Was I mis-sold buildings insurance?

rippedoffmum

I bought my first property in 2000. I was married at the time, it was a second home - a small cottage - but as I was working I took out the mortgage because my husband already had a mortgage in his own name so it seemed less complicated.

Having never had a mortgage before when I went on my own to arrange the mortgage (not done on phone) I allowed them to sell me buildings insurance. I was given the impression that the buildings insurance was somehow linked to the mortgage ie I had to have it. I wasn't made aware that I could take out insurance with another provider.

What's more I was sold a policy without limit, ie it was not linked to the value of the property. The Halifax had had a valuation of the property done and it was valued at £114,000.

I was naive and very pregnant with my first child at the time.

I split with my husband and have a house bought outright now with proceeds from the family home - no mortgage. So of course I had to take out insurance independently and I did so. This house is insured for more than double the current value of the cottage. The cottage remains in my name officially but unofficially it's my husband's now and I haven't visited it for two years.

I have three other accounts with Halifax - current a/c, savings a/c and credit card. The first two are long-standing.

Then I noticed that the mortgage amount was barely going down and in fact I am paying more interest than I was in May. I had a look at the statement and saw an insurance premium for over £700, nearly three times the cost of the premium on my current house which includes contents.

I spoke to them and they confirmed that I could have taken out insurance with another provider. I did not know this, I thought if you took out a mortgage you had to get your insurance with the mortgage provider - it was a package, if you like.

What's more, when I left London in 2003 I changed my address details with Halifax. This was for the mortgage and all the other accounts. When I moved house again I also did so. All the accounts were linked so I did not have to do this for each individual account.

However... apparently the insurance is run by a separate branch of the business. Annual renewal notices for the insurance have been sent to the old London address for the past eleven years because they didn't link it. It did not occur to me to contact any insurance company because I did not realise a separate company existed. I assumed the insurance came as a package with the mortgage so it didn't occur to me that I had the option not to review it.

I've been paying a fortune for insurance for a house that isn't worth very much and as a consequence my mortgage has been being paid off at a snail's pace.

I think I was mis-sold it on two grounds - one that I was not made aware that I could get insurance elsewhere and two that I was sold an inappropriate policy - for a house of unlimited value.

Will I be able to prove this and get some redress? I'm so upset.

Savvy people will read this and think I am naive I am sure. But I moved from a rented flat in with my husband. He dealt with financial matters. I became a stay at home mum very quickly - I started work for the first time since my children were born in August this year. My husband gave me 'housekeeping money', this was my only income, so the mortgage payments came out of that.

I'm just gutted, I've been a loyal customer of Halifax for nearly twenty years.

rippedoffmum

Oh and it's a repayment mortgage.

Credit-Crunched

"buildings insurance was somehow linked to the mortgage ie I had to have it"

It is usually a condition of the offer that buildings insurance is in place, and the solicitors would check this on completion, so they were correct here.

Then I noticed that the mortgage amount was barely going down and in fact I am paying more interest than I was in May. I had a look at the statement and saw an insurance premium for over £700,

A buildings insurance premium would have zero correlation on the balance of your mortgage, and anyhowon a C/R mortgage, the capital balance reduces very little in the initial years

"one that I was not made aware that I could get insurance elsewhere and two that I was sold an inappropriate policy - for a house of unlimited value."

Are you saying that you thought the only insurance provider on the market was Halifax? Do you only shop in one shop? are you aware that other companies are able to price things differently..

I can't work out if this is a troll post, or you are genuinely asking for redress because you did not know you were not able to shop around? I apologise if you are not.

In short, I see not solid grounds for compensation. Yes, £700 a year seems very steep? However, does that include significant contents policy with all the bells and whislte? Are you in a flood plain?

dunstonh

Having never had a mortgage before when I went on my own to arrange the mortgage (not done on phone) I allowed them to sell me buildings insurance. I was given the impression that the buildings insurance was somehow linked to the mortgage ie I had to have it. I wasn't made aware that I could take out insurance with another provider.

You are required to have buildings insurance. There isnt a lender out there that will lend without it.

What's more I was sold a policy without limit, ie it was not linked to the value of the property. The Halifax had had a valuation of the property done and it was valued at £114,000.

Quite normal. Indeed, it is unusual for find one with a limit. Setting a sum insured is a very old fashioned way of doing it and usually more expensive.

I think I was mis-sold it on two grounds - one that I was not made aware that I could get insurance elsewhere and two that I was sold an inappropriate policy - for a house of unlimited value.

1 - they didnt need to tell you that you could buy elsewhere.
2 - your policy is not inappropriate. unlimited or maximum sum insured policies are the norm.

So, on that basis, no wrong doing has taken place.

Will I be able to prove this and get some redress? I'm so upset.

On the first point, you tell us if you have any evidence to prove any wrongdoing?
On the second point there is no wrong doing. Just your lack of knowledge (that is not a criticism but it would be daft to complain about something that is normal).

rippedoffmum

Of course it isn't a troll post, please don't say that. I think it's very unkind to say that. I feel stupid already and just want help. I was like a child when I was with my husband and he treated me like that; he was a lot older than me... it's only since I separated two years ago that I am learning anything about insurances and having to pay my own bills.

Please take account also that in 2000 people weren't as savvy as they are now - only a few people had the internet, you didn't shop around for things like now. I arranged everything through my branch of the Halifax in person and I suppose I trusted the staff there.

I had not had a mortgage or owned a property before. I did not realise that I could take out insurance elsewhere because I thought I was obliged to take it out along with the mortgage, because I guess the mortgage means that the property kind of partly belonged to the bank if you see what I mean. I knew I had to have buildings insurance but I also assumed that you had to have their own insurance.

"A buildings insurance premium would have zero correlation on the balance of your mortgage, and anyhowon a C/R mortgage, the capital balance reduces very little in the initial years"

I'm not sure what capital balance means but I assume it is how much you still owe the bank? On October 10 this year the amount I owed on the mortgage was 35,344.07. The previous month (10 Sept) it was 35,669.11. I paid my monthly repayment which is £325.00 - a direct debit - and 113.99 in interest was taken out on 30 September.

Then also showing as money going out of the account on 10 October is 719.59 labelled as 'insurance premium'. So the total balance on the mortgage becomes 36,063.66. This is taken from the mortgage account rather than any other account I have so it was added on to the amount I have to pay back.

My interest in October was higher than the sum in September - it was £117.08 compared with £113.99.

I have kept my mortgage statements from 2012 and 2013 - since I've been on my own. I have to confess I never really looked at them but now I can see that last year there was an insurance premium taken for £587. So it went up a lot in a year. The 2012 only shows the repayments and there isn't an insurance premium listed which seems a bit weird. A lot of paperwork was lost or thrown out when we moved house so I don't know if I had any before that. I found all this stuff boring and left everything to my husband but the mortgage was in my sole name.

The first thing I intend to do is to cancel the insurance and ask for repayment of future months until next year. I don't know if they will let me do this as the annual premium has been taken rather than it being done monthly. They told me that it was £54 pounds something a month but it's not taken out monthly. Then I will go on uswitch or wherever and find another policy and take that out.

I was shocked today to find out that letters about renewal were sent out to my old address that I moved from 11 years ago. The insurance premium was taken out of a mortgage account with the same bank, that was always up-to-date address-wise but the letters about the insurance went to my old London address. Maybe if I had had them I might have realised I wasn't obliged to have insurance with Halifax or I might have considered that it was a big premium or I might have noticed it was for unlimited cover.

Please don't think I'm a troll. I have just made a new account on MSE because I forgot which email address I registered on here with (I use three and have an old one I don't use). I don't use the site often but I've posted on it before about things like how much I should pay for building work etc. I can't remember which email address I used, I had a go at logging in but it didn't work and it said if I had X number of failed attempts I'd be locked out so I thought it was easier just to set up a new account/profile with a new email address.

Thanks in advance for any advice.

rippedoffmum

"Quite normal. Indeed, it is unusual for find one with a limit."

Is it really? When I got buildings insurance on my current house with Churchill I had to say how much for and the house is insured for a bit more than I paid for it (probably not enough now).

Depending on how much the value of the house was affected the size of the premium. Ditto the contents insurance, the more cover I wanted the more I had to pay.

This house is worth twice as much as the cottage is worth now, 14 years after it was bought, and the premium annually for this house including an extra £50K in contents insurance is only £234.40

rippedoffmum

Just to clarify, when I took out the mortgage on the cottage I did know that buildings insurance was mandatory but I also thought it was mandatory to have it with the mortgage provider.

rs65

rippedoffmum wrote: »

My interest in October was higher than the sum in September - it was £117.08 compared with £113.99.

There are 31 days in October - 30 in September. Your interest is about £3.90 daily.

rs65

rippedoffmum wrote: »

"Quite normal. Indeed, it is unusual for find one with a limit."

Is it really? When I got buildings insurance on my current house with Churchill I had to say how much for and the house is insured for a bit more than I paid for it (probably not enough now).

Depending on how much the value of the house was affected the size of the premium. Ditto the contents insurance, the more cover I wanted the more I had to pay.

This house is worth twice as much as the cottage is worth now, 14 years after it was bought, and the premium annually for this house including an extra £50K in contents insurance is only £234.40

You should insure buildings for the rebuilding cost - not what you paid for it. You will need to look at this. In fact, it sounds like an unlimited policy would be a huge benefit for you.

janiebquick

rippedoffmum wrote: »

Is it really? When I got buildings insurance on my current house with Churchill I had to say how much for and the house is insured for a bit more than I paid for it (probably not enough now).

Buildings insurance is to cover the cost of rebuilding not to buy a house of the same value. I don't know where you live but, here in the south, the cost of rebuilding is considerably less than the purchase cost.

dunstonh

"Quite normal. Indeed, it is unusual for find one with a limit."

Is it really? When I got buildings insurance on my current house with Churchill I had to say how much for and the house is insured for a bit more than I paid for it (probably not enough now).

Yes it is really. Old style sum insured selected plans are still available but not common as bedroom rated plans where the sum insured is set to an automatic high maximum.

Please take account also that in 2000 people weren't as savvy as they are now

Really? I think the general education levels and personal responsibility levels have fallen.