21st November, 2022
According to research, people across the UK are choosing to forego their motor and home insurance in an attempt to save on household bills, but what is the true cost of this?
In a study carried out by NerdWallet, 29% of respondents admitted that, in an attempt to cut back on costs, they’ve stopped paying for their insurance this past year. Plus, a further 11% don’t plan to pay once their renewal is due.
While this may seem like an ideal solution in the short-term, the sad truth is that you’re putting yourself in a very vulnerable position.
First things first, motor insurance is a legal requirement. If you decide to drive without insurance then you risk fines, penalty points and even losing your licence. While we understand that saving money is more important than ever, it’s not worth putting yourself in that position.
You never know the importance of insurance until you need to claim
Research from Experian has shown that approximately 31% of people don’t feel financially secure and 49% of those aged 18-24 expressed that their financial situation is a cause of stress for them. But could you imagine how stressed you’d be if you were involved in an accident and had no insurance?
It’s well-known that, in most cases, the cost of a claim will outweigh the cost of the policy itself. Without valid cover, the upfront cost of things like vehicle repairs, replacement vehicles and medical expenses would unfortunately fall on you – and if the accident was your fault, you won’t be compensated.
This research also showed that 42% of people have cut back on non-essential journeys, so it may be worth looking into a ‘Pay as you Drive’ policy, where the cost of your insurance is based on the amount of miles you drive each month. It’s an easy enough way to reduce costs without the huge risk, simply drive less to pay less!
Your home is your castle – why wouldn’t you protect it?
While home insurance isn’t a legal requirement, it is strongly advised and mortgage lenders will usually insist that you have it.
Just like motor insurance, the cost of repairing damages to your home in the event of a flood, fire or theft, to name a few, can often be eye-wateringly high. Valid home insurance would prevent you from having to foot these bills yourself and alleviate some of the stress that you and your family would undoubtedly be feeling during an already difficult time.
Experian’s data also revealed that 44% of people would need to borrow money from other sources in the case of an unexpected emergency. With this in mind, it’s important to thoroughly check your policy before purchasing to make sure that it covers everything you need.
It’s also vital to remember that during times like these, scammers will take advantage of those looking to save cash on a ‘good deal’. So, before you hand over your precious pounds to a cheap insurer that seems too good to be true, keep in mind that it just might be.
Written by: Shannan Errington
*Please note that the above information has been gathered through secondary research. The information provided is not based on our opinion. You should seek further guidance and information before making an informed decision.
Sources:
https://www.experian.co.uk/business/campaigns/cost-of-living
https://www.insurancetimes.co.uk/news/home-and-motor-insurance-most-likely-candidates-for-coverage-cutbacks-amid-cost-of-living-crisis-nerdwallet/1442510.article
https://www.gov.uk/vehicle-insurance/driving-without-insurance
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