- The rising cost of living is leading policyholders to pare back their insurance
- But this gamble risks Britons being left with massive bills if they need to claim
Consumers are increasingly being forced to cut back on optional insurance to save money – but they risk of footing bills of hundreds or even thousands of pounds if the worst happens.
The UK’s largest general insurer, Aviva, has said that Britons are stripping back non-essential parts of their home and car insurance policies, such as windscreen cover.
When buying car and home insurance, customers can choose to buy extra top-up insurance – for an extra cost. These deals cover things the main policy does not.
Sometimes these add-ons are included as standard with the price you pay for the policy, as a sweetener by the insurer.
But paring back the level of insurance cover you buy means taking on more risk, and facing the possibility of huge bills if things do go wrong.
Comparethemarket director Alex Hasty said: ‘What might seem a cheaper option could end up costing you more in the long run, if you need to claim.’
Here are some of the most common optional insurance policies and how much they cost you to have – or not have.
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Where possible we have also included figures from the Financial Conduct Authority regulator that show how many claims are made on the deals and how many claims are paid out.
However, there may also be an excess to pay with add-on insurance, so check the detail of policies before you buy.
Some of these add-ons, such as legal expenses cover for home insurance, are claimed on rarely – just once every 312 years, while the same cover for motor insurance is claimed on once every 100 years.
However, these deals are low in price and pay out 56 per cent and 95 per cent of the time respectively, making them solid options for the risk-averse.
CAR INSURANCE
Legal cover (before the event)
Premium cost: £15 – £30
Cost of covering the risk yourself: Potentially almost unlimited
Policyholders that claim per year: 0.5 per cent
Percentage of claims paid out: 95 per cent
Personal injury
Premium cost: £20 – £30
Cost of covering the risk yourself: Potentially almost unlimited
Policyholders that claim per year: 0.08 per cent
Percentage of claims paid out: 96.57 per cent
Breakdown cover
Premium cost: £15 – £70
Cost of covering the risk yourself: £50 to hundreds of pounds
Policyholders that claim per year: 6.69 per cent
Percentage of claims paid out: 93.3 per cent
Windscreen cover
Premium cost: £20 – £50
Cost of covering the risk yourself: £130 to £600
Policyholders that claim per year: No figures available
Percentage of claims paid out: No figures available
HOME INSURANCE
Legal cover (before the event)
Premium cost: £18 to £30
Cost of covering the risk yourself: Potentially almost unlimited
Policyholders that claim per year: 0.16 per cent
Percentage of claims paid out: 56 per cent
Home emergency cover
Premium cost: £21 to £60
Cost of covering the risk yourself: Potentially thousands
Policyholders that claim per year: 2.36 per cent
Percentage of claims paid out: 86.89 per cent
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