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.
Extra cover: Top-up insurance policies give additional cover to your home and car, but consumers feel they have no choice but to cut back on them due to the cost of living crisis
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.
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
Car cover: Skimping on extras such as legal or personal injury insurance could come at a huge cost to drivers if an accident did happen
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
Compare home insurance, car insurance and travel insurance
Beat the renewal blues and compare the best deals for home, car and travel insurance.
Every year, these bills can creep up and the best way to save is to shop around to make sure your loyalty doesn’t cost you.
It should be the case that results and prices are similar across most comparison sites, but they may slightly differ, so it is worth checking a couple. We suggest:
HOME INSURANCE
Before you start, you will need to know your home’s rebuild cost for buildings insurance, plus details of previous claims. For contents you need to know the overall sum to be insured and any high value or special items.
MoneySupermarket
Compare cheap home insurance from 60 brands
Confused.com
Get a quote in less than 8 minutes
GoCompare
Free £250 excess cover, terms apply
Uswitch
See what you could save on your home insurance
Also check insurers such as Direct Line and Aviva that do not appear on comparison sites.
CAR INSURANCE
New Financial Conduct Authority rules are meant to stop insurers bumping up renewal quotes, but it still makes sense to check for better deals on the comparison sites. We suggest:
Plus Direct Line and Aviva that do not appear on comparison sites.
TRAVEL INSURANCE
It’s a foolish traveller who departs without insurance, even if it only covers medical emergencies. Compare before you buy with:
MoneySupermarket
Compare deals from 35 leading providers
Confused.com
See how much you can save from a few days to an annual policy
Also try Direct Line that does not appear on comparison sites and if you have previous serious medical issues consider a specialist insurer or broker.
Affiliate links: If you take out a product This is Money may earn a commission. This does not affect our editorial independence.
