PERSONAL FINANCE
POLICIES promising a quick fix for your boiler if it breaks down are being aggressively marketed by cold callers and can cost up to £30 a month – but are often not worth the paper they’re printed on. Here, we investigate the deals – and their drawbacks.
BRITISH households are spending over £1billion a year on central heating cover, according to estimates by The Mail on Sunday, but experts warn these products often don’t provide value for money – or even a fast response when the pilot light goes out.
About ten million homeowners purchase these policies to cover unexpected domestic disasters such as the boiler breaking down, the central heating failing or pipes bursting.
These deals – sold by energy suppliers such as British Gas and npower and specialist companies such as HomeServe – pledge a swift response by an experienced tradesman if a fault develops.
For some customers they live up to the promise and there is nothing extra to pay for repairs on top of a monthly direct debit – with prices ranging between £2 a month for basic deals and £30 a month for a more comprehensive plan. But for many others, poor customer service and delayed repairs wreck any hope of a seamless claim or resolution. And the cost of the policy is little more than money down the drain.
James Daley, founder of the independent banking and insurance watchdog FairerFinance, says: ‘People have felt let down by these policies when they thought they were covered and found out they weren’t or the claim didn’t pay out enough.
‘There’s a lot of variation in the quality of policies but no clear shortcuts for finding the best, other than reading through a policy’s terms and conditions to check for booby traps.’
Meanwhile, hard-selling of the policies by phone has become an epidemic that eclipses even those relating to Payment Protection Insurance refunds.
Regulator the Information Commissioner’s Office revealed last week that it receives 100 gripes a day from consumers fed up with calls about boiler insurance, many to vulnerable older people who went on to buy cover they did not need.
In total it received more than 9,000 complaints from September, to November last year – twice as many as those relating to PPI. The watchdog fined one firm – Kwik Fix Plumbers, formerly Boiler Shield – £90,000 for making nuisance calls that led to more than 200 complaints from July 2013 to March 2014. The firm says it has taken steps to end the practice.
A recent report by the Financial Ombudsman Service – which acts as umpire in clashes between financial companies and customers – highlights an upward trend of boilerrelated complaints over winter. The report details some of the worst examples where customers had been let down by their policy providers and as a result had been left without heating over Christmas.
In the most recent set of figures published by the Ombudsman, there was an 8 per cent rise in the number of new complaints it received about boiler breakdown cover in the first six months of 2014, compared to the same period the year before.
Despite concerns over boiler breakdown plans, they remain popu- lar. The different types of cover include breakdown insurance for faults and repairs, or a service plan, which often includes an annual inspection and service.
Customers with insurance policies have the added benefit of redress through the Ombudsman if there is cause for complaint, and protection under the Financial Services Compensation Scheme, which would refund any money lost if an insurer went bust. Some deals may only cover the boiler, others will include the whole heating system, including hot water. Restrictions and exclusions are also plentiful, such as older boilers not being covered.
THREE OTHER OPTIONS
HOME INSURANCE: Check whether emergency cover is included on your home insurance policy or provided as part of a bank account. This may also cover burst pipes and faulty electrics.
Kevin Pratt, insurance expert at comparison website MoneySuperMarket, says: ‘While this may seem like a more inclusive option, pay-outs are usually less than you’d get for standard breakdown cover, and you can only claim in an emergency.’ SELF-INSURANCE: Put aside a monthly sum and ring-fence it in an easy-access savings account, to be used as and when a problem arises. PAY-AS-YOU-GO: British Gas and HomeServe offer one-off, fixed-fee repairs with no need to pay for an ongoing contract.