Which? finds budget home insurance policies often lack key cover features

Which? published an analysis on 5 October 2024 of 75 home insurance policies, of which 12 were identified as budget products. The consumer organisation said the budget products generally scored poorly and often had gaps in cover that customers might not notice without reading the small print¹.

Which? searched through Compare the Market for combined buildings and contents cover on a three-bedroom Victorian terrace house in south London with no voluntary excess. It said the five most affordable policies were all in the budget range, priced from £562 a year for Privilege Home Insurance to £746 for MBNA Home Insurance Essentials. It added that for £41 more, a Privilege Platinum policy at £787 includes accidental damage cover, legal assistance and home emergency cover as standard¹.

On accidental damage, Which? said this was the most commonly used policy feature in its customer survey, accounting for one in five claims. None of the budget policies analysed included it as standard, nine allowed it to be bought as an optional extra and three did not offer it at all¹. Only four of the basic policies covered items damaged or stolen while left out in a garden¹.

On trace and access cover, which pays for finding the source of a leak, Which? said two budget products had no such cover, and that where it is provided limits are typically around £5,000. It cited Association of British Insurers figures that insurers pay out £1.8m every day for damage caused by water leaks¹.

Matching sets cover, sometimes called replacement of sets cover, was missing from all but one budget policy, Which? said. It noted that John Lewis's Bronze policy covers only bathroom suites, three-piece suites, kitchen units and carpeting¹.

On alternative accommodation, Which? found almost half of the budget policies analysed had comparatively low cover. The average limit across all 74 policies it rated was £144,385, but three of the most basic products pay a maximum of £30,000 and two set the limit at £25,000¹.

On excesses, Which? compared two MBNA policies. It said the more comprehensive MBNA Plus policy carries excesses of between £50 and £1,000 for escape-of-water claims such as burst pipes, while the Essentials cover raises this to £750 to £1,000, a potential difference of £700. Escape-of-water claims were the second most common kind of claim in its customer survey¹.

Why it matters for households

The findings concern people buying combined buildings and contents cover, particularly those choosing on price. The differences Which? describes are not only about what a policy costs but about what a claim would pay. A household without accidental damage cover as standard would either pay for such damage itself or need to add it as an optional extra where the insurer offers it. Where trace and access cover is absent or capped at around £5,000, the cost of locating a leak may fall to the policyholder. Lower limits on alternative accommodation matter if a home becomes uninhabitable and a family needs somewhere else to live while repairs are done. Higher compulsory excesses reduce the amount an insurer pays on a claim, so the gap between a budget policy and a more comprehensive one can narrow or reverse once a claim is made. Which? also reported that the price gap between some budget and more comprehensive policies can be as little as £40¹.

What happens next

No further steps, dates or responses from insurers were reported.