What would happen if I get my postcode slightly wrong on my home insurance?

Clatterbiscuit

Would love some thoughts on the following...

I live in a rural location, on the edge of a very small village. Have been shocked by the cost of our home insurance this year - the best I can manage is about £500 home and contents. This seemed wrong, so I rang up an insurer and was told it was due to the postcode, which surprised me as it's not exactly South Central LA around here. And it's hilly, so I'm not sure flooding is much of an an issue either.

Our specific postcode covers quite a big area geographically (maybe a square mile?), but probably no more than four or five houses. If I change the last letter of my postcode, I can instead select a very small area that directly borders my postcode; it even covers part of the dead-end lane that leads to our house. Using that postcode instead brings my quotes down by more than 50%!

My questions are...

1. Is there anything I can do about how our postcode is rated? Anyone I can take the matter up with? It really does make no sense that one unpopulated rural area is twice as expensive to insure as the one next door.
2. What would happen if I accidentally mistyped that one letter in our postcode and then needed to make a claim on the insurance? Could they refuse to pay out on that basis?

I'm probably coming across as totally dodgy here - am just frustrated that if I walk 5 minutes along our lane I'm in a place that costs half as much for home insurance, and that just doesn't make any sense.

la531983

1. No
2. Yes

DullGreyGuy

Clatterbiscuit said:

My questions are...

1. Is there anything I can do about how our postcode is rated? Anyone I can take the matter up with? It really does make no sense that one unpopulated rural area is twice as expensive to insure as the one next door.
2. What would happen if I accidentally mistyped that one letter in our postcode and then needed to make a claim on the insurance? Could they refuse to pay out on that basis?

I'm probably coming across as totally dodgy here - am just frustrated that if I walk 5 minutes along our lane I'm in a place that costs half as much for home insurance, and that just doesn't make any sense.

1) No, each insurer is free to determine pricing as they see fit. Presumably you are checking multiple insurers or a comparison site and not just relying on one insurer? If it's so unpopulated and you are then presumably one of the catastrophe modelling companies (eg RMS or FloodRe) have loaded it notably for some reason. There aren't any waterways in the area?

2) If the insurer can prove you did it intentionally or recklessly (eg they saw this thread) then they can void your policy, keep your premiums, decline any claims and you have to declare your policy void for life (with most insurers). If they cannot prove it was that then they are entitled to correct the detail, if they wouldnt have insured you with the correct postcode then they can cancel the policy, decline a claim and you have to declare that for life too, If they would have insured you then they can reduce any claim by the percentage of under premiums paid. If you say it's 50% less with this wrong postcode then any claim would only be paid at 50% of what you're entitled to claim for. Some insurers will allow you to pay the premium shortfall and then payout in full (oddly)

Clatterbiscuit

Hi DGG

Many thanks for the comprehensive answer - much appreciated. (2) is pretty much what I thought was probably the case, so thanks for clarifying. Regarding (1), yes, I've done all the comparison sites, and when I actually spoke to an insurer I was told that some of their 'panel' of insurers wouldn't even quote for our postcode. There are no waterways of any significance - a couple of tiny streams cross the postcode area, but as I say, it's so hilly I can't see how they could ever have caused flooding.

I'd never heard of 'disaster modelling companies' until you mentioned it. If that is the case, does anyone know if there is a way to get that rating reconsidered? Or a way to get an insurer to not quote based on a postcode that covers such a large area geographically? I imagine there could be bits of my postcode area that flood, but those bits are at the bottom of valleys, in fields, so it hardly seems relevant.

Thanks again :-)

TELLIT01

When you receive the insurance documents you are told to check that all the details are accurate.  If you failed to notice that you had entered an incorrect postcode and then tried to claim I suspect many questions would be asked and then the claim declined.

DullGreyGuy

Clatterbiscuit said:

Hi DGG

Many thanks for the comprehensive answer - much appreciated. (2) is pretty much what I thought was probably the case, so thanks for clarifying. Regarding (1), yes, I've done all the comparison sites, and when I actually spoke to an insurer I was told that some of their 'panel' of insurers wouldn't even quote for our postcode. There are no waterways of any significance - a couple of tiny streams cross the postcode area, but as I say, it's so hilly I can't see how they could ever have caused flooding.

I'd never heard of 'disaster modelling companies' until you mentioned it. If that is the case, does anyone know if there is a way to get that rating reconsidered? Or a way to get an insurer to not quote based on a postcode that covers such a large area geographically? I imagine there could be bits of my postcode area that flood, but those bits are at the bottom of valleys, in fields, so it hardly seems relevant.

Thanks again :-)

There are several software providers that enable insurers to do funky things like enter a single policy and it will model what the losses from storm, earthquake, flood etc will be in a bad year (ranging from the worst year in a decade to the worst year in two centuries). The models are fairly sophisticated so if you put in its a warehouse storing paper worth £10m the losses to flood will come out higher than if you say it's a warehouse storing £10m of steel bars.

When you see the hurricanes in the US and it says its estimated to have caused $10bn of damage well that's the other thing the models can do, you can have your whole insurance customer portfolio loaded in and plot the course of a hurricane (or put in that the River Seven in Worcester has flooded) and it will predict which customers are impacted and their likely losses. Individual figures will rarely be spot on but the aggregate numbers tend to be fairly close. 

 The systems I've used in the past can geolocate properties very well, similar to Google Maps but if it cannot find a property it will place it at the centre point of the best it can do so that could be a postcode area, zip code, county etc depending on how much information has been given (these tools are used for companies with thousands of locations around the world and some get lazy with providing the details of the lesser sites)

FloodRe is slightly different, it's a reinsurance scheme on a non-profit basis setup to help people in flood areas get affordable home insurance. It has somewhat a similar impact though, if the systems trigger your in a FloodRe covered location then they may remove the calcs from the aforementioned modelling software and replace it with the fixed cost of buying reinsurance from FloodRe 

Flood in the UK is the most common problem, you can follow the links from FloodRe (https://www.floodre.co.uk/flood-resources/) to see if they consider your address to be high risk which could explain the premiums