Last Updated on July 19, 2023 by Melissa S.
This article was written in collaboration with HSBC.
With the cost of living rising dramatically, many of us are looking at a variety of ways to reduce our spending. This could include finding ways to save money on heating costs, petrol, or reducing your supermarket spend.
But is cancelling your home insurance policy a good idea to save money? In this article, we will explore the pros and cons of doing so. So before you even think about cancelling insurance, consider the points below to make an informed decision.
Why do people get home insurance?
Above all else, knowing your valuable possessions are covered against theft or accidental damage gives peace of mind. In a recent YouGov survey of 2000 people, 49% said it was a necessary purchase, with 41% saying it gave them peace of mind and 31% stating it was “reassuring” to know their belongings were covered.
Although 30% of those surveyed said home insurance was “expensive”, and 61% of people surveyed had not needed to make a claim. If you are paying for something you feel you aren’t using, it can be tempting to save money by cancelling.
However, the cost of insuring your possessions would be much smaller than that of replacing an expensive household item, such as a TV, smart phone or kitchen appliance.
How to get the best deal on your home insurance
Researching prices is key to getting a good deal. Letting your insurance auto renew annually might be much less effort, but it can also mean you are potentially paying over the odds for the cover you are receiving.
In the YouGov survey, 47% of people spent up to an hour researching which policy to choose, with price comparison sites being the most popular way to select an insurer. Other less popular ways included recommendations and customer reviews, with 16% and 12% of people using these methods respectively.
Price vs Quality of Cover
While the overall price of the policy is the driving factor for a massive 69% of those surveyed, an even larger 71% of people said the quality of cover is their top priority.
It is definitely important to know exactly what you are covered for, especially when considering expensive household items. For the sake of a small amount extra per month, your policy could give you much better protection and peace of mind.
Unsurprisingly, 72% of people said they understood what they have purchased, but 10% did not. This could lead to an unfavourable situation where the customer is paying for a policy that does not meet their needs.
Make sure you read through your policy carefully so you are not underinsuring, or even paying too much for the cover you need. For example, if you are renting, it is unlikely you need building insurance as this would be the landlord’s responsibility.
Review your policy annually, even if you are sticking with the same provider
Even if you are staying with the same provider, it is important to read through and review your policy each year. If it is a while since you have looked at your policy, you may be unsure of what your cover actually entitles you to.
It is essential to update your insurance policy to reflect any major new purchases or change of circumstances to ensure your insurance is not deemed invalid.
In conclusion: Is Home Insurance worth it?
Although everyone’s living circumstances are different, for the vast majority of people the benefits of having home insurance outweigh the drawbacks.
For a relatively small monthly fee, you can enjoy peace of mind knowing that essential and expensive household items are protected should the worst happen.
In terms of saving money, ensure you are on the best plan for your needs and consider it an investment in protecting your possessions.