(PRWEB) April 17, 2009
It is estimated that millions of people are cutting back on essential insurance cover in a bid to save money during the credit crunch, according to new research from Sainsbury's Finance. Among the most shocking findings of the study are that an estimated close to a million (946,000) people have either cancelled their home contents insurance or reduced the amount of cover they have in the last 12 months as a direct consequence of their financial situation, and that over half a million people (532,000) are estimated to have cancelled their life insurance policy for the same reason(1).
Reductions in cover and cancellations of insurance policies altogether are concerning. Sainsbury's Home Insurance is warning people who are thinking of cutting back on cover that this could be a false economy as they may be leaving themselves exposed to bills they can't then afford to pay if the unexpected happens. Simply by shopping around, people should be able to find affordable insurance without skimping on their current level of cover. There are many deals to take advantage of including one from Sainsbury's Home Insurance for example, which currently offers a 30% discount for customers buying buildings and contents insurance together online, plus £30 worth of shopping vouchers(2) on purchase and again on renewal(3).
Worryingly, Home Insurance seems to be the most expendable insurance policy in the eyes of those wanting to review their finances in this way. Over half a million (526,000) people are estimated to have reduced the level of home contents cover they have, and 420,000 have scrapped their contents policies altogether(1). Even buildings insurance has been affected, with nearly 700,000 people reducing or cancelling their policy in the last 12 months. This is concerning when you consider that UK homeowners are estimated to have made around 13,000 claims between the end of December and the end of January alone for water-related damage to their properties. The average value of these claims was over £2,000(4).
Some people have also reviewed their life insurance in this manner with an estimated 816,000 people having given up or claimed to have applied for reduced cover in the last year because of their financial situation. In the same period 579,000 people are estimated to have given up or reduced their car insurance cover; those giving up potentially in a bid to use a cheaper form of transport such as bus, bicycle or the train. More than 450,000 have completely given up their pet insurance and travel insurance policies respectively(1).
Neil Laird, Sainsbury's Home Insurance Manager, said: "Given the financial state we're in it's inevitable that people are going to be looking to make cut-backs, but it's a real concern when those cut-backs leave them vulnerable to far greater expense down the line.
"It can be tempting, with some insurance policies, to simply hope for the best. But policies vary a great deal, and cancelling your cover or opting for a cheaper deal that doesn't offer adequate cover could have serious financial consequences when something goes wrong. Insurance should be viewed as a necessity, not a luxury."
"Furthermore, cancelling car insurance and continuing to drive whilst uninsured is an illegal offence."
Aside from those that have cut back or cancelled their insurance policies, it's estimated that millions more people have moved to a cheaper provider in the last 12 months directly because of their struggling finances(1). Sainsbury's Finance is warning people who intend to move to a cheaper deal to check exactly what is covered, as it may not adequately meet their needs.
A higher percentage of car insurance owners have deliberately moved to a cheaper insurance provider because of struggling finances than any other type of insurance policy owners, with 21% of them switching for this reason. This is closely followed by 18% of home contents policy owners, and 16% of home buildings policy owners
For information on insurance products from Sainsbury's Finance visit http://www.sainsburysfinance.co.uk