- 17% of mortgage holders take out home insurance through their mortgage provider
- The average person could save £66 by switching their home insurance provider - equating to a £90 million loss to consumers missing out on better deals
- One in ten felt pressured by their bank to take out a policy to secure the mortgage
- comparethemarket.com has created its own First Time Buyers Guide, to help people understand better the property market
31 October 2016 – Homebuyers are paying over the odds on their home insurance according to new research from comparethemarket.com. Around 17% of mortgage holders could be paying £66 more than they need to by opting for home and buildings insurance through their mortgage provider rather than searching out more competitive deals. With around 7.8 million mortgaged households in the UK, this equates to an overpayment of nearly £90 million by consumers across the country.
In a survey of over 2,000 mortgage holders commissioned by comparethemarket.com, it was revealed that around 17% of mortgage holders had taken the home insurance policy that was put forward by their bank or building society instead of searching for the best deal. Consumers cited the fact that their mortgage provider represented the “easiest option” for their inertia on this front, with 44% saying that was the reason they went via their mortgage provider. One reason that could cause concern is that 11% of customers who took out home insurance through their mortgage provider, felt pressured to do so to secure a mortgage.
Buildings insurance is compulsory when purchasing a freehold property with a mortgage, and covers the building itself should it be destroyed or damaged, for example by fire or flood. However, a large portion of consumers taking out a mortgage, admit to simply taking the offer provided to them by their bank, without seeing whether there are more attractive options available on the market.
However, customers appear to be getting savvier; over half (52%) shopped around for a better deal on their home insurance within the last year and only 6% said they had never researched alternative providers.
Gemma Sonfield, Head of Home Insurance at comparethemarket.com, said:
“When you consider the huge outlay required when buying a house, it is very easy to ignore the potential savings from shopping around for a home insurance policy. However, as the statistics show, almost £90 million is being overpaid unnecessarily by taking the default option of home insurance via their bank. Perhaps the most concerning finding in our research is that more than one in ten people felt pressured to take the home insurance policy in order to secure the mortgage and that the same number didn’t even know that shopping around was a possibility. If some people feel forced to take what can be a more expensive policy, banks need to evaluate how they communicate with their customers.”