Is your home insurance renewal premium too high? Thousands of homeowners could be paying excessive home insurance premiums despite spending years with the same provider, proving that switching now could be an easy way to save money.
In an investigation into home insurance premiums, the consumer advice service Which? found customers with combined buildings and contents cover policies owned for longer than a year were paying, on average £75 (38%) more annually than new customers.
For contents cover, existing customers paid an average of £132 annually. That was 32% more than new policyholders. The report showed the gap steadily increased the longer a customer had been with the same insurance provider.
Customers who’d been with the same insurer for over 20 years paid the most at about double the amount of what new customers paid. For combined home insurance policies, the average premium paid for a policy 20 or more years old was £396 a year, while for those with a policy under a year old, the annual premium paid was £195.
Insurance pricing is most competitive for new customers with the real profits made over a longer period of time. That means many policies are sold at a discount, sometimes at a loss, during the first year to attract new business. However, it notoriously leads to hikes during renewals and can mean long-standing customers are unfairly penalised.
Which? research revealed combined policies that were four to six years old were around 54 per cent more expensive compared to the prices paid by new customers.
It is clear that staying with an insurance provider doesn’t pay. But 69% of respondents in Which?’s survey had been with their insurer for longer than a year.
Worryingly, one in six of those aged over 75 had held their cover with the same provider for over 10 years. Some may have seen their premiums almost double in that time.
Hiked Insurance Premiums Unacceptable
“It is unacceptable that long-standing policyholders are taken for granted by insurance providers and hit by these excessive premiums,” said Harry Rose, Which? Money Editor. “Customers who prefer to stay with one provider are at-risk of being exploited by these vastly overpriced premiums when little has changed in the service they receive. Insurers must make sure existing customers remain a priority, and are not sidelined by the push to attract new business.”
The loyalty tax doesn’t end with insurance. The charity Citizens Advice has filed a complaint to the UK’s Competition and Markets Authority. It estimates that customers in five markets — also including mobile phone services, mortgages and savings - are paying an extra £877 per household.
How to get cheaper home insurance?
The conclusion of these findings is perfectly clear. The competition for new customers is so fierce that great insurance deals can be found by shopping around. For that very reason consumers should look for a better deal every 12 months. With home insurance this is much easier than other insurance products. For pet insurance or life insurance it’s worth sticking with the same insurance provider because pre-existing conditions cannot be covered by a new insurance policy. That said, when searching for home insurance deals be careful not to be tempted by low prices on comparison sites if they do not provide the right level of cover you need.
Here at EmeraldLife we hope we provide unique products and a service that means you will want to renew your home insurance cover with us - like our free home emergency cover. But equally we understand the needs of the everyday consumer to get the very best price for their insurance cover. Get an insurance quote today and see if we can save you money now.