Fewer people buying contents insurance as premiums rise
Sales of contents insurance have dropped by nearly 13% year-on-year, while more than half (55%) of households have seen their home insurance premium increase since lockdown began, according to Compare the Market.
The price comparison website found that the average annual contents insurance policy in September 2020 was £68. However, this rose to £82 in December 2020 – an increase of £14.
Broken down by home ownership, only a third (32%) of renters have contents cover in place. Failure to have contents insurance leaves many exposed to significant replacement costs in the event of household items being damaged or stolen.
One in ten (11%) policyholders have also recently decided to cancel add-on cover, such as accidental damage, home emergency cover, or contents outside the home.
Compare the Market says this suggests people are tightening their belts in the face of tough economic challenges.
Insuring individual valuable items appears to be another money-saving area with more than half (52%) not insuring any individual items within their home insurance policy.
Chris King, head of home insurance at Compare the Market, said: “At a time when households are struggling with their finances, discretionary spending often comes under a spotlight. Our research suggests that many people have chosen to cut costs by deciding not to take out contents insurance. This trend is concerning as leaving valuable items uninsured can often result in short-term gain but longer-term pain.
“While many factors come into play behind the costs of premiums, one trend we are seeing is that the underlying value of claims is on the rise. Weather is one such factor and this year saw some of the wettest weather on record, with three individual storms logged in February. The impact could now be starting to trickle through into higher premiums.
“Leaving belongings uninsured can leave households at risk of high replacement costs if these items are damaged or stolen. We would urge people to strongly consider keeping their contents cover, particularly if they have valuable items in the house that would be impossible or costly to replace. Shopping around online and comparing home policies can be an easy way to find a cheaper deal and save money, while providing peace of mind that your valuables and home are protected.”