Homeowners have been urged to shop around for cheaper home insurance at renewal time after research revealed that those homeowners who remain with the same insurer, year in, year out, pay over the odds for their cover.

The research, carried out by the Your Money section in the Daily Telegraph with the assistance of price comparison site, Confused.com, revealed that that those homeowners who automatically renew their home insurance with the same provider each year are overcharged by a combined £500 million every year.  Clearly, the findings of this research suggest customer loyalty does not pay for home owners.

Confused.com noted that 1 in 4 homeowners could pay less than the renewal quote from their existing home insurance provider.   Those homeowners that shopped around and compared home insurance quotes saved £180 on average on the cost of their home insurance.

Bizarrely, some homeowners may not even need to change their insurance company to avoid higher premiums.  For instance, one Daily Telegraph reader who held a Direct Line home insurance policy paid £280 for their cover at the outset of the policy, but was quoted a renewal premium of £550 a year later.  Unhappy with that quote, the homeowner compared home insurance quotes online using a price comparison site and discovered that Direct Line was in fact the most competitively priced.  The customer cancelled their existing Direct Line policy and applied for the same cover, but as a new customer and at a lower cost of £360, rather than the £550 renewal price quoted on the existing policy.

Direct Line explained that the difference was due to discounts it offers to new customers from time to time so that it remains competitive in the market.  These discounts are one-off incentives and apply for the first year of the policy only.  It insisted that the premium quoted at renewal in the following years reflected a fair price for the cover provided once the discounts were removed.

Confused.com said the findings of the research reinforced its view that customer loyalty was rarely rewarded for those homeowners that continue to remain with the same insurer every year.   It said homeowners should shop around to ensure the price they pay for their home insurance remains competitive.  Notwithstanding this, regularly reviewing the level of cover provided also enabled home owners to check they had adequate cover in place in the event they had to make a claim.

Results of a survey conducted by the independent consumer advice organisation, Which?, has revealed that during the past year the Co-operative Bank was the best performer in the general field of financial services in the UK including car insurance and home insurance.

Which?’s survey of the financial services market established that the Co-operative Bank outshone its competitors in most areas assessed.

In response to the award the Co-operative Bank explained that the way in which it conducts its business is different to most banks which appeals to many UK consumers who have become disillusioned with the big banks and the way they have been affected by the credit crisis. 

It said that at the heart of the Co-operative Bank is an ethos to provide quality and ethically enhanced products, excellent customer service and that it operates on a fully funded basis – this means it only lends out money it has already received as deposits from customers.  This is the reason why the Co-operative Bank has been pretty much immune to the effects of the credit crunch.  As a result of this business ethos, the Co-operative brand appeals to many consumers.

Co-operative Home Insurance > 

Co-operative Car Insurance >

Figures released by AA Insurance reveal that the average quoted premium for annual buildings insurance increased by 5.3% during the past 12 months.

The figures are based on the AA’s Insurance Premium Index.  The index has tracked both home and car insurance premiums since July 1994.  It is now widely accepted as the industry benchmark for measuring insurance premium trends.  For home buildings and home contents insurance, the index tracks a total of 750 risks from 77 insurance companies and brokers.

In the AA’s opinion, the cost of home insurance remains excellent value for money for consumers, with many good deals still available.

The average quoted premium for a stand-alone annual buildings insurance policy is now £218.04.  However, the average of the lowest three quoted premiums for each ‘customer’ in a basket of 750 risks showed the average cost to be £122.77.

The average quoted premium for a stand-alone contents insurance is now £122.98.

The average quoted premium for combined buildings and contents insurance is now £290.62.

The AA said that the latest figures emphasise how competitive the home insurance market is.  It noted that many insurers are very keen to attract new customers and frequently offer attractive introductory deals or discounts, which has lead to the average price of home insurance remaining competitive. 

The AA still urged consumers to shop around and compare home insurance quotes to make sure they were getting the right level of cover for their circumstances and at the best price possible.  It warned that in the long-term such attractive offers to home owners will not be sustainable and it is more likely than not that the cost of home insurance will start a trend of increasing over the next few years.

Linked to this expectation of increasing premiums is the fact that the current recession has lead to an increased number of claims from homeowners due to burglary and other crime.  Insurance fraud has also been on the increase as hard-pressed consumers look at ways of making money – all of these increased costs to the insurers will inevitably be passed onto policyholders.

The Association (ABI) of British Insurers has published a report, based on findings from a national survey conducted by YouGov, which reveal that nearly 25% of consumers in the UK have cancelled or have decided not to renew their home contents insurance in order to save money.  A further 17% have cancelled or have not renewed their buildings insurance cover.

Consumers are also disposing of other types of insurance cover to save money.  Of the 2,000 adults who took part in the survey, 13% say they have cancelled life insurance policies and a further 21% admitted that they are considering reducing or ceasing their saving altogether.

Many of those hard-pressed families who are attempting to save money by ditching their insurance policies are from deprived areas where the risk, for instance, of burglary is significantly higher than the national average.  It is therefore these consumers who are more likely than the average consumer to need home contents insurance cover to protect them in the event they are burgled.

In response to the findings the ABI said that it is a false economy for consumers who are struggling financially to cut back on their insurance protection.  It noted that insurance, whatever from it is in, such as car insurance, home insurance, travel insurance, etc, provided an important safety net for consumers when the unexpected happens.  Having adequate insurance cover provides long-term security for individuals and their families. 

It is important that consumers regularly review existing cover to make sure it is still relevant since circumstances do change.  The ABI noted that consumers should only cancel existing insurance policies as a last resort when there is no other option available.

Other findings from the survey reveal that 45% of consumers would like to save more money, but are currently unable to do so due to affordability reasons.  Some said that the Government should stimulate increased savings by encouraging more consumers to save with increased opportunities and incentives.

Unsurprisingly, more women than men worry about how they and their families would cope with an unexpected event.  In addition, more women than men are worried about whether their pension arrangements will be sufficient, reflecting the fact that women in the UK tend to have smaller retirement provision than men.

Compare home insurance>

It is a sad fact of life that during a recession crime increases.  Once particular crime that increases significantly is burglary.  While many UK homeowners will make sure that their home is secure, the vast majority fail to take the same level of precaution with their gardens.  Burglars often view gardens as easy pickings since few homeowners have any meaningful security in place to deter burglars, many of which are opportunistic.

While many homeowners may worry about the contents of their shed being stolen, few fail to consider garden items such as trees, shrubs and ornaments might be at risk of being stolen too.  Some thieves may even spot a newly laid lawn and steal it by rolling it up and selling it on. 

In the event that a homeowner is targeted by thieves many might assume that they will be adequately covered under their home insurance policy.  Unfortunately, this might not be the case under all home insurance policies since all policies are not the same with different limits and exclusions.  The cheaper home insurance policies tend to have more exclusions and lower claim limits.  Consumers should be wary that when it comes to insurance that cheapest is not always best.  Homeowners who compare home insurance quotes online should always make sure that they obtain the right level of cover for their circumstances, and not just focus solely on the cheapest quote.

It is important to bear in mind that permanent fixtures such as sheds, conservatories, patios, walls, fences, gates and hedges are usually covered under the buildings part of a home insurance policy only - not the contents part.  Likewise, objects that can be moved such as BBQs, chairs, tables, tools, and other equipment will usually be covered by the contents part of a home insurance policy only - not the buildings part. 

Confused.com says it is very important that when comparing home insurance quotes that consumers check the key features of the policies since they can vary considerable from policy to policy.  As an example, Churchill will provide cover for items stolen from a garden, but only up to a maximum of £250.  Lloyds TSB Options home insurance policy provides cover up to £2,000 for garden items as standard, but this does not include a lawn if that is stolen.  Other typical exclusions under home insurance policies include plants in pots and ride-on mowers.

Research carried out by one insurance company reveals that the average cost of replacing items stolen from gardens is nearly £400, but this cost be significantly higher for larger gardens which may contain both more items and higher value items compared to the average sized garden.  The most common type of garden claims include: damage by storms, accidental damage, theft, malicious damage and impact damage (for example from a motor vehicle).

For homeowners who want to ensure that they have sufficient cover in place to protect their gardens it is possible with some home insurance policies to ‘bolt-on’ extra cover. 

For instance, Kwik Fit’s standard home insurance policy covers garden claims up to £500.  However, it is possible to purchase one or two ‘bolt-ons’ of extra cover.  The first level of extra cover costs £35 and will provide cover up to £1,500.  The second level of extra cover costs £50 and increase cover up £2,500. 

Another home insurer, Halifax, offers cover up to £500 for replacement of stolen trees, shrubs and plants, and an additional £500 for garden furniture, ornaments and BBQs.  Further, contents stolen from garages, outbuildings and greenhouses are also covered up to £2,000.

Homeowners currently looking to take out a home insurance policy should firstly sit down and estimate how much cover they actually need.  Trying to guess while in the middle of an application form is probably not the smartest move since its likely they will underestimate or overestimate how much cover they need.  This could lead to financial loss in the event of a claim, or paying too much for cover not needed.  The best way to get an estimate is to take a walk round the garden and any outbuildings and take a note of everything considered to be at risk of damage or theft which would need to be replaced.  Many consumers would probably be surprised by the total value of their garden and contents once they add them up.

For homeowners with very expensive items such as antiques or statues in their garden then they may need to seek specialist cover since most home insurance policies may not provide sufficient cover.  Hiscox is one specialist insurer that can provide cover for households that require cover for expensive buildings and contents.

In order to protect their gardens and contents, homeowners should consider doing the following: 

• For valuable items take photos to give to the Police in case they are stolen
• Rusting locks or padlocks should be replaced for newer and stronger locks
• planting prickly plants such pyracantha around the perimeter of the garden to deter thieves
• Keep valuable items out of sight by locking them away in a shed or outbuilding after you have used them
• Use curtains or blinds in sheds to prevent the contents from being seen
• Place motion alarms under statues and other large items that will go off if they are moved
• Use tree anchors to protect valuable trees and shrubs
• Carry out an annual check of sheds, outbuildings and fences / walls and make any repairs if necessary
• Fit security lighting across the whole garden so that the entire space can be seen, rather than just next to the house
• Use a security pen to write your address on valuable garden items such as BBQs, bikes and lawn mowers – this will help the Police identify them if they are recovered

Compare home insurance>

It has now become the norm for millions of UK consumers to shop around and compare insurance quotes online before making a decision to purchase.  The benefit of comparing quotes online and using price comparison websites is the ability to save hundreds of pounds on the various forms of insurance available, such as car and home insurance. 

However, consumers should ensure they fully read and understand what they’re covered for when purchasing insurance online.

For instance, it has been shown that many UK consumers who purchase home insurance online fail to establish the exact type of locks fitted to their windows and doors before completing an online application form – many wrongly assume that the locks meet minimum safety standards and that they will therefore be covered if they are the victim of a burglary.  It is apparent that many consumers fail to read the final, vital questions and notices when completing application forms online which ask important questions.  For instance, many fail to understand the importance of accurately answering questions such as: “are the locks British ’safety-standard’, a five-lever mortice lock conforming to BS3621, or a cylinder rim deadlock?”

Consumers who breeze through price comparison websites without fully reading and accurately answering questions could find themselves with no cover if their home is burgled and they try to make a claim on their home insurance.

For instance, if, when assessing a claim, the home insurance company decides that the locks fitted to the doors are not up to the minimum standard, or not as described when the application form was completed, then it could refuse to pay the claim and treat the policy as being invalid.  

It may seem like a minor thing to check what type of lock is fitted, but it is imperative that homeowners do this.  This will ensure that they are covered in the event of a burglary.  Notwithstanding this, it could also mean cheaper insurance quotes if the most secure type of locks are fitted – home insurance companies typically offer discounts if the most secure type of lock, a five-lever mortice lock conforming to BS3621, is installed on ground floor doors and windows. 

Unfortunately, establishing the type of lock fitted can be cumbersome for homeowners since they need to physically take the lock out of the door to do this. Fortunately, there is some assistance available for homeowners.  They can ask their home insurance company to send them a diagram which clearly shows the different types of locks.  Homeowners can also find pictures of the various lock types at www.sterlinginsurancegroup.com. 

If, after trying to establish the types of lock fitted, homeowners are still unsure what type(s) they have installed it is wiser to tick “no” or “not known” on the application form rather than trying to guess or assume that a five-lever mortice lock or a cylinder rim deadlock is fitted.

It should be noted that ticking “no” or “not known” on the application form can lead to more expensive home insurance compared to a quote based on the most secure types of locks. 

If consumers are unsure about any aspect of their home insurance quote when comparing quotes online they should speak directly to the insurance company who produced the quote to satisfy themselves that they fully understand the key features of the policy. 

Compare home insurance>

Compare car insurance>

Many UK consumers are struggling financially in the current recession and many are looking at ways to cut the cost of household bills. 

Research from internet car insurer, Esure, has revealed that more than 20% of consumers have cut-back on the level of car insurance over the past year. 

Some consumers may think they can save themselves money by cancelling existing insurance policies, but this may prove to be a false economy if disaster strikes and they find themselves unprotected and out of pocket, possibly by thousands of pounds.

It is important to remember that insurance is there to protect consumers and their possessions.  Some types of insurance are essential and are required by law, while some types of insurance are a luxury which may not necessarily be a necessity, depending on that consumers particular circumstances.

In order to assist consumers weigh up their options and to see if there are any ways in which they can save money on the cost of their insurance policies, Ukfinancemarket.co.uk has drawn up a brief summary of the different types of insurance available and what scope, if any, is available to save money.

Essential insurance
 
To begin with, the types of insurance every UK consumer must have.

Car Insurance

The UK law stipulates that if you own a car you must have car insurance.  Therefore, cancelling your car insurance altogether to save money is simply out of the question – you must have car insurance to drive on the UK‘s roads. 

However, it may be possible to save money on car insurance by opting to reduce the level of cover you have by shopping around and comparing car insurance quotes online.  Alternatively, reducing the level of car insurance cover from, say, fully comprehensive to third party, fire and theft could result in savings.  However, if you are contemplating reducing the level of their cover should fully understand the implications a reduction in cover will have in the event an accident or claim.

Home Buildings Insurance

In addition, if you have a mortgage then the lender will insist that you have adequate buildings insurance in place to protect its collateral for the loan (mortgage) it has given to you in the event it is damaged.  For instance by a flood or fire.  Comparing home buildings insurance quotes could save money on the cost of cover.

In summary, therefore, for car insurance and buildings contents insurance the only viable option available to save money is by shopping around and comparing quotes online to get the cover you need at a cheaper price.

Nice-to-have insurance

Next, the types of insurance which are not essential, but would be nice-to-have.

Home Contents Insurance

Many consumers fail to understand the importance of having home contents insurance.  Consequently many consumers don’t even have any home contents insurance – the Association of British Insurers recently released a report that one in four homes in the North West do not have any home contents insurance.

Those consumers that do understand the importance of home contents insurance frequently under-estimate the total value of their contents and possessions in the event they had to be replaced.  They could therefore find themselves under-insured in the event of a claim following, say, a burglary or a fire.

It is a fact of life that fires, floods and burglaries do happen.  So if consumers are able to afford home contents insurance then they should at least have some cover in place.  Consumers who shop around and compare home contents insurance online could save themselves money by getting the right amount of cover at the cheapest price possible.

Travel Insurance

Travelling abroad without travel insurance is not particularly wise.  The last thing you want when you are on holiday, perhaps many thousands of miles away from home, is to be worrying about large medical bills if you are taken seriously ill.

For those consumers who travel abroad regularly it could work out cheaper over the course of a year if they purchase an annual multi-trip travel insurance policy, rather than several single trip travel insurance policies for each trip.  Shopping around and comparing travel insurance quotes online could result in savings in the cost of travel insurance.  Be warned that the travel insurance offered by travel agents and sold with holidays is typically much more expensive than travel insurance purchased online offering a similar level of cover.

Pet Insurance

The UK is a nation of animal lovers.  Unfortunately unexpected vet bills can run into thousands of pounds and put a massive hole in the family finances.  As such, consumers should seriously consider taking out pet insurance for their cat or dog to protect both their finances and their pet in the event they need medical attention. 

Simple vet treatments such as an x-ray on a cat or dog can cost up to £200.  Most surgical procedures start from several hundred pounds upwards. 

Pet insurance costs can be relatively cheap.  Monthly premium costs are usually under £10 for most types of pet insurance, depending on the level of cover chosen.  You can shop around and compare pet insurance policies online to get the right cover at the cheapest price possible.

Life Insurance

Now life insurance could arguably be under the Essential Insurance list mentioned above, depending on the consumer’s particular circumstances.  If you are single with no financial dependents then you do not need life insurance.  However, if on the other hand you are married with a young family then having adequate life insurance in place to protect your family in the event of either yours or your spouse’s death is vitally important. 

Many consumers have life insurance just to cover their outstanding mortgage thinking this will be sufficient.  However, this level of cover is likely to be completely inadequate for a young family.  For young families it is important to think of life insurance as a means of replacing the lost salary of the family breadwinner if they died or paying toward the cost of child care previously provided by the homemaker if they died. 

Having inadequate life insurance could leave your financial dependents in serious financial difficulties in the event of your death.  If consumers are employed then their dependents may be entitled to life insurance if your died and also a dependent’s pension.  Consumers should check with their employer what benefits are available.

Save into an Emergency Fund

Finally, in addition to having the right and adequate amount insurance in place and at the cheapest price possible, consumers should give some thought to setting aside money each month to create an emergency fund for unexpected costs or emergencies so that there is no unexpected drain on their day-to-day finances.

Insurance to Avoid

Many commentators in the finance industry consider the value for money offered by other types of insurance such mobile phone insurance, wedding insurance and extended warranties to be questionable.  Consumers who have these type of insurances should perhaps consider relevance of the policies to their current circumstances and ask themselves whether it is worth having those policies.  Cancelling policies that do not provide value for money and instead paying the money into an emergency fund could be the wiser option.  This is because you will always have access to the emergency fund and you won’t have to deal with any insurance company if you need the money.

The Association of British Insurers (ABI) has launched a campaign for UK households to increase the uptake of home contents insurance, particularly in the North West of the UK. 

The ABI has noted that a large number of households are taking a big risk with their financial security during the recession by not having or cancelling existing home contents insurance.  According to the ABI’s figures approximately 25% of households in the North West of England do not have home contents insurance.  Such a large number of uninsured households is clearly cause for concern. 

If disaster struck, such as a fire, flood or burglary, those homeowners without home contents insurance would have no cover or protection to replace the many personal possessions and contents in their homes, which could, in total, be worth ten of thousands of pounds.  It is therefore imperative that all homeowners have adequate home contents insurance in place at all times to protect the family possessions and contents. 

The ABI noted that while homeowners in social housing are much more likely to suffer from a fire or a burglary, it is this same group of people who are least likely to be able cope financially if disaster struck.  The ABI said that both it and the Government are keen to improve the number of UK homeowners taking out home contents insurance and is exploring all the options available with local authorities and housing associations.

Compare home insurance>

Intune, a subsidiary of Help the Aged and Age Concern England, has discovered that nearly 25 % of consumers over 60 do not regularly review their personal  finances.  Instead, this group of consumers rely on financial advisers or other family members to provide them with advice and guidance on their money. 

A further 15% of the over 60s fail to review whether the cover being provided by their existing insurance policies remains appropriate, and 10% fail to review the rates of interest being received on their savings and whether this could be improved.

It is wise for all consumers, not just the over 60s, to carefully review their existing financial arrangements to make sure they are getting the most out of their money.  By regularly reviewing and comparing existing financial arrangements it could be possible to find similar or better cover at a similar or lower cost.  However, it is important for consumers to remember that cheapest isn’t always best.  Some insurance policies might be cheaper than others, but they may not offer the same level of cover or protection. Consumers have different needs and different circumstances, and what might be right for one consumer might not for another. 

Intune noted that older consumers have become more cautious with their savings, possibly due to the high profile collapse of several financial institutions in the UK.  This has lead to many older consumers spreading their savings, and thus risk, across several different banks and building societies.

Compare savings accounts>

The current economic downturn in the UK has lead, perhaps not unsurprisingly, to a rising number of fraudulent insurance claims during the past year.

According to the Association of British Insurers (ABI) approximately 107,000 insurance claims during the past year, worth a total of £730, were found to be fraudulent.  In once such case, a motorist pushed his own car over a cliff and attempted to claim on his motor insurance policy in order to raise funds to pay off his debts.

The increase in fraudulent claims is 30% higher than the previous year.  The ABI noted that fraudulent claims increase during a recession since policyholders who might be facing financial difficulties, perhaps caused by rising unemployment, seek any means possible to raise funds to meet their financial liabilities, such as bills and mortgage repayments.

The ABI noted that fraudulent claims were most common on home insurance policies, with 55,000 false or exaggerated claims detected last year.  Fraudulent motor insurance claims were the highest by value, at £360m.

It has been calculated that fraud adds an extra £40 a year to the average insurance policy premium.  The insurance industry therefore has a clear incentive to make it harder for cheats to claim which will, in turn, reduce the total value of claims paid out and lower insurance costs for honest customers.  In response to the ABI’s report, Norwich Union said the majority of insurance claims were still genuine and when assessing claims it looks for unusual remarks, whether a customer had made a series of claims, and whether a policy had just been taken out.

Compare car insurance>

One of the UK’s leading money comparison websites reported last week that while home owners actively investigate and source cheaper car and motor insurance policies, many fail to do the same with their home and contents insurance.  As a result of this apathy toward reviewing their existing home and contents insurance, many homeowners are overpaying around 1.3 billion each year on their home insurance. 

It was noted that 44% UK homeowners have not actively reviewed their home and contents insurance policies during the past five years and choose instead to remain with the same insurer, year in, year out.  However, 65% of motorists use online money comparison websites to source the best deal for their car and motor insurance every year.

Given that homeowners’ personal and financial circumstances change over time, it could be the case that those homeowners who fail to annually review their home and contents insurance policy could be paying for cover that is neither suitable for their circumstances nor provides the level of cover the homeowner thought.  It is therefore very important that homeowners review their home and contents insurance policy each year to ensure that they get both the best deal and that they are adequately covered in the event the unexpected happens.

Home insurers are currently offering great deals on home and contents insurance policies.  At UKfinancemarket we have teamed up with several leading home insurance compaines to provide you with access to the most competitive and cheapest home insurance deals available on the market, without comprising on the level of cover provided.  By using our website you can compare the insurance market and source the best and cheapest insurance deals on car insurance, motorbike insurance, van insurance, travel insurance, home and contents insurance, pet insurance, life insurance and private medical insurance.