Cardiff (PRWEB) August 6, 2008
Those who have a mortgage or are about to take one out will know that it is a condition of mortgage agreements that the property being bought has adequate buildings insurance. However, it does not necessarily follow that the home insurance policy has to be taken out with the mortgage provider. As a result, over 30%* of homeowners who simply accept the policy offered by their lender may be lumbered with uncompetitive buildings cover.
Customers are usually offered buildings insurance by their mortgage providers, but they are not obliged to take it - unless they sign up to a mortgage deal which specifically requires them to buy their lender's insurance. This cover usually needs to run from the date of exchange of contracts right up to the full term of the mortgage.
The reason why buildings insurance is a requirement of a mortgage agreement is that lenders need to safeguard their investment in people's homes. Although it may not be readily apparent, in most cases the homeowner is free to shop around to get the best value cover.
If a customer doesn't take out a mortgage provider's home insurance product, they will sometimes charge a fee to cover the cost of verifying that the preferred buildings insurance product is up to standard. The fee will usually be around the £25 mark**. However, some insurance providers will actually pay this charge as an incentive for homeowners to sign up with their product, which buyers would do well to bear in mind when shopping around for a deal.
It is worth noting that some lenders may stipulate that their own brand's buildings insurance must be taken out as a condition of their mortgage agreement. In such cases, shopping around isn't an option. However, buyers would do well to check to see if such a stipulation exists. If not, they may well save hundreds of pounds by comparing cover offered by other home insurance providers.
*Confused.com asked six banking brands, and found that in the 6 months from November 2007 to April 2008, they generated 25,000 buildings and contents policies from 80,000 mortgage sales - a cross-sale rate of just over 31.25%. These brands accounted for 40% of the banking peer group's mortgage sales.
Confused.com is one of the UK's biggest and most popular price comparison services. Launched in 2002, it dominates the car insurance aggregator market and generates over one million quotes per month. It has expanded its range of comparison products over the last couple of years to include home insurance, travel insurance, pet insurance, van insurance, motorbike insurance, breakdown cover and energy, as well as financial services products including credit cards, loans, mortgages and life insurance.
Confused.com has 62 motor insurance partners, and customers can save up to on average £208. It also has a panel of 43 for home insurance, and customers who use Confused.com for home insurance can expect to save up to £193.
Confused.com is not a supplier, insurance company or broker. It provides a free, objective and unbiased comparison service. By using cutting-edge technology, it has developed a series of intelligent web-based solutions that evaluate a number of risk factors to help customers with their decision-making, subsequently finding them great deals on a wide-range of insurance products, financial services, utilities and more. Confused.com's service is based on the most up-to-date information provided by UK suppliers and industry regulators.
Confused.com is owned by the Admiral Group plc. Admiral listed on the London Stock Exchange in September 2004. Confused.com is regulated by the FSA.