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Halifax cover: £1,227 if you are loyal, £370 if you're new | Patrick Collinson

Patrick Collinson
The financial watchdog ordered insurers to disclose the previous year’s premium at each renewal and to encourage consumers who have renewed four or more times ‘to shop around’. Photograph: Joe Giddens/PA

If there’s one financial resolution you should make for 2018, it’s to change your home insurance policy. No other part of the financial services industry is more riddled with blatant, though legal, mis-selling than the home insurance business.

Take the case of Teresa Jackson (not her real name), who contacted Guardian Money recently. She lives in a three-bedroom terraced house in west London and has insured it with Halifax since 2005. The premiums have gone up nearly every year, from £53 a month in 2009, to £65 in 2012, and £83 in 2016. Her most recent hike, to £102.25 a month, or £1,227 a year, made her finally pay attention. Jackson went on to Halifax’s website and entered the same details for the same cover at the same address. Back came a quote for £370 a year. In other words, she was paying 3.5 times more for the same cover.

“I am sent renewal policy documents on an annual basis to discuss any changes and I have not taken that opportunity in the past,” Jackson says. “A busy schedule and a misguided belief that I have selected a reputable provider has meant that my home insurance policy has ticked over for 12 years without me paying much attention.

“Where I take umbrage, though, is that a loyal client who has neither missed a payment nor made a claim throughout the history of my policy can be treated as a gullible idiot, and my loyalty abused through the automatic renewal of expensive policies when Halifax is fully cognisant that there are more economical alternatives available.”

When Jackson called Halifax, its attitude was that it was up to her to make changes and that as she had not been in touch, her policy was simply renewed.

I put this to Halifax, which responded: “We communicate the renewal price to customers clearly every year prior to renewal, encourage them to review their policy to ensure it still meets their requirements and to compare policies like for like. The previous year’s price is now included in all renewal letters.”

Meanwhile, for those people who claim that is all about “caveat emptor”, how about this case? Last week, a reader in Hampshire contacted Money about his mother’s contents insurance policy. She has Alzheimer’s. More Than, her insurer, sent a renewal quote of £229 for the year – that’s for contents only, not buildings insurance. Her son did a quick search for alternative equivalent cover and found it for just £35, or not far short of a tenth of the price quoted by More Than. “As a courtesy I rang More Than to inform it that we were cancelling the policy and mentioned the high price, but it didn’t see anything wrong in the renewal ‘offer’ at such exorbitant rates; in fact it was quite rude and offhand about it. Are there no rules or limits governing renewal offers, particularly to the elderly or vulnerable?” he asks.

Actually there are some pretty good new rules, which probably prompted Jackson into taking action. In April, the Financial Conduct Authority ordered firms to disclose the previous year’s premium at each renewal and to give consumers who have renewed four or more consecutive times “an additional prescribed message encouraging them to shop around”.

It would be useful to remind householders what the premium was when they first took out the policy so they can see just how much extra they are paying. Home insurance is one of those “boiled frog” businesses, where companies persistently put through sizeable, but not enormous, rate increases every year hoping consumers won’t notice. Just seeing the previous year’s premium is not enough.

What’s more, the elderly are the least likely and able to shop around on the internet, even if they are told their rate went up 10% or more last year. Regulators are understandably hesitant about introducing price caps, but for the over-75s there is a compelling case. State insurance commissioners in the US regulate rates and there’s no reason why it can’t be done here to protect the most vulnerable.