Most of the UK's biggest water companies are promoting potentially unnecessary insurance costing customers more than £100 million a year, according to consumer group Which?.

It found nine of the 12 biggest firms are promoting "expensive" supply pipe insurance with their own free pipe repair schemes, which customers are automatically entitled to use.

Key Points

  • Water companies promoting unnecessary pipe insurance
  • Which? says millions have cover they don't need
  • It's costing consumers more than £100 million a year

Millions of customers will have bought insurance they do not need and will never claim on, Which? says.

It adds 667,000 homes in the Anglian, Southern and United Utilities areas are covered by third-party water pipe insurance provider HomeServe, adding: "The sheer number of people who buy this cover hints at how valuable these policies are to the providers.

"At £35 a year, customers in these three regions alone spend more than £23 million on pipe insurance. Once you add the customers from other regions, the total spend is likely to be more than £100 million."

Promoting third-party cover

Researchers found nine of the 12 big companies promoted HomeServe's policy through direct mail promotions.

While references to the water companies' free pipe repair schemes were included in some of these letters, their benefits were played down, Which? says.

Some of the firms also promoted third-party insurance on their own headed paper, potentially persuading consumers to unnecessarily buy a policy, the watchdog adds.

It says none of the letters it scrutinised mentioned that ordinary home insurance might also cover water supply disruptions, despite finding 19 of the leading 25 home insurers, including AA, Legal & General and RIAS, would cover burst supply pipe claims to varying degrees.

Which? adds: "Disturbingly, we were concerned to find that many water companies' websites encourage their customers to first call a plumber in the event of leak, which in fact could invalidate a claim under their home insurance, as many insurers specify they must be contacted before any repairs are made."

Calls for Government action

Which? executive director Richard Lloyd says: "It's totally unacceptable that water companies are pushing potentially unnecessary water supply pipe insurance from third-party private companies.

"Few companies highlight their own assistance schemes, and most fail to tell you that your home buildings insurance may overlap on the key benefits of cover.

"We're calling on all water companies to use the same free pipe repair scheme so that it's clear to consumers what they're covered for.

"We also want to see the Government and Ofwat take action to stop water companies from confusing consumers by promoting third-party pipe insurance under their own banner."

HomeServe response

A HomeServe spokeswoman says: "We believe the Which? article to be hugely misleading. The facts would appear to present a different picture.

"Nearly one in 13 homeowners in Great Britain have suffered a water supply pipe emergency at some point and while most water companies may offer a one-off service, they are not obliged to do so, nor are they always in a position to respond quickly.

"HomeServe will have engineers in attendance within two hours in the event of an incident. Furthermore, it's critical to understand that a third of claims pertain to problems with pipework under the home, the internal stop valve and the rising main - all elements which would not qualify for repair by the water companies.

"It's also important that consumers get a clear understanding of what their home insurance will cover in such circumstances.

"Water supply pipe problems due to wear and tear is unlikely to be one of them, whereas HomeServe will protect homeowners against such risks, which is a significant difference when considering research shows that wear and tear accounts for 98% of claims."