Don’t make this home insurance mistake!
Almost a third (30%) of homeowners took out a home insurance policy through their mortgage provider at the time of purchase, instead of shopping around, said comparethemarket.com.
The price comparison site added that a significant number could be overpaying for home cover by failing to search for the best deal. Those surveyed were paying an average of £418 for buildings and contents cover despite the average annual cost of a buildings and contents insurance policy being only £147.
Why didn’t they shop around?
Nearly a third (29%) of homeowners said that their mortgage provider seemed the “easiest option” at the time.
More than one in ten (13%) felt pressured into taking an insurance policy to secure the mortgage in the first place and 14% felt forced by the lender to take out insurance with a specific provider.
However, some homeowners (15%) admitted to simply accepting the policy showed to them without shopping around for alternative options available on the market and 10% said they didn’t know they could shop around.
What are the rules?
Some mortgage providers may insist that you have buildings insurance as a condition of the mortgage and that this is in place before the contracts are exchanged, but this can be bought from any provider.
Buildings insurance covers the building itself should the home suffer damage, for example by fire or flood.
If you are a leaseholder, this insurance is often covered within the service charge by the management agency for communal areas, but it is worth checking with your solicitor the areas of the building you are responsible for insuring.
Contents insurance helps cover the cost and damage of personal possessions and items.
Chris King, head of home insurance, at comparethemarket.com, said: “Although cross selling rarely means you’ll end up with the best deal, many home buyers still take out insurance with their mortgage provider even though cheaper deals can be found elsewhere.
“Some consider it the path of ‘least resistance’, but others feel pressured into doing so. Buying a house is considered one of life’s most stressful and expensive events – and many homeowners are likely to choose the quickest and easiest route.
“For those who go with their mortgage provider’s recommendation and then renew with the same provider year after year, they could be paying far more than they need to.”