New breed of insurers can offer cheaper deals: Tom Tickell tells of a quotation service and some other options

Brokers claim to be able to find the best rates for insurance, but they will be fishing in a pool that excludes the new breed of direct insurers that often offer the cheapest deals.

Towry Law says almost everyone can save money with its new quotation service.

'If you are already insured with the company we recommend we will offer a 5 per cent discount,' said Roger Parkinson, one of the group's directors. But he added that if an inquiry came from someone already insured with a cheaper direct insurer there would be nothing the firm could offer. 'We are not going for the cut-price companies which are here today, gone tomorrow,' he said. 'Our panel contains the really big names in the business.'

Towry Law's panel does not include companies that deal with the public direct and do not pay any commission. Their charges can be up to 15 per cent lower than elsewhere.

Until now direct insurers have concentrated on motor policies, but they are moving into household and contents insurance. According to analysts at Smith New Court, premiums are typically 15 to 20 per cent lower than those elsewhere. So it makes sense to check their rates before committing yourself to a policy.

The table shows annual premiums for a house with a rebuilding cost of pounds 100,000 and for pounds 20,000 contents on 'new for old' settlement.

The rates will depend on your age and whether the property is left empty all day as well as the postcode. Savings look particularly attractive if you have taken out home and contents insurance policies through the building society where you have your mortgage.

But most lenders have obstacles to make borrowers insure at least the structure of the house through them. Normally you have to pay a single pounds 25 'administration charge' if you want to use an outside insurer.

One or two lenders have even tried to levy an annual fee for the privilege, though they came under fire from the Building Society Ombudsman.

But some insurers have hit back. Zurich, for instance, will deduct that lender's levy in year one, so you do not lose.

Lenders cannot usually make you insure your home contents with them. But all the recent package deals offering fixed-rate or capped mortgages insist that you obtain your household and contents insurance through the lender. After all, 30 to 35 per cent of the premiums go to it in commission.

Most borrowers - especially those who have had their mortgages for some time - are not on special schemes. They should look at what Towry Law and the direct insurers offer.

What kind of savings can people expect? Towry Law cites a house whose rebuilding costs work out at pounds 100,000 in London's NW2 postal district.

Commercial Union will charge pounds 390 for its insurance, whereas a group of Lloyd's syndicates will ask pounds 270.

You can get big savings on the contents side, too. Anyone wanting to insure home contents in the Wirral for pounds 20,000 will find Norwich Union charging pounds 180. Cornhill will take on the business for pounds 130.

More factors go into deciding rates. Churchill will cut premiums if you are over 50. Retirees are charged only half its standard premium.

Towry Law hotline 0753 5544000; Direct Line 081-686 8877; Churchill Insurance Service 0800-200 345.

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