Direct Line has claimed that homeowners are being ripped off when it comes to household buildings and contents insurance, with the potential savings running at somewhere around £33 million.

Merely by shopping around, the group claims, around 400,000 homeowners could save an average of £50 on the cost of their policy. The problem is that many of them are almost forced by lenders to buy uncompetitive insurance to help recover the costs of heavily discounted mortgages. Direct Line claimed that during 2000 mortgage lenders received about £275 million in commission for arranging home insurance for their customers, who often paid up to 30% more than they would have if they had arranged the cover direct.

This problem is made even more serious for borrowers who realise that they are paying too much but then find that they are unable to take out a policy elsewhere without being charged a switching fee of between £25 and £45. Direct Line said that some customers were being charged switching fees even if they refused to accept the lender's insurance cover at the time of taking out the mortgage and estimated that about one million people would be hit by switching fees if they tried to arrange cover elsewhere.

Direct Line has now called on the Government to intervene, with Malcolm Cooper, home insurance business manager at Direct Line, saying: "It's clear from our research that there is an overwhelming need for the Government to take action and outlaw these practices once and for all. Consumers continue to be treated very shabbily by some mortgage providers, despite our best efforts over the past decade to bring about change in the market place."

You can access a comparative quotation system and links to other systems and providers at our sister site for home insurance: http://www.a-home-insurance-website.co.uk