Home insurers start to 'force down payouts'
HOME insurance companies are increasingly offering to replace expensive items rather than pay the cash value of stolen or damaged items.
Insurers are taking a much more stringent approach to household claims and are now offering much lower cash alternatives or even vouchers for items, says insuremyhouse.ie.
Managing director Jonathan Hehir said: "Insurers realise that, in the current age of austerity, many people... don't want to replace those high-end items purchased during the Celtic Tiger, preferring now to spend the money on more practical considerations.
"Realising this change in public perception, insurers are using the threat of replacement to negotiate a far lower cash payout."
Anecdotal evidence suggests most people believe they will receive a cheque equal to the value of items damaged, lost or stolen, minus the policy excess.
But many are surprised to be offered a similar replacement, or a voucher to be spent with a provider of such items, such as a jeweller, he said.
"Alternatively, you may be offered a cash alternative, but this will invariably be bargained downward to anywhere from 10-30pc less.
"Either way, these options will cost the insurer considerably less.
"Most have discount deals with jewellers and providers of other high-value items and, even in the case of vouchers, they are often able to purchase these at a far lower cost than the face value," he said.
Insuremyhouse.ie, which sells home insurance online, claimed that while previously insurers didn't tend to look for original purchase receipts, they are now doing so as a matter of course.
But few households have their high-value items photographed or valued, and not many people keep receipts for items bought five or 10 years ago, he said.
However, without this documentation, a claimant may struggle successfully to receive compensation.
"If you read the terms and conditions of a typical household policy, you'll find that insurers can demand that a number of conditions are fulfilled before they will consider your claim.
"These are not new conditions, but during the boom times they generally weren't enforced," he said.