Customers forced to scrap car and home insurance to save money – but saving tens of pounds could mean you’re missing out on thousands of euros
- The rising cost of living is prompting policyholders to reduce their insurance
- But this gamble risks leaving Britons with huge bills if they have to file a claim
Consumers are increasingly forced to cut back on optional insurance to save money, but risk paying bills of hundreds or even thousands of pounds if the worst happens.
Aviva, the UK’s largest general insurer, has said Britons are cutting non-essentials from their home and car insurance policies, such as windshield cover.
When taking out car and home insurance, customers can choose to take out additional supplementary insurance at an additional cost. These deals cover things that the main policy does not cover.
Sometimes these add-ons are included as standard in the price you pay for the policy, as an insurer’s sweetener.
But lowering the level of insurance coverage you buy means taking on more risk and facing the possibility of huge bills if something goes wrong.
Additional coverage: Additional insurance policies provide additional coverage for your home and car, but consumers feel they have no choice but to cut back on them due to the cost of living crisis
Comparethemarket director Alex Hasty said: “What seems like a cheaper option can cost you more in the long run, if you have to file a claim.”
Here are some of the most common optional insurance policies and how much they will cost you to have — or not have.
Where possible, we have also included figures from the regulator Financial Conduct Authority showing how many claims are being made on the deals and how many claims are being paid out.
However, there may also be a deductible to pay with additional insurance, so check the details of the policies before purchasing.
Some of these add-ons, such as home insurance legal expenses, are rarely claimed — only once every 312 years, while the same coverage for auto insurance is claimed once every 100 years.
However, these deals are priced low and pay out 56 percent and 95 percent of the time, respectively, making them solid options for risk-averse people.
CAR INSURANCE
Legal coverage (before the event)
Premium Cost: £15 – £30
Self-covering costs: Potentially almost unlimited
Insured persons who claim per year: 0.5 percent
Percentage of claims paid: 95 percent
Personal damage
Premium Cost: £20 – £30
Self-covering costs: Potentially almost unlimited
Insured persons who claim annually: 0.08 percent
Percentage of claims paid: 96.57 percent
Breakdown coverage
Premium Cost: £15 – £70
Self-insurance cost: £50 to hundreds of pounds
Insured persons who claim annually: 6.69 percent
Percentage of claims paid: 93.3 percent
Car coverage: Skimping on extras such as statutory or personal injury insurance can mean heavy costs for drivers if an accident does occur
Windshield cover
Premium Cost: £20 – £50
Self-insurance cost: £130 to £600
Insured persons claiming per year: No figures available
Percentage of claims paid: no figures available
HOME INSURANCE
Legal coverage (before the event)
Premium Cost: £18 to £30
Self-covering costs: Potentially almost unlimited
Insured persons who claim per year: 0.16 percent
Percentage of claims paid: 56 percent
Emergency cover for the home
Premium Cost: £21 to £60
Cost to cover the risk yourself: Potentially thousands
Insured persons who claim annually: 2.36 percent
Percentage of claims paid: 86.89 percent