What
is best for you?
It may be that the best contents insurance
policy is the one offered to you by your mortgage lender.
They usually offer you a policy either separately from your
mortgage or incorporated into the cost of the loan. There
are some genuinely good deals on offer from mortgage providers
and many people may prefer not having to budget for this
insurance separately. However, you should be aware of some
of the potential pitfalls…
Some companies capitalise
on the fact that many customers are too lazy or ill informed
to change supplier or hunt around
for a better deal. With bank insurance premiums an average
of 31 percent higher than the most competitively priced policies,
the cost of this convenience could be as much as £3,500
over the life of your mortgage.
However, to make matters worse,
some lenders go to great lengths to ensure that borrowers
have little choice but to choose the
contents insurance policy that is on offer. One in four lenders
imposes an administration fee if a borrower wishes to arrange
insurance elsewhere, while a fifth of lenders refuse to make
certain key pieces of information available to other insurers,
preventing them from being able to offer an accurate quote.
Other lenders refuse to allow access to their best lending
rates unless a borrower takes out their insurance. The reason?
Simple - lenders are reckoned to earn around £275 million
each year in commission on these policies from insurance companies.
Why not shop around and make sure that you keep just a little
bit of this extortionate sum of money in your own pocket?
Contents
insurance offered by specialist providers is often cheaper
than that offered by mortgage lenders. Remember that
every insurer specialises in a certain group of customers
or type of insurance. They will all insure most people for
most
things, but the best-priced premiums are to be found when
your needs fit the bill of the insurers preferred customer.
It can
be a good idea to ask them what this is in their case.
Remember that there can be major differences
between policies - you may not be comparing like with like. |
