Consumers pressured into buying lender's home insurance

Date: 02/07/2008 08:00

New research from Gocompare.com* has revealed that a significant number of people buying their home insurance from their mortgage lender said that they felt pressured to do so.

According to the survey, over 20 per cent of homeowners bought their current home insurance from their mortgage lender. Of them, 12 per cent said that they felt under pressure or believed that buying the insurance was compulsory. Just 19 per cent said they bought the cover because they thought it was value for money with two thirds saying they bought it simply because it was convenient.

Hayley Parsons, Chief Executive of Gocompare.com said, &Quot;This is a worrying sign. 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. There can be a danger of pressure selling when margins on the loan itself are so small, but customers need to know that they are under no obligation to buy buildings and contents cover from their lender."

"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. But, this convenience comes at a high price. Simply buying your lender’s policy could cost you an extra £110 a year**."

Gocompare.com's Home Insurance service enables customers to input their details once and compare more than 20 leading insurance brands including The AA, Bradford and Bingley, Budget, Endsleigh, esure, Kwik-Fit, MoreThan, Pearl, Sheila’s Wheels, Saga, Swinton and Zurich home insurance.

Ends

For further information please contact:
Gordon or Liz at Maw Communications on 01603 505 845

Notes to editors:

^* Research commissioned by Gocompare.com. Carried out with 1077 home owners in May 2008 by Opinion matters/Tickbox.net

^** Source: The AA British Insurance Premium Index, April 2008. The benchmark index calculates the average buildings and contents premium and the 'Shoparound premium'. The Shoparound premium is arrived at by averaging the cheapest three premiums for each risk. The difference between the average and the Shoparound premiums was £110 a year.

Gocompare.com launched in November 2006. The first of the so-called “Comparison 2.0” websites providing a far greater focus on product comparison as well as price, while cutting edge technology makes the customer experience slick, quick and easy. Unlike some other aggregator services Gocompare.com always provides a guaranteed quote, rather than just an estimate.

Today, Gocompare.com provides one of the most comprehensive online car insurance comparison services in the UK as well as comparing home, motorbike, van insurance and breakdown cover. In March 2008, Gocompare.com won a Fast Growth Business Award. The judges complemented the management team for 'an extremely well-executed business with a clear USP and strong brand'.

Gocompare.com is authorised and regulated by the Financial Services Authority.