Research by price comparison site Money Expert has revealed that a quarter (25%) of people are only willing to pay for mandatory insurance products, such as home or motor insurance, due to strained household budgets.
The rising costs of insurance, combined with the cost of living crisis, have impacted millions of UK households. Money Expert commissioned a survey to understand people’s attitudes towards insurance products currently available on the market.
The survey revealed the most common insurance policies that people hold. Car insurance, being a legal requirement in the UK, is the most popular policy with 68% of respondents. Two-thirds (66%) also held home insurance, and just over a third (37%) had life insurance, both often required to obtain a mortgage.
As the cost of living continues to bite, the survey suggested people are tightening their budgets and reducing the number of insurance policies they hold. Income protection insurance was the most likely to be ditched, with 13% indicating they wouldn’t renew their policy. Pet insurance was also at risk, with 12% likely to cancel or not renew, despite 57% of British households owning a pet. Additionally, 10% stated they would not take out travel insurance to reduce costs.
Despite widespread cost-cutting, nearly a quarter (24%) noted they wouldn’t cancel any of their insurance policies due to the high risk of not being protected. Furthermore, 20% stated they could afford their policies without issues.
To save money on insurance, 41% of respondents mentioned they would reduce the number of add-ons such as key cover, income protection, and accidental damage. Another 37% suggested haggling with their insurer for a better deal, 33% would increase the excess to reduce the overall premium, and nearly 20% would opt for the most basic cover available, such as third-party insurance.
When asked about measures to prepare for emergencies without insurance, 16% admitted they had no plan in place. However, 37% had a savings pot for emergencies, 15% would use a credit card, and 7% would rely on family or friends or consider applying for a personal loan.
Liz Hunter, commercial director at Money Expert, commented: “Despite the cost of living crisis, it’s clear that people still think paying for insurance is important and, while it can be expensive, it’s not worth the risk of not being protected. We can see that people are becoming more careful with what they’re spending, including their insurance products. Naturally, we’ll continue to see strong demand for motor, life, and home insurance products, but we’ve seen significant rises in premiums over the past few years, meaning consumers will want to save money where they can.”
“We’re likely to see more people reassessing what they need from their insurance, and we’ll likely see non-essential products being dropped in favour of the mandatory policies. The data also outlined that consumers are more aware of the additional cover that comes with certain policies, which can significantly increase the price of the premium and are likely to be dropped to reduce the overall cost. Until we start to see a reduction in costs for insurance, particularly motor and home products, we’ll continue to see their impact on household spending and likely make consumers reevaluate what insurance policies they need and what they can do without for the time being.”
