How loyalty to your home insurer can cost you £200

HOUSEHOLDERS who stay loyal to their insurance company can pay £200 a year more for home cover than a new customer, a survey found.

The extra money raked in by penalising long-standing customers is used to boost profits and to subsidise cheap deals to attract new customers.

Consumer group Which? said existing customers were typically paying £270 per year for a combined policy covering buildings and contents insurance. That was £75, or 38 per cent, more than a new customer.

Combined policies that were four to six years old were around £105 a year more expensive than those offered to new customers.

The Which? research found that the combined insurance on a policy that had run for at least 20 years was £396 per year, compared with the £195 available for new customers through price comparison websites – a loyalty penalty of £201.

Earlier this year, the Association of British Insurers and the British Insurance Brokers’ Association announced plans to tackle excessive premium differences between long-standing and new customers.