Call centre staff are to be re-trained and new scripts are being written.
The publicly quoted company has been in contact with the Financial Services Authority (FSA) regarding the mis-selling.
Homeserve sells homeowners insurance to provide them with cover against blocked drains, burst pipes, boiler breakdowns, leaking roofs and electrical problems.
Chief executive Richard Halpin said: "We are determined to ensure customers receive the highest standards of service and we have therefore taken swift action to address the issues identified by our review. We have commenced a programme to re-train staff. We will resume marketing once we are confident that our sales processes meet the standards that we and our customers expect".