Homeowners lose millions insuring with mortgage provider

Nearly half of all homeowners could be throwing money away by choosing their mortgage lender’s insurance, according to new research released by the Post Office.

Over eight million people who own their own home could be losing a combined £40 million every year on their home and life insurance because they buy their mortgage lender’s products instead of shopping around.

The survey found that nearly half of all homebuyers (46 per cent) bought buildings, contents or life insurance from their mortgage provider.

One in 10 people did so because they thought it was compulsory to buy home or life insurance from the same company that provides their mortgage.

One in 20 even believed their mortgage was at risk if they didn’t buy insurance too.

And 63 per cent are not shopping around, instead choosing their lenders’ insurance because it was ‘”convenient.”

Post Office Financial Services head of insurance Phil Ashkuri said: “Convenient doesn’t always mean cheap. Many homeowners don’t realise taking out buildings and contents insurance with their mortgage lender is generally not the best value deal. And it’s not compulsory for securing their mortgage.

“Our advice is shop around as there are better home insurance deals out there from standalone providers. The Post Office takes the hassle out of finding the best policy at the right price by searching a panel of companies on your behalf.”

The Post Office can save customers up to up to £173 on home insurance. Policies offer a host of great benefits and from 1 May 2007, new customers can get one month’s insurance completely free, with 12 months of cover for the price of 11.