To my shame, I have little idea about what’s covered by my home insurance. Will my fence, blown down in this week’s storms, be repaired under my policy? Would my water company cover me for a burst pipe?
A lot of people buy insurance to cover life’s emergencies and many of them do through a company called Homeserve, which provides home emergency cover to more than two million customers in the UK.
This week Homeserve was fined £30.6m by the Financial Conduct Authority (FCA) – the largest retail fine ever handed out by the regulator. The fine was imposed for ‘systematic, and long-running failures’, mainly mis-selling of insurance policies from 2005 to 2011.
Mis-selling to retirees and the vulnerable
Homeserve’s failings were particularly serious in the FCA’s view because a ‘significant proportion’ of its customers were of retirement age and vulnerable.
Many of Homeserve’s customers will have heard about it through their utility company. In 2012, we found that nine of the UK’s 12 biggest water companies promoted Homeserve’s pipe insurance in direct mail promotions, even though some of the companies had their own free insurance policies’.
And Homeserve itself says its business is built on ‘long-term affinity relationships with utility companies and appliance manufacturers’.
Direct mail from your water company
This promotion by water companies is still going on. I live in London and a recent letter from Thames Water urged homeowners to buy Homeserve protection against unexpected plumbing and drainage repair bills.
It told them: ‘Around 179,000 homeowners in the Thames Water area already trust Homeserve to solve such problems, so why not arrange cover today?’
Homeserve says it has cleaned up its act since the mis-selling days. It’s 2013 annual report says it has made good progress with customer service and satisfaction, and has 40% fewer complaints than the previous year.
But have customers’ experiences changed? Have your utility companies tried to sell you insurance from Homeserve or any other insurers? Did you take up the offer – and have you checked to see that the insurance covers you for your needs? Did the company pay out when you needed to make a claim?