Credit Crunch: Home Insurance

HOMEOWNERS in the North-East have been warned that scrapping insurance policies to help meet the rising cost of living could prove disastrous.

Darlington-based insurance broker BiB has received reports of many residents abandoning home and contents cover as a way of making savings in the present troubled economic climate.

But the Northgate firm is urging anyone considering making such economies to learn lessons from the tragic events of just a year ago when parts of Britain were devastated by severe flooding and thousands of people were forced to flee their homes.

Insurance claims arising from the disaster were reputed to have topped £3bn and, with experts fearing that such out-of-season flooding could occur more regularly in future, BiB is hoping that its warning will be heeded.

Veronica Ryan, retail operations manager, said it was understandable that people would be tightening their belts given the current financial difficulties affecting the country.

But she warned that home and contents insurance was an “ill-advised” place to start making cutbacks in stretched budgets.

“Home and contents insurance are very sensible, if not essential, things for every homeowner or occupier to have in place so that, in the event of a disaster of any kind, they are assured of the ability to continue to live in the style to which they have become accustomed,” she said.

“There were some real tragic stories after the 2007 floods and you would think that homeowners and occupiers would have learned a lesson, but some have very short memories.
When the cost of living increases, something has to give and insurances are an easy, but ill-advised, target.

“As people struggle to pay their mortgages they look at what is left at the end of the day and make cuts, sometimes going into default with payments without considering the consequences.

“If they were to call their insurance broker and discuss the problem they may be able to make very significant savings on their premiums by taking on an increased excess, for example, which would reduce their outgoings, but still leave cover in place in case of an expensive situation or a catastrophe.”

Premiums may also be reduced through burglar alarms, fire alarms or other security measures being fitted, as well as residents setting up Neighbourhood Watch groups in their community.

Anyone wanting further information about reducing their premiums should seek the expert advice of an insurance broker. BiB can be contacted on (01325) 353818.