Buying the cheapest home insurance can be false economy

A report by independent financial research company Defaqto has revealed that home insurers are increasingly offering certain aspects of cover as optional extras rather than as standard features.

In an adverse economic climate, where consumers are naturally more price focused, it is crucial that people understand policy features to ensure they choose the right type of cover and avoid the risk of underinsuring their home.

Mike Powell, Defaqto's Insight Analyst for General Insurance, said: "Price is becoming increasingly important in the home insurance industry.  Firstly, the rapid emergence of price comparison sites as a major distribution channel has meant that many consumers are purchasing cover based on price rather than the quality of the cover.  Secondly, the industry is responding to the current economic climate by offering consumers a way of obtaining cover that is more affordable.

"It is important for consumers to focus on policy features when choosing home insurance to ensure they choose a policy that is right for their needs - and not just on finding the cheapest cover available, potentially leaving them with insufficient protection. Defaqto Star Ratings for home insurance indicate the level of features and cover provided by different policies, helping consumers choose products that best meet their needs."

Defaqto provides Star Ratings for a range of products including home insurance policies. Consumers can use Defaqto Star Ratings as a guide to help them choose the overall level of features and benefits they need from their insurance policies. Policies offering a basic level of features and benefits are rated as 1 Star and those with the most comprehensive range of overall benefits a 4 or a 5 Star. Consumers can find out more by visiting defaqto.com/star-ratings.