Home insurance ’second most important insurance you can buy’

Homeowners are being urged to take out insurance for their homes if they have not already, as it is the “second most important insurance you can buy”, one expert claims.

The British Insurance Brokers’ Association (BIBA) said only car insurance, which is a legal requirement, is more important than home insurance.

According to the organisation, insurance premiums for buildings and contents insurance are still low as they have “hardly changed” in the past ten years.

Graeme Trudgill, technical and corporate affairs executive of BIBA, said: “Look at the flooding that we have had – 75 per cent of people have contents insurance which means 25 per cent don’t.”

“This means that if something happens, they have lost everything,” he added.

According to BIBA, a mortgage holder could also be breaking part of a contract between themselves and a mortgage lender if home insurance is not in place.

Meanwhile, figures from the Association of British Insurers (ABI) have shown that the UK insurance industry paid out £9.0 million to householders in 2006 for property damage or the loss of possessions.

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BIBA calls for investigation into price comparison websites

The British Insurance Brokers’ Association (BIBA) has called for an investigation into price comparison sites by the Financial Services Authority (FSA), saying the body’s regulations were not written with these websites in mind.

Findings from the research revealed that over half of insurance buyers do not understand the difference between each insurance policy offered by comparison websites.

A further 84 per cent admitted to being confused by insurance policy details offered while only six per cent believed the details offered were true.

Eric Galbraith, BIBA chief executive, said: “The current FSA rules were written prior to the growth in aggregator sites.”

“I believe the regulator should now look again at developing more appropriate regulations, to ensure that consumers are being afforded suitable protections,” he added.

The research also found that many comparison websites base their calculations on assumptions meaning some consumers could purchase insurance policies which are not suitable for them.

However, Hayley Parsons, managing director of insurance comparison website Gocompare.com, said a review would be unnecessary as brokers and agents are already regulated by the FSA.

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Home insurance market remains competitive

Prices in the home insurance market are still competitive despite predictions that flood damage claims earlier this year would inflate premiums, according to the British Insurance Brokers’ Association (BIBA).

Graeme Trugdill, technical services manager at the organisation, commented: “Home insurance is still ultra-competitive and you see during any advert break on TV, companies saying we will be your cheapest home insurance option. It is still very competitive.”

Although many thought the flooding would hit home insurance consumers hard, he insists there are still some good deals out there.

He advises those looking for cover to seek advice from an independent source to compare the best ones available.

According to a BBC Panorama programme, in the three months up to July 23rd this year, rainfall was over double the average for that time of year.

Furthermore, it reported that 60,000 homes were hit by the summer’s floods, with the environment agency stating that the chance of London’s flood barriers being overwhelmed by flood is currently at 0.05 per cent.

Tags: flood, Business and Economy, British Insurance Brokers, Financial economics, weather, environment agency