Uninsured Brits are playing a risky game

Published 06th Aug 2007

The Association of British Insurers (ABI) predict that one in four Brits lack any form of household insurance, a risk many would urge homeowners not to run.

Several victims of the recent flooding were guilty of just this, citing the rising cost of home insurance as the main reason for their omission. Shopping around for the right product is the only way to find insurance to both suit your requirements and take the strain off your pocket – it’s better to pay a little more for the right level of cover than find yourself in the same position as some of the un-insured residents of central England.

Taking account of inflation, insuring a home is now as much as 23 per cent cheaper in real terms than ten years ago. Even though some insurers have increased their premiums by as much as 10 per cent, a high profile culprit being Norwich Union, Brits are still paying less for their policies now than they did in the mid 1990s.

Julie Carter of Adrian Flux Insurance’s household insurance division advised: “Insurance companies will load for higher risk such as flooding, but that doesn’t apply to many of the houses affected recently – for example in Hull and Sheffield, which weren’t near rivers or areas considered to be at risk of flooding.

“Even if you do live in a risk area, you’re not going to end up paying double for your insurance or anything like that. The insurer shouldn’t load the premium by more than 10 per cent, so in theory it should still be more affordable than it was ten years ago – even if you’re with one of the companies that’s putting up its prices.”

Some insurers do unfortunately draw the line at certain ‘high risk’ properties. Regrettably for some though, these are not just limited to those at risk of flooding – thatched roofs and underpinned walls also pose big problems. However this doesn’t mean that insurance is neither impossible to get nor expensive if you fall into this bracket.

There will be a bit of a hike in premium to correspond with the elevated risk factors, but Carter advises homeowners that specialist insurers will always try to get the best price for their customer as at the end of the day they want their business on the books.

She adds: “The insurer may want work carried out to minimise the extra-risk, but if you comply with their requests the extra cost of the premium, compared to a lower risk property, will probably be somewhere between 5 and 30 per cent, depending on the circumstances.”

Judging by the rates quoted by Flux, the extra amounts it’ll cost are pretty reasonable – and certainly nothing compared to the amount you will be paying to replace and repair your belongings after a deluge leaves them under 2ft of water.

A two-bedroom detached house with a rebuild value of £200,000 and contents valued at £20,000 in a low-risk flood area such as Castle Rising in Norfolk (PE31 6BG) will cost around £148.17 when insuring it with the company. By contrast a similar property in a higher flood-risk area such as Carrow Road in Norfolk (NR1 1HS) will cost around £187.94 for the same level of cover – hardly worth taking the risk just to save yourself £40.

On the trickier issue of re-insuring a property in one of the areas hit by the recent floods, Carter believes it’s just a case of widening the search: “Residents should be able to get cover, provided there is an environmental report and proof that any work required to prevent recurrence of the flood has been carried out. They may need to shop around to get the best deal, but it makes sense to do that with any insurance.”
By Ariane Buteux

Source: ' Personal Finance & Savings '

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