Why are private tenants not taking out home insurance?
By Anna Bibby, 25 April 2019
It’s always recommended for tenants to have home insurance in place to protect their possessions in the event of an emergency. However, recent findings from The AA have revealed that an alarmingly low number of private tenants are not covered by home insurance.
The AA released its latest Insurance Consumer Index (ICI) and revealed that only a third of tenants in the private rental sector have taken out home insurance. In the survey, 54% of private renters opted to get contents insurance, but 33% decided to have no insurance whatsoever, leaving them vulnerable in the event of a break-in, fire or any other emergency in their home. The issue seemed to be especially prevalent amongst low income families, with only three in 10 low income households choosing to take out insurance.
In contrast, tenants renting under the housing association were more likely to have taken out insurance. The report revealed that 64% of residents in Housing Association properties have content insurance and 27% have no insurance.
From a regional perspective, London and the North West had the highest percentage of tenants without insurance at 15% and 10%, respectively. The North East, West Midlands and Wales followed at 9%.
So, why are so few private tenants choosing not to take out insurance? According to Janet Connor, the managing director of AA Insurance, it was a mixture between affordability and the fact that they don’t really see it as a necessity. She said: “The widely reported high cost of private rent may be a reason why renters are not buying insurance. With only three in 10 low income households saying they do not have insurance; it is possible they see insurance as a ‘nice to have but cannot afford’ purchase”.
According to a survey by Direct Line Insurance in April, tenants are also failing to take out insurance because they believe that they’re covered by their landlord’s insurance. Out of all the respondents, 29% were under the impression that they were covered with their landlord’s buildings insurance policy, which is a large amount of tenants to be misinformed.
Those renting under a Housing Association are more likely to be insured because they receive advice from their housing manager, who recommends in-house insurance policies. It seems that private tenants need to receive more advice from their landlord when it comes to insurance, especially those who are renting for the first time.
It is concerning that so few tenants are choosing to take out insurance, whether it’s due to affordability or lack of information. Tenants need to do their research on insurance policies and make an informed decision from there. Landlords also need to emphasize the importance of content insurance and make it abundantly clear that tenants are responsible for taking out their own insurance. According to the Money Advice Service, the average annual cost of content insurance is £59.22 which amounts to £1.13 a week, a very small expense for something so important.
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