Water giants ‘pushing pointless insurance cover for burst pipes’
WATER firms are pushing customers to take out private insurance against burst pipes that could be totally unnecessary, it has been claimed.
Most of the biggest companies are promoting cover from insurers such as Home serve in return for substantial commissions.
The policies, which cost around £35 a year, are sold to millions on the basis that they offer peace of mind in case of emergencies.
However, many of the same water firms offer free repair schemes for pipes running from outside the home to the boundary.
And many customers already have home insurance policies that would cover them for damage or costs associated with repairing a burst pipe inside the home.
The research from consumer watchdog Which? estimates that customers are spending £100million a year on the cover.
It is likely to fuel anger at private water firms which have recently pushed up prices well above inflation for struggling homeowners.
A Which? spokesman said: ‘Water companies pro-actively push this costly third party insurance, and our researchers found nine of the 12 big companies promoting Home serve’s policy via direct mail promotions.
‘While references to the water companies’ free pipe repair schemes are included in some of these letters, their benefits were played down.
‘Some of the firms also promoted third party insurance on their own headed paper, potentially persuading consumers to unnecessarily buy a policy. None of the letters we scrutinised mentioned that home insurance may also cover water supply disruptions.’
In fact, Which? found that 19 of the leading 25 home insurers, including AA and Legal & General, will cover burst supply pipe claims to varying degrees.
Which? executive director Richard Lloyd condemned the hard-sell tactics. He said: ‘It’s totally unacceptable that water companies are pushing potentially unnecessary water supply pipe insurance from third-party private companies. Few companies highlight their own assistance
‘Pipework under the home’
schemes, and most fail to tell you that your home buildings insurance may overlap on the key benefits of cover.
‘We’re calling on all water companies to use the same free pipe repair scheme so that it’s clear to consumers what they’re covered for.’
He also urged industry regulator Ofwat to act to prevent water companies from promoting the third-party insurance under their own name.
Home serve defended its service, saying it was wrong to believe water companies will automatically fix bursts free of charge. A spokesman said: ‘Nearly one in 13 homeowners in Great Britain have suffered a water supply pipe emergency at some points and while most water companies may offer a one-off service, they are not obliged to do so, nor are they always in a position to respond quickly.’
‘Home serve will have engineers in attendance within two hours in the event of an incident.
‘Furthermore, it’s critical to understand that a third of claims pertain to problems with pipework under the home, the internal stop valve and the rising main – all elements which would not qualify for repair by the water companies.
‘It’s also important that consumers get a clear understanding of what their home insurance will cover in such circumstances.
‘Water supply pipe problems due to wear and tear is unlikely to be one of them; whereas Homeserve will protect homeowners against such risks.’
Water UK, which speaks for the industry, stressed that the burst pipe insurance policies promoted by its members were optional.
In a statement, the alliance said: ‘Water companies already help many thousands of their customers, sometimes through free repairs, sometimes with guidance and sometimes with contributions towards costs.’
Many water company websites encourage their customers first to call a plumber in the event of leak.
However, Which? warned this could invalidate a claim under their home insurance policies, because many insurers specify they must be contacted before any repairs are made.