Insurance experts are warning people against cancelling or reducing their home insurance cover in a bid to save cash during the cost of living crisis.
It is believed that around 80% of UK homes are already underinsured despite the average property containing nearly £30,000-worth of possessions.
Insurance consultants say that altering or scrapping cover altogether to trim household budgets could be a costly mistake.
Home insurance can come in three forms: contents insurance to cover the items within your home, buildings insurance to cover the build itself, or it can be cover that contains both of those elements.
Experts A-Plan Insurance said now was not the time to cut corners on premiums and offered advice on how to stay protected.
It said: “The purpose of home buildings and contents insurance is to provide homeowners with cover for unexpected and potentially costly situations.
“This could be anything from storm damage or fire, theft of possessions, accidental damage from an escape of water, a fallen tree or subsidence.
“These costs can reach into thousands of pounds, and if your insurance denies your claim, you are unlikely to be able to restore your home as you hoped.”
Many homeowners also severely undervalue their contents or, worse, don’t have contents insurance at all, A-Plan cautioned.
For the underinsured, this means that if you need to make a claim in the event of a theft, fire, or even water damage, you may not be covered for the full replacement value of your possessions. For the uninsured, it could mean equipping your home from scratch, out of your own pocket.
A-Plan said: “With the price to replace your personal possessions increasing, it could wipe out your finances during a time when other costs are soaring, and it could mean having to wait a long time to replace them.”
The average adult purchases around £1,000 of new belongings a year, but not enough people update their contents insurance value, A-Plan said, advising it was good practice to keep a contents checklist – take a room-by-room approach, and make sure you are not underinsured or even over-insured.
The Association of British Insurers (ABI) also advised against cancelling or reducing cover to save on monthly outgoings. It said: “The cost of living crisis is hitting hard. Many will understandably be looking at where they can make savings but, at this time, the protection and security provided by insurance is more important than ever.
“Whilst some might be tempted to not take out insurance, cancel monthly payments or not renew a policy, doing this could be costlier in the long run. If you are concerned about paying your premiums, you should talk to your provider to see if they can help. You may also benefit from shopping around but be sure to choose a policy that best suits your needs.”
Callum Tanner, the ABI’s manager of general insurance, said the cost of home insurance had actually fallen for existing customers this year.
Recent industry figures show that the average renewal premium for contents insurance, at £124, had come down £14 since January. For buildings cover, the average premium, at £247, is down by £27.
For new policies, the average premium for contents insurance has risen by £2 since the beginning of the year; for buildings cover the average price paid, at £184, is up £9 so far this year.
Tanner said: “Falls in the average cost of home buildings and contents insurance will be welcomed by households facing rising bills, as the cost of living crisis shows no signs of easing.”
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