Why Honesty Pays with Home Insurance

Why honesty pays with home insurance

You’ve probably heard of insurance ‘fronting’ before. Typically this is when a car insurance policy is put in the name of a parent rather than a child in a bid to save cash. Of course, this is an illegal act and if caught an insurer is likely to invalidate a claim.

Well now the act of ‘fronting’ has come to home insurance in a very high profile manner.

Newspaper reports have been dominated with news about MP Andrew George’s expense claims which allegedly include a home insurance policy in his daughter’s name. Though the MP’s motives are not for us to speculate on, it is a timely reminder to homeowners not to put an insurance policy in someone else’s name.

The risks of home insurance fraud

Home insurance premiums are based on an assessment on the risk customers have declared to be true at the point of sale. Once they have entered into the insurance contract they are accepting that the application is true and if it is discovered at a later point that the information provided was not accurate, then the provider is well within its rights to decline claims and terminate the agreement. In worst case scenarios this can even result in prosecution.

The general motive for putting a home insurance policy in someone else’s name is simple – it is done with the hope that it will save the real policyholder money on their premiums. For example, you may be deemed a higher risk than the person you ask to front a policy because you have an occupation that involves spending more time away from home or because you are younger and therefore deemed more likely to hold house parties and so on.

Fronting can be seen as a comparatively sinister form of insurance fraud in that those who commit fronting are generally aware of what they are doing. However, there are ways to invalidate a policy that you might not ordinarily be aware of.

For example, if you declare to your home insurance provider that you have high security window and door locks in place or a sophisticated burglar alarm, then your insurer will expect these devices to be in operation. If they’re not and you suffer a burglary, then your hopes of a payout may be dashed.

How to save cash and be honest

There is simply no need to put a home insurance policy in someone else’s name and risk invalidating the contract when there are so many ways to save.

There is a huge gulf between the average premium returned on a contents insurance policy for those who just take an average quote and those that shop around for the cheapest deals. In fact, according to the AA British Insurance Premium Index, the average quote among those who don’t shop around is £122.34 - this can be almost halved by shopping around, the average for which is £66.87. Another key factor when shopping for home insurance quotes is to note down your renewal date and making a point of comparing policies every year. This is because insurers offer their cheapest deals to new customers, generally through online discounts. Only by comparing these deals every year can you capitalise on the latest offers.

Thankfully this is relatively straightforward if you use a comparison website - the leading comparison tools can now compare quotes from more than 50 insurers with one search meaning you don’t have to trawl from website to website in a bid to save cash.

If you’re stuck in the middle of your existing home insurance contract and your provider charges an extensive exit fee, then you may still be able to save money without searching for a new deal.

For example, consult your insurer about security devices such as window/door locks, burglar alarms, security lighting, time-switch lights, CCTV cameras and so on. Installing any or all of these should offer significant savings as long as your insurer approves the device you use. Similarly there are savings to be made if you can reduce your fire risk – such as with smoke alarms and fire extinguishers, or even by quitting smoking.

If you can afford to pay your home insurance premiums upfront then do so as this will cut out interest charges. Raising your voluntary excess will also help you save.

So you see there really is no need to tell lies on a home insurance policy - doing so will only mean that the policy you pay for is not worth the paper it is written on.