Insurance, like braces on your teeth or income tax, is a necessary evil. It’s a topic that needs be taken seriously. We’ve blogged before about the importance of ensuring you have the right cover in place. So we want to share some new research from Aviva with you.
According to the insurer, which provides cover for one in four UK households, a growing number of renters are putting themselves at risk by choosing to remain uninsured. Aviva polled 2,057 people in June, including 567 respondents living in rented accommodation and 585 respondents who own their house with a mortgage. The results are interesting.
First, the vast majority of renters taking part in the survey, don’t have any form of protection in place; life insurance, critical illness cover or income protection. This means they may have trouble paying their rent if they unexpectedly have a drop in income and compares badly to homeowners. Three out of five people with a mortgage told Aviva they have some kind of protection insurance in place.
The research also reveals that only two out of five households living in rented accommodation have contents insurance. This rises to nine out of ten homeowners with a mortgage. Aviva calculates that this means almost six million renting households could be without any insurance cover at all if their possessions are damaged by fire or flood or stolen.
The reality, of course, is that the responsibility of buying a house or flat often triggers the purchase of life insurance and contents cover. And buildings insurance is a standard requirement. This is not the case for tenants, who are also likely to spend a larger proportion of their income on housing costs and so have less spare cash. Aviva found that on average renters spend 35% of their income on rent, compared to the 25% spent on a mortgage. And people living in the private rental sector are paying the most, with figures averaging out at 40%; this is considerably higher for many people renting in London.
No surprise then that insurance is an expense too far. If you’re young and single, the need for life insurance may seem negligible but contents insurance is a different matter. People living in flats may feel they have added protection from theft due to block security, concierge staff or just knowing there are plenty of other people for thieves to choose from. However, fire, as we all know too well, is often devastating and can leave people literally with just the clothes they are standing up in. And leaks from neighbours’ flats can quickly destroy fixtures and fittings as well as personal possessions.
Never assume your landlord’s insurance will cover you. It may pay for redecoration if the bathroom upstairs floods but it won’t pay out for that damaged laptop or your book collection. So if you are renting your home, think again about contents cover. It’s cheap and quick to buy online. You may never need it – but is it worth taking the risk?