Third of Homeowners Don’t Know They Can Switch Insurer
Almost a third of households believe their home has to be insured by their mortgage lender and don’t believe they can switch to a new provider, according to research from comparison site Gocompare.
Gocompare said around 1.6 million homeowners have bought home insurance from their lender but 30% (466,200 households) said they mistakenly believed their home had to be insured with their lender as a condition of the loan.
And worryingly 6% said they were told by their lender that it was a mandatory purchase. Additionally nearly a quarter (24%) think switching away from their lender’s insurance will invalidate their mortgage.
Ben Wilson of Gocompare.com Home Insurance said: “We were shocked to find that so many people still think that their mortgage offer is conditional on buying their lender’s home insurance, and that a significant minority are essentially in a mortgage-linked insurance trap – believing that switching away from their lender’s insurance will invalidate their mortgage.
“We were also concerned that a handful of lenders could be exploiting their relationship with their customers by pushing them to buy their insurance cover.
“If you have a mortgage on your home, then your lender will require you to protect your property with buildings insurance. But it’s up to you where you buy that cover from. While buying cover offered by your lender alongside your mortgage may seem an easy option, you might find you’re paying well over the odds. And over the lifetime of a mortgage, failing to regularly shop around for a good deal on home insurance could cost £1,000s in lost savings.
“As well as finding a good value policy, you also need to make sure it covers all the things that are important to you, plus any minimum cover levels your lender may require, and comes with excesses that you can afford.”