When you bought your home, did you take out home insurance with your mortgage lender?
If you did, you’re certainly not alone, as new research by Gocompare.com suggests that one in seven of us did the same.
But while it might seem easier to take out home insurance with the same lender your mortgage is with, you could save hundreds by looking elsewhere.
Losing out on cheaper deals
Of the people that took out home insurance with their mortgage lender, nearly half said they did so because it was convenient. And a further three quarters didn’t check to see if there were cheaper deals to be had elsewhere before they took out the cover.
Some of the reasons people gave for doing this involved thinking it was their only option. Nearly one in ten survey respondents thought they didn’t have a choice but to take out insurance with their mortgage lender, and 14% said they thought it would help with their mortgage application if they did.
It seems many people don’t know that you’re free to take out home insurance with a different insurer altogether – you don’t have to go through your mortgage lender, and who you choose certainly won’t affect your mortgage application. Even if your mortgage lender offers you a good home insurance policy, you should still compare different policies from other insurers. Having an uncompetitive insurance policy means you could be forking out hundreds more than you need to each year.
Where possible, try and get a number of quotes from different insurers to get a good idea of how much different insurance premiums will cost you. Remember, you should check what each policy protects you from, as it’s no use going for a cheap insurance policy if it doesn’t give you the cover you need.
Check your cover
Worryingly, more than a third of people who responded to the survey said they didn’t check what they were covered for when they applied through their lender.
This is really important, as not doing so means you may not be covered should you need to claim in the future. No matter who you go to for home insurance, you must check what their policy covers. Even if they are your mortgage lender, that doesn’t mean they’ll automatically give you the protection you need for your home.
Should the worst happen and your home is damaged or destroyed by fire, flood or subsidence, not having the right cover means you might not get enough cash to repair the damage. This can make things really difficult, as you’ll have to try and find the cash for repairs from another place, which can be an extra pressure at an already tough time.
Disclaimer: All information and links are correct at the time of publishing.