Cheap contents insurance: Salvation Army launches policy costing just £4 a MONTH
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Home contents insurance costing just £4 a month is being launched by the Salvation Army, and it’s arguably the cheapest in the country.
Contents insurance pays out if the items in your home are stolen or destroyed, for example due to fire or material damage.
But many households can’t find affordable home contents insurance. If you live in a high-risk zip code area, have previously made insurance claims, or have gone bankrupt, most insurers will either refuse to do business with you or raise their prices significantly.
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Many other homes just can’t afford contents insurance, so go without it, while others don’t see the need for it.
This cover costs an average of £116 a year, according to the Association of British Insurers, although this is a historically low price and many homes are being charged much more.
But now a new product aims to help the six million homes that cannot purchase normal contents insurance – representing 26 percent of the country.
What is it and why is it so cheap?
The Core Home policy will be launched on January 16 by the Salvation Army General Insurance Corporation, or Sagic. As the name suggests, this is the insurance branch of the Salvation Army.
The low-cost insurance product costs £4 a month and covers £30,000 in household contents and £10,000 in alternative accommodation if you have to leave your home following a claim.
The new insurance policy was designed by Neil Bresler, of insurance broker ECH Facilities, with Sagic handling the insurance.
Unusually there is no deductible if you have to pay before you can make a claim. The product also renews monthly, not annually, and you can cancel at any time.
Renters or homeowners can get the deal, but people who own their own homes also need home insurance under the terms of a mortgage.
Bresler said, “The sad truth is those who need insurance the most are the least likely to get one, either because they can’t afford the premium or because they live in zip codes that are considered high risk by traditional insurers. , or because they are subject to criminal disqualifications.
‘We estimate that of the UK’s 22.6 million households, 26 per cent, or 6 million, do not have home contents insurance, and they are the market we are trying to help.’
How does Core Home compare to other insurance policies?
The Core Home policy has no exact rivals, but it is cheaper than most other content policies for the level of cover you get.
The cheapest home contents insurance This Is Money could find costs £4.95 per month, from insurance company Admiral.
That does cover up to £75,000 worth of content, but crucially has a £100 deductible.
And that’s for a two-bedroom house in a leafy, crime-free part of Kent.
The cheapest quote for the exact same house in the high-risk area of Tower Hamlets, London, is £5.61 per month, from John Lewis Insurance – again with a £100 deductible.
How is it so cheap?
First, the deal limits cover £30,000 for content and £10,000 for alternative accommodation.
The average home has around £35,000 in contents and most insurance policies will cover £40,000 to £50,000. This stripped-down coverage means a stripped-down premium.
This is sleep at night coverage
Gordon Dewar, CEO of SAGIC
It’s also web-based, with no call center, which also helps keep prices low.
The Core Home deal also does not cover high value items such as jewelry and does not cover accidental damage.
It also doesn’t have additional insurance for things like legal fees or the cost of replacing frozen foods if a freezer breaks down, which often drives up the price of home contents insurance.
Bresler said, “We have removed high-risk elements such as jewellery, valuables and accidental damage, as well as benefits, which are the main factors behind the high cost of coverage, but have ensured that customers are protected against major hazards such as fire or burst pipes.”
Gordon Dewar called the new product ‘sleep at night’ cover
What Core Home does do is pay out for things like fire, theft, storm damage and subsidence – what Sagic CEO Gordon Dewar calls “sleep at night.” The policy does provide cover against flooding, but not if you live in a very flood-prone area.
Dewar said: ‘It’s a stripped down policy, we know that, we’re transparent and the customer will understand what they’re getting. This is sleep at night coverage.
‘Running an insurance company is not difficult, you just treat customers the way you want to be treated.
“Insurance has noble roots, underpinned by the principle that the many protect the few, but increasing personalization and changes in risk profiling have threatened this principle.”
How to get the policy
Initially, Core Home will be sold via the website of broker ECH Facilities, but in the future this will be possible through other brokers, municipalities and housing providers, among others.
Customers who are not comfortable buying insurance online can appoint an attorney to do it for them, such as a family member or trusted neighbor.
If you have applied for home contents insurance before, have gone bankrupt or been convicted before, the online system will not give you a quote.
However, people in these situations will be referred back to Sagic where a human will personally consider their case.
One place you can’t get Core Home is on price comparison websites like CompareTheMarket.
This is to keep costs down, Bresler said, since these websites charge a fee to insurance companies that sell through them.
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