Home Insurance is one of those products where increasing competition and products often mean that the major factors in buying choices are a) price & b) big brand name badged on the product.
Whilst that doesn’t sound too strange there are a couple of things which consumers should be aware of when buying products solely on price and brand;
- In order to appear on the first page of products on price comparison sites insurers and brokers have to have a lower premium than their competitors – OBVIOUS! In order to be cheaper insurers can pay less commission but the comparison sites may not accept that (you’d be surprised at just how much money sites charge insurers) or they can change the product and take cover out of the policy.
We are concerned that without knowledge of the products or proper advice consumers are probably not aware that all the things that they might well have expected to see in an insurance policy 10 years ago are just not there. Often the nice to have covers that make having a claim simpler and less stressful are taken off to make the products cheaper.
In the main the larger perils are covered but things like ‘pairs and set’s may not be there. Pairs and sets provides cover for replacing the undamaged items in a set so that the new replacement will match, a good example is cracking a sink in the bathroom, you really want not only the sink replaced but if you can’t find one that matches the bath and toilet you really want those replaced or at least some help towards the cost of replacing the undamaged items, this does not exist in most cheaper policies.
Another important thing to look out for is trace and access cover. If you suffer a leak from a pipe and you can’t tell where the leak is, perhaps because the pipes are a tiled floor or behind kitchen cabinets your insurance policy will only pay for fixing the leak and resultant decoration damage, not the cost of getting to the leak which could be very costly if you have to take up tiled or wood floors or remove part of the kitchen. This cover will not be in the cheapest policies but lots of insurers will offer this as part of their general covers in standard priced products.
- It is very difficult for sites to highlight all of the differences between products, in fact they do a pretty good job of highlighting major things such as excess but definitions for other covers require you to look at each summary of cover or policy wording individually.
Now that might not seem to bad but wasn’t the point of the site so that you wouldn’t have to look at each policy in turn? Wasn’t it supposed to be simpler their way?
OK – a good insurance broker does all this for you, same thing as the site except you get someone to speak with who listens to what you have and what you want to protect and recommends a product to cover the things that you want to cover and explains things that won’t be covered.
- Insurers generally try to go above and beyond in trying to help customers when they have suffered a claim. However their approach can be guided by where you bought your policy and how much you paid for it and you may find that a very strict interpretation of cover will be applied if you have bought the cheapest policy available.
For example you might not always want a replacement item you may want cash instead. If the insurer is having to save cost they may insist on replacement as they can achieve supply chain savings and thus you might be disappointed. Equally the cause of the claim may be in dispute and their interpretation might differ from yours and your claim may not be considered.
This doesn’t sound like a big deal but how your claim is handled and what responses you get to whether items are covered or not really does matter and matters an awful lot more when the worst has happened and you expect your insurance policy to come to the rescue.
Insurance is based on the losses of the few being funded by the premiums of many, therefore there are years where overall claims values are higher, for example in years with high claims volumes and thus to cover that premiums will need to rise, cheaper year on year makes no allowance for that so something has to give and it usually the policy cover.
Remember, no product can possibly get cheaper year on year and as with most things in life you do get what you pay for.
Insurance brokers can give you a personal and bespoke service both for your home and your business and have access to a large range of products. The key is to make sure your insurance broker really understands what you have to protect and explains how you can cover these things with the products available so that you can make the decision about what cost and cover level to have. In the event of a loss then you will have made a positive decision about the items that you will have wanted cover for.