If you’ve recently seen a big increase in your home or car insurance premium, we explain some of the reasons why.
According to recent inflation figures from the CSO, home insurance premiums have risen by almost 10% over the past year.
And while overall car insurance premiums are actually down 11%, some people have been hit with big premium hikes.
Obviously if you made a claim over the past year and lost your no-claims bonus, you'll be hit with a higher premium come renewal
But here are some of the other reasons why you may have been hit with a big hike in your insurance costs.
1. End of price walking
Earlier in the year, the Central Bank's ban on so-called ‘price walking’ came into effect in the insurance sector.
Price walking is a pricing strategy whereby loyal customers who stay with the same insurer for many years gradually end up getting charged higher and higher prices at each renewal compared to newer or more price-savvy customers.
In other words, their loyalty is penalised and they end up paying a so-called 'loyalty premium'.
Insurance companies were able to use detailed analytics and algorithms to target those customers it knows are more likely to pay the higher prices.
However, this is now illegal.
While first-year introductory discounts and offers are still allowed, from year two onwards, everyone with the same risk profile must now be charged the same price for their car and home insurance.
So if you've seen a big increase in your car or home insurance premium at renewal it could be because:
- You had a first-year new customer discount which has now come to an end.
- You’ve been with the same insurer several years and had perhaps negotiated a discount for the previous year or had not been the victim of price walking. You must now be charged the same as everyone else with a similar risk profile.
As you can see, there are winners and losers from the end of price walking.
People who haven’t tried to negotiate better deals in previous years will likely have seen their premiums fall, while those who had negotiated better deals will see theirs rise as everyone must now be charged the same.
2. Construction inflation
As we’re all well too aware, inflation has shot up hugely over the past year. And the construction industry hasn’t been spared.
In fact, according to a recent report from the Society of Chartered Surveyors, the cost of rebuilding a home in Ireland rose by just over a fifth nationally last year.
Rebuild cost inflation ranged from 14% in Dublin to 26% in the northwest, with the national average increase coming in at 21%. This in turn is having a big impact on home insurance premiums.
With the Government announcing the introduction of a new 5% concrete levy, construction costs are expected to increase which will cause home insurance premiums to rise even further.
As your home and car get older, this will affect your premium.
This is particularly true for cars over 15 years of age.
And as you yourself get older, this will impact your car insurance costs. You’re likely to get your best quotes when you're in your 40s and 50s. But once you hit your 60s, age starts going against you unfortunately.
So if you car has hit 15, or you've hit the age of 60, this could also be reason why you're seeing an increase in your car insurance.
What to do?
If you’ve been hit with a big premium hike that seems difficult to justify, you have a few options:
- Ring your insurer and ask why
Make sure a mistake hasn’t been made. However, due to the end of price walking, you’re unlikely to be offered any type of discount on your premium even if you haggle. This is because theoretically, the insurer would then have to offer that discount to everyone else.
Insurers are still able to offer good introductory discounts to new customers for the first year. So if you’re not happy with the cost of your insurance, switch insurer and save.
And the good news is that you can now get great value home and car insurance on bonkers.ie!
- Review your cover
It’s usually better to be slightly overinsured than underinsured, but if you’re unhappy with the cost of your premium, review your level of cover to ensure you’re not paying extra for something which you may not need.
When it comes to home insurance, people often make the mistake of insuring their property for its purchase value as opposed to its (usually lower) rebuild cost so make sure you’re not overinsured here. Mind you, as mentioned above, rebuild costs have risen hugely over the past year so make sure you have the correct rebuild cost on your policy schedule.
Switch and save
Make sure you aren’t overpaying for your home and car insurance policies on bonkers.ie.
Get familiar with home and car insurance
Become aware of your home and car insurance options on bonkers.ie with the help of our insurance-related articles.
- Our home insurance Quickstart Guide will provide you with everything you need to know about comparing home insurance policies on our site.
- Here is our car insurance Quickstart Guide which outlines how you can get a tailor-made policy to suit your needs.
- Learn about the different considerations you should keep in mind when purchasing home and/or car insurance.