British Gas's insurance quote is plumbing new heights

Published 03rd Oct 2009

Customers with HomeCare policies could be better off saving the money, reports Miles Brignall


Millions of households that have British Gas HomeCare policies face price rises of up to 50%, taking the annual cost of insuring against central heating and plumbing disasters for some customers to £450.

The increases come amid Which? research which indicates that 90% of households will be better off dumping the policies and putting the money into a savings account.

In recent weeks a number of posters on internet forums have complained that the premium demanded by British Gas for its HomeCare heating and boiler cover has risen substantially.

One reported that her monthly premium had jumped from £26.60 to £38.60 a month – an increase of £144 over the year. When she queried it, she was told that the company had introduced risk-based pricing that set a premium according to the make of boiler and size of house.

In recent years the cost of covering a gas boiler and central heating cover has risen substantially, with owners of bigger houses seeing the biggest increases. British Gas's HomeCare Flexi 400, which covers the entire central heating system, annual service, plumbing and drains, and home electrics, now costs £350 a year if you live in London.

Originally, British Gas quoted one price regardless of the age of the boiler, or where you lived in the country, but no more. In 2006, it started charging customers in London more, to reflect higher costs in the capital.

Now, it has said the premium will reflect the "customer's boiler type, age, breakdown history and how expensive it is to repair". It says it still charges new customers the flat fee in the first year. It then applies the risk-assessed premium in subsequent years – even if you have not made a claim.

British Gas said this week that while some customers' prices will go down on renewal, the average price increase this year will be 10%. Customers will see the increase on their renewal notices from September onwards.

The move will inevitably force those paying these premiums to question their value. The products, which are sold as offering "peace of mind" against the fear of failing to find a plumber if the worst happens, have proved hugely popular – particularly among older customers and amateur landlords.

British Gas's service division now has at least 8 million customers and it is a huge moneyspinner for the company. Last year the division increased its operating profit by 29% to £195m.

However, regular Money readers will be aware that British Gas has suffered service problems in the past. Today we receive far fewer complaints than we used to, but many unhappy customers still pop up.

One complaint that we still receive is being told that a boiler is too old to repair, even though British Gas inspected it a few months earlier – and accepted the premium.

Customers say they are also being told that expensive flue work is required to bring their home up to modern standards. And if your boiler will no longer work, the company will also install another – at a price often much higher than that charged by an independent engineer.

A recent survey by Which? found that just 57% of the British Gas boiler contract customers were satisfied with its customer service, with more than 1,900 responding to the survey.

So what are the alternatives? Self-insuring may be the money-saving option. Boilers tend to be the most troublesome a year or so after they have been installed. Get through that initial period without major problems and you should have several years of trouble-free existence.

Why pay £200 a year for a cover you don't claim on? Five years' premiums will more than pay for any repairs – but this approach requires that you have the money when needed.

Part of the problem is that the alternative companies to British Gas suffer similar poor scores for customer feedback. HomeServe, the other big player in this market, did slightly worse than British Gas in the Which? survey and E.on was equally poor.

The problem with companies offering rival "cover" is that they generally use local contractors – some of whom are excellent, but plenty of which aren't. And they tend to get very busy during the first serious cold snap of winter – when everyone turns their boilers on full blast. And it's wise to ask friends and neighbours for a recommendation of a local engineer you can trust. Give your boiler a good check in September (the typical cost is £80-£100), and keep your £200 for repairs as required.

A spokeswoman for British Gas says the company now does repairs to order – doing away with the fear you'll never find a competent plumber. "You don't have to sign up for a contract to get your boiler fixed by a British Gas engineer," she says. "Just call us when your boiler breaks down and we'll fix it as a one-off repair with a competitive fixed price, with no extra charges and all parts and labour included.

"If you still want cover for unexpected repair costs, there's flexibility to have a lower monthly fee from £7 – with a £50 excess cost for each repair."
boiler table

The emergency option

If you are keen on getting cover, a cheap option is to add emergency central heating cover to your home insurance policy. This will provide emergency cover for a number of scenarios including damage to roof and smashed windows – and crucially boiler and heating cover.

Halifax's home policy is typical – it costs £49.99 a year. The excess-free cover has a limit of £500 per insured incident and any claim you make will not affect the "no claims discount".

As an added benefit you also get emergency plumbing cover.

Cover is not provided for boilers that have not been serviced every year, or are older than 15 years.

These policies could be a good option if you have a good local plumber for routine work, but would like someone in an emergency and your trusted plumber is unavailable. The policies don't include an annual inspection or service, and they are only as good as the plumber the insurer subcontracts to turn up at your home.

At last – Which? survey reveals top two boilers

If the worst happens and you're forced to buy a new boiler, go for one of two brands, according to the first-ever consumer study on boiler reliability.

Until now it has been notoriously difficult to get comparative data – the likes of British Gas have always kept it close to their collective chests.

However, Which? has named Vaillant and Worcester as the most reliable main brands sold in the UK. It asked 2,800 members who'd had a condensing boiler installed since April 2005 how it has performed.

Vaillant customers reported the fewest problems (just 26%). Worcester was a close second with 29%. Both left the others trailing far behind.

Vokera had a similarly good score, but from a far smaller sample.

At the other end of the spectrum, Keston was the worst brand. Three-quarters of members experienced problems – 24% said it leaked water.

Ideal Boilers didn't come out well – 44% suffered some sort of problem.

More than half of Halstead boiler owners had a problem, while 36% of those who had a British Gas unit installed have had problems since.

An it's worth noting that gas installers are no longer Corgi registered – Corgi has been replaced by the Gas Safe registration scheme (except in Northern Ireland). Which? found that 92% of consumers who used an independent installer were satisfied, compared to 84% who used British Gas. It also found online plumbing sites offered the best prices for a new boiler.

Source: ' Guardian '

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