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Hard-up households told not to give up insurance

Hard-up households told not to give up insurance

Category: Insurance

Updated: 28/11/2017
First Published: 10/01/2011

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Cash-strapped Britons planning for a year of frugal living have been urged not to sacrifice their insurance cover to save a few pounds.

Almost three quarters of Brits told Allianz that they are looking to make cuts to their outgoings in 2011, with more than one in ten planning large financial cuts.

Spending on entertainment will face the largest cut in outgoings, followed by reducing bills by switching provider, slashing food budgets, limiting travel costs, and re-evaluating their internet/phone/TV package.

However, as a result of the recession, over half of Brits have already looked to reduce their insurance costs including their car and home insurance.

Whilst the majority have done the sensible thing and shopped around for a better deal with the same levels of cover, other strategies have included reducing individual item cover, removing extras such as legal cover and courtesy cars, and increasing voluntary excesses.

Although reducing home buildings or contents insurance cover is last on the list of insurances Brits would cut, more than half of homeowners are already either unsure if they have enough home contents cover or knowingly choose not to insure themselves fully.

The same applies to just under a half of those surveyed when it comes to home buildings cover.

As a result, Allianz has urged homeowners to look beyond immediate cuts and to think carefully before deciding to reduce their spend on insurance protection, as cutting insurance could leave their treasured possessions and even their homes under insured or perhaps not insured at all.

"When looking to make household cuts people will naturally prioritise what is important to them," said Gareth McChesney, head of home and motor portfolio management at Allianz UK.

"However, there is a real danger that by cutting costs and being underinsured, whether willingly or not, people could find themselves facing a bigger financial headache and bill in the long run.

"This is particularly the case if they are hit by an unfortunate event for which they could have had adequate insurance protection.

"We would stress, that if people want to protect themselves and their belongings, they need to ensure that they have the right level of insurance cover in place."

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