An excess is the amount you volunteer to pay yourself in the event of a claim. The higher your excess, the lower your premium will be.
So let’s say you have home insurance and claim for water damage to your house due to a leaking pipe. The repairs will cost €5,000 and your policy has an excess of €300. In this instance, in the event of a successful claim, your insurance provider will pay you €4,700 i.e. €5,000 - €300.
Almost all insurance policies have a small excess to begin with and your policy terms and conditions will outline clearly what it is. However increasing the amount by just one or two hundred euro in some cases could knock a fairly large amount off your premium.
So if you want to reduce your insurance costs, increasing your excess can be an easy way to do it.
A good insurance policy is there to help you in your hour of need. But sometimes if it’s only a small accident or emergency, you can be better off ignoring your insurance and just paying to fix the problem yourself.
Firstly, making a car or home insurance claim will usually affect your no-claims bonus, which could see your premium increase significantly come renewal time.
Secondly, once the excess has been applied (see above), it may hardly be worth claiming in the first place. For this reason, claiming for smaller things like a cracked window screen or a broken boiler, can sometimes end up costing you more in the medium term if you go through your insurance company.
Most good insurance companies will clearly talk you through the benefits of making a claim and advise on whether it’s really worthwhile.
Companies often make the most money out of selling you extras and add-ons that you don't really need and this also applies to insurance.
Whether it’s car insurance that comes with breakdown assistance or health insurance that comes with a choice of staying in a snazzy private hospital, there are a multitude of things you can add on to your insurance policies.
But you really need to ask yourself whether it’s worth it.
Paying extra on your health insurance to be able to stay in the swanky Beacon Clinic in Dublin is all well and good but probably not much use if you’re living in Cork. Similarly, paying extra for breakdown assistance isn’t much value to you if you already have it through the AA. Or paying for fully comprehensive car insurance on your 15-year-old banger that isn't even worth €2,000 is probably not worth the extra cost. And paying extra on your travel insurance for winter sports cover is useless if you hate the snow and have never taken a winter break in your life.
That’s not to say some of the extras that come with insurance policies aren’t worthwhile. And some even now come as standard, at little or no extra cost, meaning it’s no harm having them just in case.
But remember to look carefully at what you’re actually paying for and whether it’s worth the extra cost.
Sometimes you may not need insurance cover at all as you’re already (unknowingly) covered by either an existing policy or legislation.
For example, your employer might provide you with a death-in-service benefit of three or four times your salary meaning you may not need extra life insurance.
Also, if you have a European Health Insurance Card (EHIC) it will cover you for emergency healthcare in any other EU and EEA country as well as Switzerland. Also, under EU laws, you’re entitled to compensation if your flight is delayed by more than three hours, which is often better than what you’d get under many travel insurance policies.
Similarly if you have home and contents insurance, things like your mobile phone and laptop will usually be covered already or can be included for a small additional fee, meaning phone or gadget insurance isn’t required.
And when it comes to travel insurance, some credit cards actually include it for free as one of their perks.
So before taking out insurance, think about what you need it for and whether you might already be covered.
If you’re a smoker who’s looking for life insurance, specified illness cover, or mortgage protection, then look at quitting. Smokers pay far higher premiums than non-smokers, so as well as being good for your health, it’ll be good for your pocket!
If you already have a life insurance policy and have been off the cigarettes (and vapes!) for at least a year, you can ask your existing life insurance provider to put you onto non-smoker rates. If they agree to the request, you might be asked to take a cotinine test, which tests the level of nicotine in the blood.
Reducing your level of life insurance cover is another way to reduce your premium.
For example, if you have young kids you’ll need a higher level of life insurance cover as the benefit will have to last until they’re at least 18 or 21 if in higher education, if not older.
But as your kids grow up, their financial dependency on you will (hopefully) slowly start to reduce. So this means the level of life insurance you need will reduce also.
However you should only reduce your life insurance cover if it’s appropriate for your particular circumstances and you should always talk to a qualified financial advisor before you do so.
The quickest and easiest way to save on your insurance costs is to switch to a cheaper provider.
Whether it’s saving on your car insurance come renewal time or getting cheaper travel insurance, shopping around always saves.
The good news is that at bonkers.ie comparing life insurance, serious illness and mortgage protection quotes is easy. Just fill in some simple details such as your age, the amount of cover you want, and the term the policy should run for using our online comparison service, and we'll compare policies from Ireland's main providers and produce a quote for you in just seconds.
One of our in-house qualified advisors will then give you a quick call to finalise your application and answer any queries or concerns you might have.
Insurance is predominantly all about risk reduction. You pay to protect yourself in case something bad happens. And your insurance company prices your premium based on how risky or likely something is to happen.
Because of this, anything you can do to make yourself look a less risky bet in the eyes of your insurer will have a positive impact on your premium.
So installing fire and burglar alarms will help reduce your home insurance costs while parking your car in a garage or your driveway as opposed to out on the street will reduce your car insurance costs.
And as noted above, quitting smoking will reduce your life insurance costs.
Come renewal time, ask your insurer for advice on the list of things you can do to have your premium reduced.
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