Pushy lenders make 1.5m households overpay £1,400 for cover
AT LEAST 1.5million homeowners who bought home insurance in the 1980s and early 1990s have overpaid an average £1,400 in premiums by failing to switch to a cheaper deal.
The figures, based on exclusive research conducted for The Mail on Sunday by website Compare the Market, indicate that one in four owners who bought their house before the mid-1990s have stuck with the cover they bought at the time.
These people took out home loans when mortgage lenders routinely insisted that best deals could only be obtained if borrowers also signed up for costly cover.
Conditional selling, says comparethemarket, was so effective that decades later many homeowners are still paying too much for this poor value insurance.
The practice of tying sales of insurance to a mortgage has been nearly eradicated thanks to various pieces of legislation and a mortgage code introduced in 2007.
One homeowner who has finally taken action is Cliff Greenhill, 66, of Loughton, Essex. He has saved himself £750 a year, though he now has identical cover from the same insurer.
The retired Barclays manager and cricket lover, has been overpaying on his home insurance for 32 years since he took out a home loan through his bank. The insurance, bought at the same time through the bank, was provided by Norwich Union (now Aviva) and he renewed it every year without question.
When Cliff told his son his annual premium was £1,200, he was persuaded to compare deals online.
Cliff, who is married to Josephine, 62, was bowled over when he found the same insurance on offer to new customers for £450.
He estimates his loyalty to Barclays and Aviva has cost him £10,000. He has filed a complaint with the Financial Ombudsman Service and is awaiting its verdict.
Helen Phipps at Compare the Market says: ‘The once common practice of mortgage providers strongarming consumers into purchasing home insurance through them has been phased out.
‘But many home buyers still see taking out home insurance through their mortgage provider as the path of least resistance.’