Boiler insurance: should you just buy a new boiler?

Many companies offer boiler insurance and maintenance, but could it be cheaper to just buy a new boiler?

Boiler insurance can pay out to repair or even replace a faulty boiler, and some of the more comprehensive policies also provide maintenance and an annual service.

Like any insurance product, the price can vary wildly depending on what's included; you can pay as little as £80 a year or more than three times as much for greater protection.

But some boiler fitters argue that customers would be better off buying a new, more efficient boiler and paying for it month by month. So is it true?

Buy a new boiler?
Take Help-Link.co.uk as an example. It claims customers can save close to £25 a month by buying a new boiler. Here's the pitch:

It suggests you're paying £15 a month on boiler maintenance and also forking out 'up to £26.67' a month because your boiler is old and inefficient. So according to them, that's potential unnecessary spending of £41.67 a month.

However, if you buy a new A-rated condensing boiler through the company, you'll pay as little as £17 a month until the boiler is paid for.

The cash price of the boiler they use as an example is £1,789, and you pay a deposit of £474, then 120 monthly payments of £17.

So that's a representative APR of 9.9%, meaning you pay a total amount of £2,514, spread over 10 years.

Help-Link's claim is that the 10-year warranty on Worcester Greenstar gas-fired products means you'll no longer need your existing maintenance plan. But does that cover every scenario?

A call to Help-Link's sales team revealed that the warranty is very inclusive. The rep claimed that the warranty covers any callouts, any parts and any labour needed over that 10-year period, as long as you comply with certain criteria.

One of the criteria, however, is that the boiler is serviced at least once a year. That usually costs between £60 and £80 a pop, which is a cost you'd be responsible for.

Also, the £17 a month figure is for one of their cheaper boilers spread across the maximum term of 10 years. If you need a more expensive boiler or want to make repayments over a shorter term then the monthly payment would rise.

Finally, it's worth noting that Help-Link itself offers a boiler insurance plan: "...Sign up for our Diamond Central Heating Cover Plan and your heating and hot water will be covered with immediate effect - ensuring peace of mind this winter."

So clearly the company doesn't entirely dismiss boiler insurance and maintenance policies! But for £2,514 in total, the extended warranty isn't a bad way to get extra protection for your boiler.

What to watch for
Be very careful to read through any warranty's small print. There are likely to be a number of ways to accidentally invalidate this kind of protection, so you need to make sure you're keeping your end of the bargain.

Also, be aware that the cost is spread through a loan - you're taking on a finance agreement. That means that the debt comes with you, even if you move house or decide to scrap the boiler before it's repaid.

What about a boiler from somewhere else?
But what about other providers? Do they offer a comparative deal? British Gas also allows boiler buyers to spread the payments across one to 10 years and doesn't need a deposit.

That might make it more affordable for anyone whose boiler has broken down but doesn't have a few hundred quid spare as a deposit. The company is currently offering £400 off all its boilers, but they only come with a one-year guarantee.

Call around and get quotes for your specific property, to make sure you find the best overall price and deal.

Do you need boiler insurance?
If you're not in the market for a new boiler but are no longer under warranty, should you take out boiler insurance? Here are a few questions to ask:

How likely is it that my boiler will break down?
It's hard to work out how useful an extended warranty or insurance policy is if you don't know how likely your boiler is to fail.

The older a boiler is, the more likely it is to have some problems. According to uSwitch, one in three gas central heating boilers will develop a fault in the first six years. The average cost of repairing a boiler is £185.

How much does boiler cover cost?
It's cheaper to insure just your boiler and controls, but that may leave you stuck if something goes wrong with your wider central heating system. For example, British Gas charges £10.50 a month for simple boiler and controls cover, with a £50 call-out fee.

Alternatively, you could take out a far more inclusive policy. For example, the AA's boiler and central heating cover costs £317.76 a year but includes an annual service, unlimited call-outs and money towards a new boiler if yours is beyond repair.

Does my own home insurance cover my boiler?
You may decide to take out boiler cover because you want to know someone will fix your boiler fast. No one wants to be left without warmth and hot water, especially in the cold weather.

But it's worth checking your home insurance policy before buying cover. Many include 'home emergencies' protection. Check the small print carefully as these usually have a lot of exclusions and limited pay out. However, you may decide that's enough peace of mind.

Would I qualify for boiler insurance?
Your boiler has to be in good working order to qualify for most policies. That means annual services and no current faults.

Phone around for quotes
If you're in the market for a new boiler then the most important thing is to call around for quotes. Boiler and installation prices vary wildly and you may have to purchase a specific type of model depending on your home.

Ask for written quotes so that you can take your time over the small print and fully understand if any extended warranty includes enough to give you peace of mind. Don't forget to compare the total cost of any finance plans when you're considering the price of the boiler.

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