Unnecessary water pipe insurance costs consumers £100m
Which? has discovered that 10 of the UK's 12 biggest water companies are promoting potentially unnecessary supply pipe insurance, costing consumers more than £100m per year.
Water companies were found to be promoting expensive supply pipe insurance when they offer their own free pipe repair schemes which customers are automatically entitled to use, resulting in millions of people buying insurance they don't need and will never claim on.
Water companies proactively push this costly third party insurance, and our researchers found nine of the 12 big companies promoting Homeserve's policy via direct mail promotions. While references to the water companies' free pipe repair schemes are included in some of these letters, their benefits were played down. Some of the firms also promoted third party insurance on their own headed paper, potentially persuading consumers to unnecessarily buy a policy.
None of the letters we scrutinised mentioned that home insurance may also cover water supply disruptions. We found that 19 of the leading 25 home insurers, including AA, Legal & General and RIAS, will cover burst supply pipe claims to varying degrees. Disturbingly, we were concerned to find that many water companies' websites encourage their customers to first call a plumber in the event of leak, which in fact could invalidate a claim under their home insurance, as many insurers specify they must be contacted before any repairs are made.
Which? executive director, Richard Lloyd, says: "It's totally unacceptable that water companies are pushing potentially unnecessary water supply pipe insurance from third-party private companies. Few companies highlight their own assistance schemes, and most fail to tell you that your home buildings insurance may overlap on the key benefits of cover.
"We're calling on all water companies to use the same free pipe repair scheme so that it's clear to consumers what they're covered for. We also want to see the Government and Ofwat take action to stop water companies from confusing consumers by promoting third-party pipe insurance under their own banner."