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June 2, 2016

£1.6 Million Home Owners Caught in Home Insurance Trap

1.6 million home owners have purchased home insurance from a lender and many of them think they are unable to move to a better deal, according to the latest research from Gocompare.com Home Insurance. The findings show that 14% of home owners used their mortgage lender to arrange their home

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BDC 317 : Jun 2024

June 2, 2016

£1.6 Million Home Owners Caught in Home Insurance Trap

1.6 million home owners have purchased home insurance from a lender and many of them think they are unable to move to a better deal, according to the latest research from Gocompare.com Home Insurance. The findings show that 14% of home owners used their mortgage lender to arrange their home insurance, with nearly half a million home owners believing they had no alternative but to use their mortgage lender for home insurance, as they thought this was listed in the terms and conditions of their mortgage. Meanwhile, almost a quarter of borrowers who chose to take out home insurance their mortgage lender say that they think their mortgage would be invalidated if they were to switch to another provider for home insurance. A further 12% said that they felt pressured into purchasing home insurance from their lender and 6% say that they are being told by their provider that they have no choice but to take out insurance with them. All mortgage lenders require a property to be protected by appropriate buildings insurance that usually covers against thing such as subsidence, flooding, storm and fire damage. This provides protection in a financial sense for both borrowers and lenders against structural damage to the house. However, borrowers are now being advised to note that they are not obliged to purchase their home insurance from their mortgage lender. The findings of the research have resulted in calls from comparison websites to encourage home owners to shop around for the best home insurance deal in order to make big savings. However, when home owners were asked why they made the choice to by home insurance from their mortgage provider, most people were either apathetic, had misplaced their trust in lenders or had simply misunderstood the terms and conditions laid out by their mortgage provider.

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