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Buildings Insurance From Your Mortgage Provider?

New research⁽¹⁾ conducted by Sainsbury’s home insurance reveals that confusion abounds in the home insurance marketplace, with 2.94 million people believing that they had to buy their buildings insurance from their mortgage lender in order to secure their mortgage.

The findings underline the dominance that mortgage lenders have on the home insurance marketplace, with almost a half (48%) of all those with buildings insurance saying that they have purchased cover directly from their mortgage provider.  This failure to shop around for their home buildings policy means that many homeowners could be missing out on great deals.

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Only 28% of people with buildings cover purchased from their mortgage provider believed that their lender had offered them the best deal.  Almost one in five (18%) believed they had to purchase it from their mortgage provider to secure their mortgage; 13% went with their lender because they received an immediate quote and it was convenient; and 7% couldn’t be bothered to shop around.

Reasons why homeowners bought buildings cover directly from their mortgage lenders⁽¹⁾

The new research conducted by Sainsbury’s home insurance also highlighted a general apathy when it came to shopping around for home insurance with 8.55 million people (26% of homeowners with home cover) neglecting to source any additional quotes when buying home buildings and/or content insurance.  A further 16% only bothered to get one extra quote besides that supplied by their current provider.

Steve Johnson, Head of home insurance, Sainsbury’s said:  “Buying a home is often a hectic time and for many people it may seem tempting to just purchase buildings cover from their mortgage provider.  However people really should shop around to check they’re getting the best deal.  Despite the fact that home insurance premiums are reportedly on the rise⁽²⁾, there are some great deals out there if people take the time to evaluate what’s on offer.”

Of those homeowners with cover who did not source any additional quotes the last time they renewed their home insurance cover, 12% said it was because they could not be bothered to obtain any further quotes – with women (16%) more than twice as likely as men (7%) to admit to this.  The 65s and over age group were the least likely to shop around, with 37% saying they didn’t get any additional quotes, compared with just 20% of those in the 25 to 34 age group.

(1) 696 people were interviewed by GfK NOP between 12th and 14th October 207.  Interviews were conducted over the phone.  The consumer omnibus research conducted by GfK NOP uses a large sample size that reflects the demographic profile of GB.  Given this it is possible to extrapolate figures and make projections from the research results within appropriate confidence intervals.

(2) Norwich Union announced that it is to increase its home insurance premiums by an average of 10% from mid-August 2007.

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