Customer Behaviour

Homeowners risk paying hundreds of pounds more for home insurance if purchased through a comparison site due to incorrect assumptions made by the insurer during the application process, a Which? investigation has revealed.

The consumer champion reviewed hundreds of home insurance quotes generated through comparison sites and uncovered pricing quirks that could leave some homeowners paying as much as £414 more than necessary for their cover.

As well as finding a number of discrepancies increasing the premiums calculated on these sites, Which? also found a number of examples where an inaccurately low premium was calculated, which could leave homeowners with the wrong level of cover or an invalid policy.

The findings come after Which? revealed similar issues with car insurance comparison sites and individual insurers.

Which? ran test quotes to insure the homes of three real people based in south London and Cambridge. Each quote assumed one of six scenarios involving details that some comparison sites did not ask about, or asked about only partially.

When using a comparison site to purchase home insurance, customers are asked a single set of questions agreed by the insurers on the panel rather than answering each insurer’s unique and more comprehensive set of application questions. This can lead to insurers receiving slightly different information from the comparison sites about customers to base their prices on than they would gather using their own questions, and relying on assumptions where detail is missing.

Which? found substantial differences between the sets of questions asked by the four major comparison sites that could leave insurers relying on assumptions about customers. The research uncovered four false assumptions that pushed the test premiums up significantly.

The biggest discrepancy was a result of a false assumption about flooding history. Some comparison sites only ask if a home has ever been flooded, not when, with some insurers interpreting a positive response to mean a flood has happened within the past 10 or five years. Correcting this assumption brought one of the test quotes down from £704 to £291, and another down from £429 to £142.

Other examples that inflated premiums included assumptions about the time frame in which subsidence had occurred, incorrect estimations regarding no-claims records, and presumptions about bankruptcy in a household.

Which? also uncovered four factors that resulted in artificially reduced premiums, which could potentially leave homeowners without the level of cover they need or even an invalid policy.

Two of the comparison sites didn’t allow users to specify that a property would be unoccupied at weekends, which a handful of insurers asked about in their own questions. Correcting this with the insurer added up to £98 in one of the test quotes.

In several cases, the research uncovered glitches in the way customer data was processed by the insurer. A bug in the system of one insurer’s website caused parts of a customer’s data to be deleted when attempting to verify their details were correct, causing the premium to reduce by £452.

Other factors generating inaccurately low premiums were insurers not being aware of trees near a property, and requests to have no voluntary excess being ignored.

Jenny Ross, Editor of Which? Money, said: “Comparison sites are designed to save us time and money, so it’s concerning to see that using one could leave people paying more than necessary or taking out cover that isn’t suitable for their needs.

“To make sure you’re getting the right price, be sure to compare different routes for buying your insurance, shop around every year, and always double check that the information the insurer has about you is totally accurate and complete to avoid being stung further down the line.”

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