Why
Home Insurance premiums vary so much!
The four main factors that vary rates and premiums between
similar products from the same or competitor company are:
1. The cost of producing the product to market
2. The discounts available for the policy
3. The commissions charged by middlemen
4. The claims made in a particular sales channel
Lets look at the different sales channels to find out why
you are probably paying more than you should be!
Direct Telesales Insurance Company Products
These products have the highest costs of production and support.
Not only do they have to set up and maintain a large telesales
workforce, but the cost of TV and media advertising to sell
these products means that premiums are usually very high -
despite all the advert claims. Moreover these products offer
simpler poorer covers and very few discounts, as the staff
employed to sell them are not insurance experts and often
do not even know what is covered.
Direct
Internet Home Insurance
These products have very high costs of production which in
some cases will take many years for the Insurance companies
to recuperate their outlay. Most can only accept 'standard
home insurance cover'. Premiums are higher to recover costs,
and are not compared to other home insurance products or sometimes
even against cheaper policies from within the same insurance
company.
Tied Agents and Affinity Group house insurance
These home insurance products are designed to be sold by inexperienced
staff such as found at supermarkets and builders. The policies
offer very simple cover with few if any discounts and include
a large commission for the agent. Because these agents are
tied to a particular insurance company they will only offer
you only one product with no choice. These products are invariably
paper based forms which have to be rekeyed into multiple systems
adding to the production costs and risking errors in your
details .
Building
Societies, Mortgage
Lenders and Banks
Probably the most costly home insurance cover you will find.
Although they tell you it is their insurance product, if you
look closely at the small print you wil find that the product
is underwritten by one insurance company that the lender has
an agency for. Commissions for these agents can sometimes
be in excess of 40% and are hidden in the premium. Many people
especially first time buyers are mis-sold these policies in
the belief that there mortgage application is in jeopardy
if they do not take out at least the buildings cover offered.
Independent Financial Advisors
Although an IFA may have your best financial interests at
heart, they are usually limited to a few home insurance products
that they have agencies for. Without doubt you will find cases
where they will advise a particular product because it has
a higher commission element for them. The products built for
IFAs by insurance companies have these high commissions built
into the rating structure. Quite often you will be offered
a product which is a 'combination policy', which has the true
cost of the house insurance hidden within a multi-product
price for life insurance, mortgage protection insurance, accident
and sickness cover etc
Insurance Brokers
Like Cheaper
Home Insurance.com, Insurance
Brokers are best placed to find you the best and cheapest
home insurance available. Insurance companies produce products
for the broker market which are the most competitive and offer
the widest ranges of home insurance cover. Brokers are experts
in insurance and can offer advice and additional discounts
that the other channels cannot. Some brokers may be limited
by the number of home insurance products they offer. Your
broker should always rebroke your policy at renewal to obtain
the best price for your house cover.
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Why we are cheaper and have a better range of cover
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