Victims of Recent Downpours Facing Spiralling Excesses

Reports in both the Guardian and on the BBC News website are highlighting the rising costs of insurance premiums for those that have been hit hard by the recent flooding in areas such as Cumbria.

The North West County has been amongst numerous places across the United Kingdom to suffer at the hands of intense flooding and insurance providers have used it as a reason to express the need for adequate cover in such conditions.

However, despite home owners carrying out various tasks to protect their home, as well as doing their best to minimise the damage by moving possessions to higher levels, insurance companies are cited to be rarely helping them.

As a result, despite their best efforts, there are homes that are becoming virtually worthless and impossible to sell on because of the insurance excesses caused by flooding.

As a result the National Flood Forum, a charity that provides advice and support to people who are victims of flooding, is urging insurance companies to change its attitude towards flood victims and protection measures that are in place.

They feel that it is unfair that despite work to protect the home, some of which can stretch into tens of thousands of pounds, high insurance premiums and excesses are still being applied to properties.

The Guardian newspaper has spoken to various people that have succumbed to flooding, citing insurance figures that have more than doubled since 2008. They refer to AXA, who have since imposed a maximum limit for flood excesses of £10,000.

The insurance industry has insisted that they do not increase the flood excess on the majority of properties. A press release from MoneySupermarket.com earlier in November pointed out that insurance providers have improved their handling of flooding in recent years and home owners should still ensure they are taking preventative measures to minimise damage.

Earlier in the month, the BBC also pointed out that the government and the insurance industry had agreed that the providers would continue to insure homes that are at risk of flooding, with the real difficulty being the switch to another provider in the future.

Sources: Guardian.co.uk, BBC News and MoneySupermarket.com Press Release

Reports on the Weather Issues Facing the UK

Each year the UK faces extreme weather conditions that often lead to flooding and gale force winds and as Cumbria struggles to get back to its feet following the horrendous flooding it has seen over the last couple of weeks, MoneySupermaket.com and the BBC refer to insurance premiums during this time.

Flooding can cause considerable damage to the home; this much is a given, but both sources give indications as to the habits of insurers and those who have suffered at the hands of flooding and other weather-related damage.

In light of the recent floods in Cumbria, Dumfries and Galloway, Julie Owens of MoneySupermarket.com highlights the need for Home Insurance: “Unfortunately this sort of event serves as a reminder to those living in flood risk areas to make sure they are prepared for these eventualities and making sure they are fully insured is paramount.

“People living in ‘at risk’ areas should check the details of what their buildings and contents policies cover, as well as the limits and excesses on both. It pays to make sure that the quality of your insurance is high and you won’t be left out of pocket if you have to make a claim.”

She highlights that in recent years, insurance providers have improved the way in which they handle large scale flooding incidents like this. However, home owners, who may have to make claims on both contents and building insurance, should take extra steps to minimise damage, such as moving valuables upstairs and tying down garden appliances that could cause damage to the house.

“Your insurer will expect you to make attempts to minimise your claim”, she adds.

The BBC refers to a deal that was agreed upon between the government and the insurance industry that means that insurers will continue to insure homes at risk of flood. However, the real difficulty in this situation may be switching to a new insurance provider.

The average costs of flood damage to the home each year amounts from £20,000 to £40,000 according to the ABI, with these figures expected to rise with global temperatures. In the current situation in Cumbria, Dumfries and Galloway, the claims could exceed £100 million in total.

Source: MoneySupermarket.com Press Release Nov 2009 and BBC News

Only a 2.6% Rise Since 2007

Home owners going without home insurance to cut the costs of everyday life could breathe a sigh of relief this year as Sainsbury’s Finance releases figures showing only a small rise in the cost of running the average house since 2007.

The cost of running the household can hit unwanted highs and coupled with the ongoing recession it has meant that some people are cutting back on items such as home insurance. However, industry figures warn that such action could end up costing people more in the long run.

Sainsbury’s Home Insurance reveals that the average cost of running the home is around £11,455 annually according to sources such as the Office of National Statistics. This is around £220 a week and a rise of only 2.60% since 2007. Sainsbury’s cites the reduction of mortgage payments as the reason for the lower rise as other areas of the house have actually risen in costs.

One area that has risen is the cost of gas bills in the UK, which have risen on average by around 26.68% since 2007 from £651 to £812 (estimated), with electricity at £14.69%. This is according to figures from Ofgem.

So home owners should think twice about cancelling or failing to take out insurance policies, with a range of risks still facing the average home. Sainsbury’s has recently highlighted the reduction of home insurance claims in 2009, which compared against the increase in burglaries suggests a reduction in the number of people with home insurance. The insurer estimates that 946,000 people have cancelled or reduced their home insurance cover from 2008 to 2009, with 700,000 citing their financial situation.

“We spend thousands of pounds each year running our homes and have often invested even more money on furnishings and decorating,” said Joanne Mallon, Home Insurance Manager for Sainsbury’s Finance, “Yet, so many people are putting this investment at risk by cutting back on their home insurance.

“Good quality home insurance doesn’t have to be expensive.”

As ever, customers are encouraged to shop around for the best deal they can find in home insurance (as is the case with any form of insurance). It could make the difference between no insurance and finding a policy at the right price and an adequate level of protection.

Source: Sainsbury’s Finance Press Release July 2009

According To Figures Obtained by Sainsbury’s Home Insurance Claims Index

People regularly fear for their belongings and if we are to believe the news, there are crimes going on regularly in the UK, with the contents in our homes under threat.

However, according the Sainsbury’s Finance, there has in fact been a drop in the amount of claims on people’s home insurance in 2009, whilst the average size of each claim also fell.

Sainsbury’s Home Insurance recently launched their Home Insurance Claims Index, which is designed the monitor the amount of claims made during intervals of six months, whilst also looking at their individual size.

In the first half of 2008 there was a worrying statistic made aware to the leading insurance provider that showed 527,000 claims were made in the first half of the year. However, by the time the same period finished in 2009, this had dropped to 373,000, with the average volume that made up each claim showing a drop from £918 to £735.

The figures represented the number of claims issued to Sainsbury’s Home Insurance and clearly do not account for the amount of claims made to other leading insurance providers. However, any form of drop in the amount of home insurance claims is something to be happy about, though home owners should still be vigilant.

During both 2008 and 2009 the most popular form of claim was water escaping, followed by storm damage, accounting for around 18% and 16% in 2008 respectively. This changed to 19% and 18% respectively in 2009. The top 5 claims during both periods also included accidental damage to the building, theft from the property and accidental damage to possessions such as TV’s, Videos and Computers.

“Our index shows the huge impact adverse weather conditions can have on the number and value of home insurance claims made,” said Lucy Hunter of Sainsbury’s Home Insurance.

“The first quarter of 2008 brought particularly severe conditions, and storm damage in that quarter accounted for 21.8% of all claims made.

“For the six months overall, storm damage was still the second most prevalent claim in 2008, accounting for 15.9% of claims made. In the first half of 2009 it only accounted for 8.5% of claims.”

A Quarter of Burglary Victims Affected

When applying a monetary figure to the consequences of suffering a burglary, the first task that might come to mind is weighing up the costs of numerous possessions, such as the television set, a DVD collection or other items around the house.

However, if recent figures are to be taken into account then home owners should take other costs into account – those associated with identity theft.

According to LV, the Liverpool Victoria Friendly Society, around a quarter of those that have suffered a burglary in recent times have also succumbed to ID theft, with the average cost of solving the problem amounting to £2,150.

As a result, the Friendly Society, which provides home insurance and other policies, has offered help to those that are covered by its home insurance policy. Those with LV’s home insurance will now be able to access an identity fraud helpline, which is free of charge.

LV= points out that when burglars enter a home, it can often be too easy for them to find  personal documents as the majority of home owners keep them in the same place. They quote an anonymous fraudster that highlights the issue:

“So many people make my job really easy by sticking all the key documents together in one place. And for all the family too, so you often get three or four identities for the price of one, so to speak”

Fraudsters can easily steal a person’s identity with items such as credit cards, ID cards, National Insurance cards and statements from the bank. As a result, they are highly valued on the black market, making them prized possessions for would-be thieves.

So as well as ensuring that home owners have home insurance, it is being urged that they also have security measures in place to protect themselves. This includes ensuring that personal documents are secure and are not all located inside say, a single handbag.

The problem could be of particular concern if statistics from Sainsbury’s Finance are taken into account from November. From the beginning of April to the end of June 2009, the insurer states that 67,000 claims on home insurance were made as a result of theft.

Sources: LV= Press Release Sept 2009 and Sainsbury’s Finance Press Release Nov 2009

Home Owners Should Ensure that they are Adequately Covered

Burglaries in domestic properties rose by 2.8% from the beginning of April to the end of June 2009 compared to the same period the year before, according to figures from the Home Office released last month.

The same period in 2008 saw 65,200 reported burglaries, with this figure rising to 67,000 this year, prompting Sainsbury’s Home Insurance to warn home owners to make sure they are properly insured.

The leading insurance provider revealed that the amount of claims made on home insurance policies has dropped this year, which could highlight the problem according to some people, who point out that it reveals that people might be underinsured. Sainsbury’s reveal that the drop in the amounts of claims made during the reported period was 13%.

Theft of some sort corresponds to 15% of claims made to Sainsbury’s Home Insurance, which means that members of the public are urged to check their policies and ensure that they are covered. They should also read the small print of any policy they are considering taking out so that they will not be left out of pocket if something should occur.

Sainsbury’s also suggest a correspondence between the rise in burglaries and the ongoing recession, with their Home Insurance Manager Ben Tyte commenting on the issue: “A rise in burglaries may not be a surprise during a recession but what is alarming is the decrease in theft-related claims over the same period which we fear may indicate that fewer people have adequate home contents cover in place.

“A significant proportion of all home insurance claims relate to theft, and we would urge homeowners to make sure their home security is up to scratch and that they have adequate home contents cover.”

In many cases, when people are feeling financial strain, insurance policies might be the first to come, but during a recession when everyone is feeling the pinch it leaves people particularly vulnerable to theft. It means that in the long run, getting rid of insurance might not save money at all.

“If you are not insured, becoming a burglary victim could severely hit your pocket,” Tyte adds.

Source: Sainsbury’s Finance Press Release Nov 2009

Home Owners Urged to Take Extra Care

When we take out any form of insurance, we might be doing so because we fear a range of incidents occurring, from theft and damage of items to structural damage.

However, one way in which both of these areas comes under great threat is through fires. In a recent press release from Aviva Insurance, they cite statistics released from the Association of British Insurers that shows a rise in fire claims from early 2007 to early 2009.

It means that the costs associated with fire damage are now at an all time high, with figures at their greatest amount since records began.

However, whilst these statistics are worrying enough on their own, more shocking is the report that many of the fire claims on home insurance are as the result of arson attacks on property.

“Fire claims are at their highest and we are seeing an increasing number of arson claims crossing our desks” said Allister Smith of Aviva, “Over 40% of all fires in industry and commerce are now started deliberately [according the figures from claims in 2009]”

He warns home and, in particular, business owners to be vigilant against such attacks. He cites a common cause of arson being waste storage outside of properties, where arsonists have been known to ignite bins and place them up against or near the property.

A range of preventative measures are encouraged by the insurer, ranging from businesses isolating electricity supplies to ensuring regular inspections are carried out on vacant or unfinished properties.

“Property owners should undertake risk management by implementing a number of cost effective measures.

“The Regulatory Reform (Fire Safety Order) 2005 (RRO) emphasises that the owner or employer in every workplace has a legal responsibility for implementing and complying with the Order. Businesses should have a strategy in place for managing fire safety, which includes identifying the risk of arson and acting to reduce it.”

Aviva cites statistics that claim 9,000 fires take place in empty buildings annually and damage caused the properties that are yet to be finished or generally unoccupied, are of great concern to insurance providers.

So having home insurance or any other form of insurance does not mean that people should not take necessary preventative measures to protect their property. With fire a serious threat, people should be very careful.

Source: Aviva Press Release Sept 2009

Large Number of Students without Home Insurance

Being a student is about liberation; leaving home and finding new-found freedom living in your own flat or house. It is often cited as the best years of people’s lives, with flat parties, plenty of free time and of course studying. However, there is large concern over the amounts of students that do not have home insurance when living in a student property. The consequences of such actions could take the bite out of some people’s student years.

According to research from Sainsbury’s Home Insurance, around 34% of students to do have any form of cover for their possessions, which is worrying considering the average value of student belongings (£3,500).

The study of 1,000 students across 134 institutions of Higher Education also found that in addition to those that say they do not have insurance, 10% of those asked were not sure if they had any cover.

Student housing can therefore be under great risk from burglaries, with the total amount of student belongings in the UK that are uninsured amounting to £573 million. This figure was reached by Sainsbury’s Finance based on the average worth of student belongings and the average number of people in a house (four). Some student properties can include an even higher amount of bedrooms, meaning that the amounts of uninsured items inside a property could be worryingly high.

Sainsbury’s Finance therefore urges students to make sure they have cover, whilst also taking the usual preventative measures to keep their property secure (such as locking doors and windows and marking possessions with ultra-violet pen).

 “With an estimated one in three students falling victim to some sort of crime each year [based on Home Office figures], it’s worrying that so many students go off to university without any insurance cover in place for their possessions” said Ben Tyte of Sainsbury’s Home Insurance. 

“However, before splashing out on insurance, students should certainly check to see if their parents’ household contents insurance policy might provide cover whilst they’re studying away from the family home, and also to check that this cover will be adequate should they need to make a claim.”

It is common for young people leaving home for the first time to think they are covered by their parents’ contents insurance; however this is not always the case. It is similar to the case with television licences, where students also fall foul to laws requiring them to purchase a licence.

Source: Sainsbury’s Home Insurance Press Release Sept 2009