Water companies' 'unnecessary' pipe insurance costs consumers more than £100m, says Which? report
Tuesday 17 April 2012
Most of the UK's biggest water companies are promoting potentially unnecessary insurance costing consumers more than £100 million a year, according to a watchdog.
Which? found 10 of the 12 biggest companies were promoting "expensive" supply pipe insurance with their own free pipe repair schemes, which customers are automatically entitled to use.
Millions of customers will have bought insurance they do not need and will never claim on, the consumer group said.
Which? said 667,000 homes in the Anglian, Southern and United Utilities areas are covered by third-party water pipe insurance provider Homeserve, adding: "The sheer number of people who buy this cover hints at how valuable these policies are to the providers.
"At £35 a year, customers in these three regions alone spend more than £23 million on pipe insurance. Once you add the customers from other regions, the total spend is likely to be more than £100 million."
Researchers found nine of the 12 big companies promoted Homeserve's policy through direct mail promotions.
While references to the water companies' free pipe repair schemes were included in some of these letters, their benefits were played down, Which? said.
Some of the firms also promoted third-party insurance on their own headed paper, potentially persuading consumers to unnecessarily buy a policy, the watchdog added.
It said none of the letters it scrutinised mentioned that home insurance might also cover water supply disruptions, despite finding that 19 of the leading 25 home insurers including AA, Legal & General and RIAS would cover burst supply pipe claims to varying degrees.
Which? added: "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 said: "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."
A Homeserve spokeswoman said: "We believe the Which? article to be hugely misleading. The facts would appear to present a different picture.
"Nearly one in 13 homeowners in Great Britain have suffered a water supply pipe emergency at some point and while most water companies may offer a one-off service, they are not obliged to do so, nor are they always in a position to respond quickly.
"Homeserve will have engineers in attendance within two hours in the event of an incident. Furthermore, it's critical to understand that a third of claims pertain to problems with pipework under the home, the internal stop valve and the rising main - all elements which would not qualify for repair by the water companies.
"It's also important that consumers get a clear understanding of what their home insurance will cover in such circumstances.
"Water supply pipe problems due to wear and tear is unlikely to be one of them, whereas Homeserve will protect homeowners against such risks, which is a significant difference when considering research shows that wear and tear accounts for 98% of claims."
- 1 'Nasa Confirms Six Days of Darkness in December': No, they don't - it's a hoax
- 2 Canadian actor punched in face after 'Islamophobia' experiment goes wrong in wake of Ottawa shooting
- 3 Woman blinded as a child can see again after hitting her head on a coffee table
- 4 Paul Hollywood: Police asked if I wanted them to arrest Mary Berry for vandalism after she 'defaced' my car
- 5 If you think Russell Brand’s new book is confused, you should read what his critics have to say about it
'Nasa Confirms Six Days of Darkness in December': No, they don't - it's a hoax
Tower of London poppies: Tens of thousands of people flock to see installation in its final days
Top Gear presenter Jeremy Clarkson criticised for beer tweet
Woman blinded as a child can see again after hitting her head on a coffee table
Bryan Adams' heartstopping images of wounded British soldiers to go on show at Somerset House
Pope Francis declares evolution and Big Bang theory are real and God is not 'a magician with a magic wand'
Huge surge in Ukip support after EU funding row, according to new poll
Ukip ‘exploiting grooming scandal’ to secure party’s first police chief
Nigel Farage: 'There’s nothing wrong with white people blacking up'
Maureen Lipman says 'she can't vote Labour while Ed Miliband is leader'
Pope Francis: 'Caring for the poor does not make you a communist'
£40000 - £65000 per annum + bonus + benefits + OT: Ampersand Consulting LLP: M...
£22800 - £33600 per annum: Randstad Education Manchester Secondary: The JobAt ...
£22800 - £33600 per annum: Randstad Education Manchester Secondary: Calling al...
£100 - £125 per day: Randstad Education Chelmsford: EYFS Teachers - East Essex...