Home insurance is more expensive than ever thanks to a rising number of claims – but just accepting a renewal quote could cost you more than it needs to. We explain why.
Renewing your home insurance might seem like an easy way to save time but it could be costing you money, with renewal quotes often coming in far higher than the prices available if you shop around.
Add to this the fact that home insurance is now more expensive across the board: Confused.com figures show that premiums increased by an average of 9 per cent over the course of 2010, so homeowners could be paying well over the odds to insure their property and possessions.
How much more does it cost?
Greg Linfield had been a Direct Line customer for two years. He contacted us after his renewal quote for home insurance came in 45 per cent higher than the previous year, despite having made no claims against his policy.
During the first year he paid a premium of £22.93 a month. In the second year, commencing October 2009, he paid a premium of £30.99 a month, a 35 per cent increase and had he automatically renewed in October 2010, he would have been paying £44.95 a month, a 45 per cent increase on 2009 and a 96 per cent increase on the 2008 price.
He says: “I telephoned Direct Line, thinking that there had been an error but was told that the premium was correct but they were prepared to give me a loyalty discount that would have reduced the increase to 36 per cent, still a massive difference to the previous year.
“No explanation was offered for the huge increase so needless to say I went elsewhere and got similar insurance for 30 per cent less than my pre-increase renewal quote from Direct Line.
“I will never automatically renew any insurance again.”
Why are renewal quotes so high?
Confused.com’s head of home insurance, Gareth Kloet explains why renewal quotes are so uncompetitive: “When it comes to home insurance, loyalty does not pay.
“A lot of providers offer a very competitive price to new customers and this includes a discount in order to gain their custom. But many people who stay with their provider in the hope that they will be rewarded could be in for a nasty shock.
“Once the renewal date comes around the aforementioned discounts are removed and the premium can significantly increase.”
What can you do to avoid the trap?
Kloet advises that the only way to ensure you are getting the best renewal price for your home insurance is to shop around and remember that many providers also offer a further online discount which is not available over the phone.
If you think you’re paying too much for your home insurance or are concerned about recent rises then it’s worth shopping around to try and get a better deal. See if you could save money by using our home insurance comparison service.