The insurance renewal quote that priced me out of house and home

If you go into a Timpson’s shop, you do not ask to see the soles of the cobbler’s shoes. So be forgiving of the financial faux pas I’m about to reveal. In half an hour on Sunday, I saved about £650.

Why is this embarrassing? I’ll begin at the beginning. Just before Christmas, I received a reminder from Tesco Bank that my buildings and contents insurance would run out on January 22. To ensure I had continuous cover it would automatically renew on that date. It seemed ages away, and Christmas was coming.

But last Sunday, two days before the deadline, I finally got out the paperwork to find my already high premium was going up by 17 per cent to £963.98 per year. An extra £142.19.

Tesco Bank has form on this. Last year, it offered a renewal premium of more than £1,000 — a 41 per cent rise. I rang and complained and the Tesco Bank agent brought it down to £821.79 which seemed like a result, even for a small terraced house in west London occupied by two of us. But I was an idiot.

On Sunday I found a comparison site, put in my details, copied the insurance I wanted from the renewal form — it took about five minutes — and pressed return.

What?! The cheapest quote was £178.47 — about one-fifth of what Tesco had wanted to charge me to renew. So who offered this cut-price insurance for buildings and contents? Some fly-by-night insurer with an office in Ruritania? No. It was none other than . . . Tesco Bank.

Next down the list were Esure, Sheila’s Wheels, Axa, Halifax and Lloyds Bank, all offering annual cover for under £200. However far I scrolled down I could not get close to the £963.98 price that the same Tesco Bank wanted to charge me for a renewal. I checked the details. Was it really buildings AND contents? Yes. Had I put in the right value for the house? For the contents, for valuables, laptops? Yes, yes, yes. Aside from some differences to the voluntary excess, it was £178.47 for the same cover.

So my original plan to call Tesco Bank and ask it to explain the 17 per cent rise and to reduce the eye-watering sum to something a little more reasonable turned into a desire to shout at somebody. However, I resisted, and asked the very polite call centre guy — why the increase?

“Underwriters . . . taking everything into account . . . they price it afresh every year . . . script line, script line”, was the gist of his response.

“So,” I said, “can you explain how I have in front of me a quote for an identical set of criteria on a comparison website and the policy costs just £178.47? And guess what? The insurer is Tesco Bank.”

He was expecting it. “Online discount . . . new customer discount . . . special price,” came the response.

“What about the underwriters?” I asked.

“Oh, they are probably different underwriters. Each year we review our underwriters.”

“And don’t you give their new low prices to all existing customers?”

“No. Yours will be the same underwriters.”

The same ones who overcharged me last year, I presume.

“So,” I asked, “can you reduce my premium to that special price with the new underwriters?”

Call centre guy breathed in. He could make some reductions but no, not to the level of that special online new customer offer price. “Why don’t you just click on it?” he suggested.

I cancelled my policy and clicked not on Tesco Bank — I did not want to give the price gougers another penny

I cancelled my policy and clicked not on Tesco Bank — I did not want to give the price gougers another penny — but on the second cheapest.

I adjusted the amounts insured, added a bike and one or two other things and insured my house and contents for less than £300. I thus saved myself a good £650 for half an hour’s work (rather better than my day job).

Commenting on my case, Tesco Bank told me: “The cover offered online is not identical to the current premium, for instance, the voluntary excess is higher on the new business quote, the specified and unspecified items are lower and there are differences in occupation specified. The online premium includes new customer discount.”

Having been a freelance journalist since the 1980s and presented BBC Radio 4’s Moneybox for all of this century, I am at a loss as to what the differences in occupation would be. Yes, the voluntary excess on my new contents policy was £200 higher. But I would still not expect the price difference to be as large as £650.

Rummaging in my home insurance file, I found that Tesco Bank had tried it on every year. I have had eight years with Tesco and made no claims, but I had not realised that as a no claims period lengthens, the premium still rises. In 2017, Tesco wanted to charge me £1,035.32, a 20 per cent increase on the £860.98 I paid in 2016. A call, a discussion, a cut to £724.73. It was similar in other years.

Why? There would be uproar if Tesco the supermarket charged its regular shoppers more.

“Buying the same cheese, eggs, and beans again Mrs Scarridge? That’ll be 17 per cent more than a year ago. Yes, I know the aisle reserved for new customers has cheaper prices, but existing customers have the same grocery suppliers as last year, and they are putting up their prices something shocking. New customers get lower prices from our new suppliers.” Yet for Tesco the bank, that is just normal behaviour.

Of course, the price gouging renewal quote system is not unique to Tesco, or home insurance cover — all the insurers do this. I do not have time to argue down my premiums every year, or to go online to stop myself being ripped off. I knew I paid perhaps a bit too much as a result. But not £785 more — nearly five times the cost of the lowest online premium.

So do as I always will in future and go to a comparison website and see what you can save. Cancelling the rip off renewal price is a good feeling. And. as it turned out, quite a profitable way to spend half an hour on a Sunday. Cobblers to Tesco Bank!

Paul Lewis presents “Money Box” on BBC Radio 4, on air just after 12 noon on Saturdays, and has been a freelance financial journalist since 1987. Twitter: @paullewismoney