Cheap home cover can come with a high price tag
Cheap home insurance can miss out some of the most popular add-ons to help property owners – but sometimes that lower price is still too much when a pay out fails to cover a claim.
Insurance companies know that home owners are confident about buying policies online and work hard to package their products on price and not necessarily the features.
Web sites shout out ‘Compare cheap home insurance policies’ and the massive savings that are available, while discerning buyers want to know the policy actually pays out for a claim.
Home owners are steered to buy on price and not the value of the cover.
Take accidental damage cover. Most home insurance buyers would expect this as standard, but only 12% – or one in eight – of buildings policies and 10% of contents policies include cover, says independent financial watchdog Defaqto.
The firm’s research also found home emergency cover was the most popular add-on, and although more than half of policies include cover (56%), its only standard on 12% – the rest charge extra.
The cost of an excess – the amount the policyholder has to pay on the first claim in a year – is also important to many buyers.
A quarter of all home insurance cover applies a standard minimum £100 excess, which means any claim has to be for a significant amount before haggling with the insurance company becomes worthwhile.
Defaqto’s Mike Powell said: “Providers are faced with an increasingly crowded and competitive marketplace. A vast number of consumers searching for home insurance policies each year and many choose the internet to compare products.
“Attitudes to insurance in an online world have changed. Our research shows that consumers are more comfortable with comparing cover online before they buy to ensure they select a policy that is right for them.
“Product differentiation is the key in attracting consumers and combating the ‘price versus cover’ challenge. Providers not only need to look at the features they offer within their product range, but also how proactive they are in marketing these to potential customers.”