Mortgage lenders pressure customers to buy home insurance
04 July 2008 / by Rachael Stiles
More than 20 per cent of homebuyers have their homes insured by the same company that provided their mortgage, and of them, more than half said that they did so either because they felt pressured by their mortgage provider, or they were led to believe that it was compulsory.
Just 19 per cent of people who buy their home insurance from their mortgage lender said that they did so because they believed it to be the best value, while two thirds said they bought it simply because it was easier and more convenient that to compare home insurance quotes and find the best deal.
Gocompare.com says that homeowners should shop around for their home and contents insurance, rather than getting it from their mortgage provider as a matter of course.
“This is a worrying sign.” Hayley Parsons, chief executive of Gocompare.com said of the results. “We know that mortgage deals have been harder to secure of late but we really don’t want to go back to the bad old days when customers were often under pressure to buy the lender’s products to help secure the loan.”
Customers need to be aware that they are under no obligation to buy other products from their mortgage lender, she said, despite any pressure which might be put on them to that affect. This could cost an additional £110 a year – a high price for convenience.
“Mortgage lenders will generally provide insurance from one company, so it’s unlikely that theirs will be the most competitive policy. Homeowners should shop around for both their building and contents insurance – the difference in premiums between insurers can be quite significant. However, it’s important to compare policies on the cover they provide, as well as the price.
“As prices rise, consumers everywhere are looking to reduce their household bills. Our survey revealed that most people bought their home insurance from their lender because it was convenient. “
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