Express.co.uk ~ Wednesday November 24,2010
By: Esther Shaw
CONSUMERS are being warned they could be putting themselves at financial risk by cutting back on cover that protects them in the event of fire, flood, theft or accident.
The warning has come from the British Insurance Brokers’ Association (Biba) after its findings showed that 57 per cent of brokers have seen consumers reduce their level of insurance protection during the economic downturn compared with 23 per cent last year.
“The steep rise in people cutting cover is very worrying,” said Eric Galbraith, chief executive of Biba. “We understand that times are tough but consumers should take care not to leave themselves exposed. It could be false economy and cost them thousands of pounds for repairs or to replace belongings.”
The most common examples were consumers reducing levels of sums insured, for example on home insurance, increasing excesses and scrapping cover that is deemed “non-essential”.
“Reducing your sums insured could be a costly mistake as if it isn’t accurate, it could adversely affect a claim payment,” said Galbraith. “Customers also need to ensure they will be able to afford higher excesses should the unexpected happen. The key is to think long and hard about the cover you need to meet the financial consequences.”
The good news is there are other steps you can take to keep a lid on costs.
Homeowners who want to cut the cost of cover can potentially save money by buying their buildings and contents cover from the same insurer and installing a burglar alarm. Motorists can save money by investing in an alarm or immobiliser and by parking in a garage. Travellers may also be able to cut costs by purchasing an annual multi-trip policy rather than a single-trip one.
More savings can be made by paying premiums upfront, as most insurers charge interest on monthly payments.