But are ‘add-ons’ as familiar to brokers as standard GI products? Are they missing a trick by not selling them alongside their traditional portfolio?
The good news is that many add-on policies are seen as valuable by customers – they have a high claims ratio and a low repudiation rate, which, in plain English, means that people claim against them often and they generally always pay out. They also tend to offer highly competitive commissions for brokers.
Add-ons is a catch-all term for any GI policy that sits alongside a primary policy. It includes policies such as key insurance, legal expenses and home emergency.
Landlord’s key insurance is a good example – a product for lost or stolen keys that is sold alongside a buy-to-let mortgage.
The buy-to-let market in particular remains a competitive high growth area. and being proactive and having access to other products and services that give brokers a USP will help them stand out from the crowd.
Lost keys and replacement locks have always been an area of friction in the landlord/tenant relationship. Most standard tenancies will state that the tenant is responsible for the cost, but rightly or wrongly, the landlord will still often be the first port of call when a tenant loses their keys and it can lead to unnecessary confrontation when tenants are presented with the bill.
Nearly half of Britons have lost or had their house or car keys stolen, 30% in the last year, according to research by Keycare. Its figures show that the average cost of replacing car keys and locks is £300, while people can expect to fork out on average £145 for replacing house keys and locks.
Interestingly, the survey also found that people under the age of 55 were more likely to lose their keys and despite the popular theory to the contrary, women are just as likely as men to lose their keys.
Add-ons can offer a real market differentiator in the competitive buy-to-let market, have a positive impact on customer retention levels and provide valuable additional income for brokers.