Worried about paying for insurance? Here’s what to consider in terms of costs and cover
As financially squeezed households look to make savings, one area of their outgoings they may well be looking at is insurance costs.
The good news is, unlike many other living costs, the average prices paid for home and motor insurance have recently fallen.
According to the Association of British Insurers (ABI), in the first quarter of 2022, the average price paid for buildings insurance was £225 while the average for contents cover was £114 – the lowest figures since the ABI started collecting the data in 2012.
The average price paid for comprehensive motor insurance in the first quarter of this year was £416 – marking a 5% year-on-year drop.
This is despite rising cost pressures on insurers, including a global shortage in semiconductors needed in vehicles, increasing repair costs as ever more sophisticated vehicles can be more costly to repair, and raw materials, such as vehicle body paint, also becoming more expensive.
However, with the overall rising cost of living stretching people’s budgets to the max, many are looking to cut back anywhere they can, and perhaps are worried about keeping up with payments. As Hannah Gurga, the ABI’s director general, says, some people “are having to make very painful financial decisions, with family budgets under extreme pressure”.
Here are some tips from the ABI for customers when assessing their cover…
1. Talk to your insurer
If you are concerned about not being able to afford to pay your premiums, speak to your insurer, or check their website to see if they can help. Flexible payment options and payment holidays may be possible on some policies. You may be able to adjust the scope of your cover to reduce your premium, but bear in mind that you may not be covered for some losses.
2. Check any insurance benefits offered by your employer
It is worth checking if your employer offers any group insurance benefits, such as critical illness or private medical insurance.
3. It can pay to shop around
Insurance is a very competitive market. But make sure that the policy you choose best meets your needs and that you aren’t focusing on price alone.
4. Remember the consequences of going without insurance can be significant and serious
Budgets are under pressure right now and some people might be tempted to not take out insurance or renew a policy in a bid to save money. But in reality, this could come at a huge cost.
Holidaying abroad without travel insurance, for example, could potentially result in a bill for thousands of pounds if emergency medical treatment is needed.
The cost of medical treatment in Spain following a fall by a UK traveller and their emergency medical repatriation back to the UK was £124,000, according to the ABI.
In another case, treating and returning a traveller who contracted Covid-19 while in Cyprus cost £70,000. Both these costs were paid by travel insurers.
Not insuring your house could be a breach of your mortgage conditions, or mean expensive repairs if there is a storm or fire. Third party motor insurance is the legal minimum requirement when driving in the UK.
5. Don’t be tempted by too-good-to-be-true insurance offers
Buying cheap motor insurance from an illegal insurance adviser could leave you driving illegally, risking a fine, penalty points on your licence, and having your vehicle seized.
‘Ghost brokers’ offer fake and doctored policies via social media and other channels, and often it is not until they need to make a claim that the purchaser realises they are not valid.
If you have concerns about whether an offer is legit, you could check if the seller is on the Financial Conduct Authority’s Financial Services Register and also contact the Insurance Fraud Bureau’s Cheatline (insurancefraudbureau.org/contact-us)
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