Boiler Breakdown Cover - is it just another tax on your savings

The news that some boiler breakdown covers do not cover air source heat pumps prompted PAPA to look into how effective these insurance covers are. When you drill down on the alternative policies offered, and Compare the market provide good detail on the approximate costs and pros and cons, then if you can get a cheap cover for around £10 per month, for a boiler that might last you for around 15-20 years, the overall cost of the insurance over that time will be £1800 - £2400 over that time disregarding inflation. (A Which Magazine Survey found that on average boiler cover costs £265 per annum, which over the lifetime of the boiler equates to between £4000-£5300!)

The current price of a standard gas boiler is around £1000 and so to replace this with parts and labour would be circa £2000-£2500 and the larger companies, such as British Gas are offering 4 years interest free credit on boiler replacement so you have to ask yourself what is the insurance for?

You would expect to have pretty much trouble-free from your boiler for the first 10 years after installation, and with some of the loopholes in the insurance policies, extra payment for parts, call out charges etc  if you do have a problem, an 'expensive call-out form a gas engineer plus parts could be around £3-400 which should solve the problem. If your boiler fails and it is an expensive fault, then it might be good economic sense to replace it, avoiding the insurance payments and getting a new boiler with a longer lifespan.

It is really about peace-of-mind and that is what insurance gives you. It really makes good sense to assess all aspects before taking out insurance, every situation is different but there needs to be a balance between peace-of-mind and long term good value.