How to find the best home insurance deals

Home insurance costs can soar if you renew with the same firm year after year — it pays to haggle.
Households are being duped into renewing expensive home insurance policies instead of shopping around for a cheaper deal.
 
Under a widespread practice called “auto-renewal”, home insurers automatically renew policies for their customers each year.
 
While this can be convenient and ensures households remain covered when their existing policy ends, critics say auto-renewal deters customers from shopping around and means they can be caught out by big hikes in premiums.
 
Insurers write to customers in advance of the renewal, informing them of the new premium. But where the price has gone up, most will not spell this out.
 
They may also change features such as the excess on the policy — the amount deducted from claims — without making this clear.
 
Although customers can cancel an unwanted policy, most stay with their existing insurer and generally accept the auto-renewal price, according to price comparison website MoneySavingExpert.com. 
 
It warns that people who auto-renew often pay a “vastly inflated price”, and adds: “Insurers rely on your inertia to keep charging you huge amounts year after year.”
 
Loyalty doesn’t pay
The Financial Conduct Authority regulator, which plans to publish a report on auto-renewal before the end of the year, says it is looking at “remedies” — which could include insurers having to make premium increases clear.
 
Comparison websites point out that because insurers offer their best prices to new customers, households who don’t shop around at renewal could be missing out on significant savings.
 
People who have been with their home insurer for a number of years could be paying hundreds of pounds more than if they switched.
 
“Loyalty doesn’t pay — insurers are very new business-led,” says Moneysupermarket.com insurance expert Sasha Evans, adding that most make a loss from customers in their first year and then look to increase prices in subsequent years when people renew.
 
Even where an existing policy includes a no-claims discount, households can generally still get a cheaper deal by switching, she claims.
 
Londoners who shop around could pay about £200 on average for buildings and contents cover, according to figures compiled for Homes & Property by Moneysupermarket.com. Average prices range from £260 in Westminster to just £145 in Sutton.

How boroughs compare in London
Most expensive boroughs  Average buildings and contents quote  Cheapest boroughs Average buildings and contents quote
Westminster £260 Bromley £158
Camden £244 Croydon £154
Islington £226 Barking & Dagenham £153
Kensington & Chelsea £225 Havering £150
Hammersmith & Fulham £223 Bexley £148
Barnet £219 Sutton £145
Source: Moneysupermarket.com, average of the best quotes obtained by users for building and contents policies by borough

Check online
Online comparison services are a quick and convenient way to find a better deal. Moneysavingexpert.com says that because the sites don’t all compare the same insurers, it is worth checking a number of them.
 
To find the cheapest quote for a typical home, it suggests searches on CompareTheMarket.com, Confused.com and Moneysupermarket.com.
 
Two of the biggest insurers, Direct Line and Aviva, are not on comparison sites, so it can be worth checking these directly, it adds. Some special deals may also only be available directly from insurers or brokers.
 
All in the detail
The AA, an insurance broker, says comparison site users should watch out for insurers using high excesses and policy exclusions to offer a market-beating price. It is also important to double-check comparison site quotes and the cover on policies by clicking through to the insurer’s own website.
 
With buildings insurance, don’t risk overpaying by covering your property’s market value rather than its rebuild value — which is generally much lower. There is a free tool for calculating rebuild value on the Association of British Insurer’s website.
 
Having identified the lowest price you could pay by switching, it can then be worth haggling with your existing insurer for a better deal. Research by Which? found that hagglers were offered discounts averaging £51.
 

Taxing issue: home premium hike
Home insurance costs are set to edge up following a tax rise on insurance premiums which came into effect on Sunday.
 
The increase in insurance premium tax — from six per cent to 9.5 per cent of premiums — is likely to add more than £10 a year to the average cost of a buildings and contents policy, says the Association of British Insurers.
 
The new insurance premium tax rate — which was announced by Chancellor George Osborne in his summer Budget — applies when households buy a new policy or when they renew existing cover for their property.
 
While the Association of British Insurers says the tax rise hits households in the pocket for having a “financial safety net, not a luxury”, price comparison websites point out that people who shop around when their policy comes up for renewal could make savings that easily offset the increase.
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