Insurers must show last year’s premiums in renewal notices. Use this when searching comparison sites to see savings. Companies often profit from add-ons such as legal cover. It’s rarely used and possibly not worth it. You may be covered for this elsewher
Insuring your home is getting more expensive. Earlier this year, Which? reported a 7.6% annual increase for property and contents cover – three times the rate of inflation. But for many, it’s more. One reader told us his insurance had almost doubled after years of standing still; another how she bought a home and contents policy for £250 one year but was quoted a renewal of £375 – she complained and they halved the increase to £312 but she went back to the same comparison site and found the same policy with the same company for £255. And last winter, The Guardian reported how Halifax charged loyal customers £1,227 but £370 for the same plan for new customers.
Citizens Advice has put in a supercomplaint about insurers and others penalising long term customers to watchdog, the Competition and Markets Authority, which has to respond by the end of December.
Insurers blame Insurance Premium Tax – it has doubled over the last three years to 12% (there’s no VAT on policy costs) but that’s just part of the story.
But in the meantime, you can cut costs. Insurers can play two sneaky – although legal – tricks on existing customers.
They may send renewal notices shortly before policies expire, hoping you’ll be panicked into accepting their terms. Make a diary or smartphone note to shop around for new cover at least a month ahead.
The second sleight of hand is automatic renewal. Here, often without you being aware, you’ve opened your bank account to the insurer to take next year’s premiums. Doing nothing, means paying whatever the insurer quotes.
Some companies make it hard to cancel direct debits – you may have to phone and talk to them. Insurers know some customers want an easy life and won’t do this – even if it costs them.
You need insurance. Mortgage lenders insist on buildings cover although you are allowed to shop around – they can’t force their policies on you. Those who have paid off the loan don’t have to buy cover but should. Renters only need contents cover.
One sure-fire way of cutting costs is to up the “excess” – the first slice of any claim which you pay yourself. Go for the largest amount you can afford – this cuts premiums but also means you won’t make smaller claims which will increase next year’s bill.