First time buyer, advice re: insurance needed

zenbuffy

Hi all,

So, to cut a long story short, I'm a first time buyer who will, very shortly, be closing the sale of a house (provided the seller doesn't go and back out now!). I've got a few weeks, and I know that, at a minimum, before I draw down the mortgage, the bank will require me to have:

a) Home insurance
b) Life Assurance for at least the total amount of the mortgage

I also need to make a decision regarding mortgage payment protection, either with the bank or (as I discovered you can do, just today) from elsewhere.

I suppose I'm a little bit lost with all of the options out there, and was hoping for some advice, so I'll try my best to outline the situation.

Home Insurance
I do have a valuation for the house, so I know the rebuild cost. I have a semi-detailed quote from the bank providing my mortgage, and another more generic quote from chill.ie as a starting point.

I will be having an alarm fitted as a priority as soon as the keys are in my hand, but I suppose that I can't say there's an alarm for the purpose of a quote now. Is it possible to state intent to fit an alarm, or perhaps just get a quote without alarm, fit one immediately, and then seek a rebate from the insurer? Or will I just have to take a hit on the first year?

I have absolutely no idea, not even the slightest, what I should be putting for contents cover. I've seen on some sites that people put 20,30000, though the real cost tends to be higher still. Is this the case? Without being too nosy, what kind of amounts are people putting down for contents cover? The quote I got from my bank included a sort of generic contents cover for small items under 1000 or some other amount like that (e.g. my phone), and also one or two specific named items that would be more expensive such as a laptop and a bike. Is this a good idea?

Finally, are there any gotchas or pitfalls that I'm overlooking here? Can anyone recommend a provider?

Life Assurance
I am finding the various quoting tools and calculators online for life assurance to be quite confusing. Do I need to be getting it for an amount much larger than my mortgage at this stage in my life, or can I get by with the mortgage amount, and look to increase it later? (I'm almost 28, good health, no partner, no dependants). Also, as per home insurance, gotchas and can anyone recommend a provider?

Mortgage Payment Protection
My bank have offered this to me, and some googling and searching here has told me that I can also get this from an independent provider. So the real question is, is it worth it? Have people here used it, found it good, helpful, useful, or a bit of a waste of money? Once again, any gotchas or recommendations?

As I said, I've left myself some time to figure this all out before I draw down, it just seems like there's so much information that it's hard to know what to go for. I have spoken to some people I know, but many of them bought their homes a long time ago, and the world is a pretty different place now.

If anyone can provide any insight, I'd appreciate it. For now, it's back to googling for me!

phormium

You need life cover or mortgage protection cover for the amount and term of the loan, the most basic type is decreasing cover where the amount paid out if you die goes down in line with the mortgage, this is the cheapest type. After that you can get all sorts of add ons, level term, serious illness cover etc. If you have no dependents etc then the most basis decreasing mortgage protection policy will do you.

For house insurance I never put down I have an alarm, whether I have or not, even though you get a discount the conditions relating to it are very strict. If you pop to the shop for 5 mins and don't put it on, and lets face it who doesn't do this, you won't be covered if broken into. Most policies are like this, double check before you accept an alarm discount.

Contents cover depends how much stuff you have, a lot of companies make it a percentage of rebuild cost, 20/30k should be plenty for you if you are just starting out.

Mortgage Repayment Protection is the insurance that pays your repayments for up to a year if you suffer from accident, illness or redundancy. Only you can determine your risks in this area, bear in mind if there has been previous redundancies or even a whisper of it where you work it is unlikely you will be covered. Again what sort of sick pay is there in your job? This is an optional type of insurance unlike the life and buildings.

Munstermissy

phormium wrote: »

Mortgage Repayment Protection is the insurance that pays your repayments for up to a year if you suffer from accident, illness or redundancy. Only you can determine your risks in this area, bear in mind if there has been previous redundancies or even a whisper of it where you work it is unlikely you will be covered. Again what sort of sick pay is there in your job? This is an optional type of insurance unlike the life and buildings.

if you are single as I think you outlined above, I would go for it if you do not have plenty of savings. It has been a live saver for me, I'm out of work since last December and I'm covered for a year for the repayments. Check their terms of condition for pay outs though. They do not pay out for the first 2 months of unemployment and if you have been given months notice that is also not included so in effect only paid me out after the 3rd month.

NIMAN

Mortgage Repayment Protection is one of those thats a bit of a gamble tbh.

If you think you job is secure then you may decide not to take it. As MunsterMissy said, its worth it if you use it. On the other hand, I had it in the form of Sickness, Illness and Unemployment Benefit for 12 years, paying over €30 per month (thats €4300) and never used it. So was it worth it for me? Well if I had ever lost my job or suffered a serious injury maybe, but thats a risk you have to decide about yourself.

coylemj

zenbuffy wrote: »

I do have a valuation for the house, so I know the rebuild cost.

It doesn't follow that you know the rebuild cost because you have a valuation.

A valuation is an assessment of the current market value of the house. In plain English, that's how much the valuer thinks it would fetch if offered for sale tomorrow, regardless of how much you are prepared to pay. The valuer's role is to make sure that the bank isn't lending too much money in a situation where the buyer is paying over market value because he lost the run of himself at the auction or offered the asking price in a private treaty situation where the asking price was too high to start with.

The rebuild cost is the estimated cost of rebuilding the house if it was destroyed by fire and includes demolition and site clearance followed by a full rebuild. The estimate for a rebuild is typically based on the square footage of the house. When you ask for an insurance quote, most insurance companies will ask you for the sq. footage and suggest a rate per sq. foot to rebuild depending on where you are in the country, it's typically cheaper to build down the country because labour rates are a bit lower than in Dublin.

If the house is in Ballsbridge, the market price will be way above the rebuild cost because a large chunk of the market price will be the premium for the location but this will have no effect on the rebuild cost relative to other parts of Dublin.

phormium

Any valuation I have seen which has been done for the purposes of a mortgage has the recommended rebuild insurance cost on it as well as the market value. As the OP is getting a mortgage maybe it is a copy of the banks valuation he has which should have this on it.

zenbuffy

Hi all,

Thanks for the advice so far. The one I'm still really thinking about is the payment protection - my job covers me for sickness in the form of Income Protection, but obviously that's no use if I lose my job, so maybe I'll price some payment protection options and weigh it up from there. I think my job is pretty secure, it's a large company, I'm permanent, we're not downsizing or in any danger of it (in fact, likely to be hiring more people soon), and they do cover me for illness, injury, etc (100% of salary for the first while, and 66% thereafter).

Re: valuation, it is the bank's valuation that I have a copy of, and it also includes the reinstatement value (i.e. the house is destroyed and needs to be cleared and rebuilt), not just the market value.

Liam D Ferguson

zenbuffy wrote: »

Hi all,

Thanks for the advice so far. The one I'm still really thinking about is the payment protection - my job covers me for sickness in the form of Income Protection, but obviously that's no use if I lose my job, so maybe I'll price some payment protection options and weigh it up from there. I think my job is pretty secure, it's a large company, I'm permanent, we're not downsizing or in any danger of it (in fact, likely to be hiring more people soon), and they do cover me for illness, injury, etc (100% of salary for the first while, and 66% thereafter).

Re: valuation, it is the bank's valuation that I have a copy of, and it also includes the reinstatement value (i.e. the house is destroyed and needs to be cleared and rebuilt), not just the market value.

I'm not a fan of Repayment Protecton policies at all. Remember that they only pay for a maximum of twelve months and to get a claim for that period of time, you need to be out of work for each and every month of that year. So if you're made redundant and get another job after two months (even if it's a minimum-wage job to tide you over) you'll only get a claim for two months.

If your employer already covers you against illness and you reckon the company is in good shape at the moment, I'd consider setting up a savings account and putting the monthly premium into it instead.