Home insurance companies have increased the amount of excess that policyholders pay when they make a claim over the past 12 months, which is coming as a surprise to many households.

According to independent financial research company Defaqto, the number of home insurance providers charging new customers £100 excess has increased by seven per cent in the last year.

Defaqto’s Home Insurance 2009: New Customers Only report also found that a number of home insurance companies have increased the amount of excess at the time of quotation to £200.

Mike Powell, principal consultant for general insurance at Defaqto, urges customers to be wary of the amount of excess attached to a home insurance policy, and said that insurers are responsible for insuring their policies are transparent about the cost of making a claim.

Mr Powell explained that there are two main reasons behind the increase in home insurance excess: “The first is to limit the exposure of the insurer and reduce the number of small claims being made. The second, and the more likely reason for the increase in excess levels, is that consumers are now becoming more acceptable to a higher excess being applicable.”

Home insurance excess has traditionally been at low levels and has gradually been increasing, but, he added, many home insurance providers offer consumers the opportunity to ‘buy back’ the excess to a more acceptable level.

“Insurers and intermediaries must be clear when advising the customer of the excess that is applicable,” Mr Powell said. “Consumers who purchase home insurance and are not aware of the excess could be in for a nasty surprise when they have to make a claim, and the insurer or intermediary could be accused of not treating customers fairly.”

© Fair Investment Company Ltd