Home insurance

Combined home and contents insurance not always best value says AA

7 July 2009

Research by AA Insurance suggests that more two-fifths of households would save money by buying separate home insurance and contents insurance, rather than a combined policy.

Says Simon Douglas, director of AA Insurance: "Many insurers offer special discounts for buying a combined home and contents policy. But even when taking that into account, a surprising number of customers would be better off buying the policies from different insurers although using a broker enables the most cost-effective combination to be bought from a single source.

"This underlines the fact that even if you get a great price on buildings, the same insurer won't necessarily offer the best deal for contents (or vice versa)."


The study1 compared nearly 25,000 home insurance quotes for 750 'customers' throughout the UK, during April, May and June 2009. It revealed that 41 per cent would save money by buying their buildings and contents policies from different insurers. But without promotional discounts, the figure would rise to 59 per cent.

"However, it is important that buyers don't just check prices but policy benefits too, to ensure they are comparing on a like for like basis," Douglas points out.

Mortgage providers

He adds that a third2 of home-owners arrange their home insurance with the bank or building society from whom they bought their mortgage, and may have renewed for years without exploring better options.

"Our study also shows that they would probably get a better deal if they bought their cover elsewhere. But the important thing is that they don't just allow their cover to lapse – recent suggestions that the recession has led up to a fifth3 of householders to cancel or not renew their cover is worrying, especially at a time when claims for both burglary and weather damage are increasing."

Buying home insurance from a broker such as AA Insurance allows customers to automatically benefit from the cheapest option, whether cover is placed with different insurers or as a combined policy, Douglas suggests. "This also overcomes objections from customers who would prefer to buy their cover from a single source, without making compromises on quality."


1Quotes obtained from 11 insurers on a basket of 750 risks obtained from the AA British Insurance Premium Index database, 8,250 quotes for each of buildings, contents and combined policies (total 24,750 quotes). Study repeated in April, May and June 2009.

2Source: Mintel Home Insurance Report, November 2008

3Source: Association of British Insurers, June 2009: 22% of householders have cancelled or not renewed their cover

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