One in eight households potentially over-insuring
07 December 2024At one of the busiest shopping times of the year, consumers are encouraged to think about whether they might be over-insuring their new items; one in eight households with contents insurance are also insuring three or more other items separately (13%).
New polling, commissioned by the abrdn Financial Fairness Trust and analysed by a team of researchers at the University of Bristol, questioned around 6,000 people about general household contents insurance and individual items insured. Over a third of those with contents insurance had also insured one or more household items separately (36%). This was equivalent to 23% of all households. The most commonly insured item was a mobile phone (13%), followed closely by a washing machine or dishwasher (12%).
Older people are far more likely to have home contents insurance than younger households, 87% of over 70s had household contents insurance, compared with 47% of those in the 30-39 age group. However, those young adults who do have contents insurance are disproportionately likely to also insure other individual items separately, with 58% of young adults with contents insurance doing so, compared to just 32% of over 70s.
The results of the study raise questions about whether many households’ contents insurance may not be fit for purpose, given so many are taking out other insurances. While a lack of insurance (or under-insurance) remains a problem among many communities, other households may be over-insuring. These households are encouraged to check whether they have existing insurance in place before taking out new individual item insurance. However, some individual item policies have additional features, such as accidental damage insurance for mobile phones.
The research also shows a difference in approach to insurance between different ethnic groups. Those from a minority ethnic groups*, were significantly less likely to have contents insurance than those from a White British background. However, those from Asian and Black backgrounds who already had contents insurance were more than one a half times more likely to have specific household items insured than those from a White British background.
Poorer households (those in the bottom income quintile) were least likely to have contents insurance. Those renting (privately and socially) were also significantly less likely to have contents insurance than those who own their home outright.
Mubin Haq, CEO of abrdn Financial Fairness Trust, said:
“For households on lower incomes, a fridge or washing machine breaking is a financial shock many cannot afford. It’s understandable that they may choose to insure individual items at a lower cost than the expense of full home contents insurance. However, the cost of these individual policies can add up and many families are leaving themselves vulnerable in situations where multiple items need to be replaced, such as fire or burglary."
Professor Sharon Collard, Chair in Personal Finance at the University of Bristol, said:
“While we know that lots of households lack adequate insurance cover, there is also a risk that some households end up purchasing more insurance products than they need. We would encourage people to check whether they already have sufficient insurance in place before taking out a new policy. We would also encourage insurers to adopt best practice guidance to ensure policies are written transparently and in plain English.”
About the research
This analysis is based on data taken from an Opinium survey of 5,804 UK adults. It was commissioned by abrdn Financial Fairness Trust for its Financial Fairness Tracker series, conducted between 4-13 November 2024. The sample for the research is designed to be representative of the UK adult population across a range of socio-economic groups and of differing political views.
This data has been further broken down and analysed by the Personal Finance Research Centre (University of Bristol), with the focus of the Financial Fairness Tracker being those who are responsible (solely or jointly) for their household finances.
This is the 11th wave of the survey. Previous editions are available here.
* minority ethnic group (Other White, Asian, Black, Mixed or other).
New polling, commissioned by the abrdn Financial Fairness Trust and analysed by a team of researchers at the University of Bristol, questioned around 6,000 people about general household contents insurance and individual items insured. Over a third of those with contents insurance had also insured one or more household items separately (36%). This was equivalent to 23% of all households. The most commonly insured item was a mobile phone (13%), followed closely by a washing machine or dishwasher (12%).
Older people are far more likely to have home contents insurance than younger households, 87% of over 70s had household contents insurance, compared with 47% of those in the 30-39 age group. However, those young adults who do have contents insurance are disproportionately likely to also insure other individual items separately, with 58% of young adults with contents insurance doing so, compared to just 32% of over 70s.
The results of the study raise questions about whether many households’ contents insurance may not be fit for purpose, given so many are taking out other insurances. While a lack of insurance (or under-insurance) remains a problem among many communities, other households may be over-insuring. These households are encouraged to check whether they have existing insurance in place before taking out new individual item insurance. However, some individual item policies have additional features, such as accidental damage insurance for mobile phones.
The research also shows a difference in approach to insurance between different ethnic groups. Those from a minority ethnic groups*, were significantly less likely to have contents insurance than those from a White British background. However, those from Asian and Black backgrounds who already had contents insurance were more than one a half times more likely to have specific household items insured than those from a White British background.
Poorer households (those in the bottom income quintile) were least likely to have contents insurance. Those renting (privately and socially) were also significantly less likely to have contents insurance than those who own their home outright.
Mubin Haq, CEO of abrdn Financial Fairness Trust, said:
“For households on lower incomes, a fridge or washing machine breaking is a financial shock many cannot afford. It’s understandable that they may choose to insure individual items at a lower cost than the expense of full home contents insurance. However, the cost of these individual policies can add up and many families are leaving themselves vulnerable in situations where multiple items need to be replaced, such as fire or burglary."
Professor Sharon Collard, Chair in Personal Finance at the University of Bristol, said:
“While we know that lots of households lack adequate insurance cover, there is also a risk that some households end up purchasing more insurance products than they need. We would encourage people to check whether they already have sufficient insurance in place before taking out a new policy. We would also encourage insurers to adopt best practice guidance to ensure policies are written transparently and in plain English.”
About the research
This analysis is based on data taken from an Opinium survey of 5,804 UK adults. It was commissioned by abrdn Financial Fairness Trust for its Financial Fairness Tracker series, conducted between 4-13 November 2024. The sample for the research is designed to be representative of the UK adult population across a range of socio-economic groups and of differing political views.
This data has been further broken down and analysed by the Personal Finance Research Centre (University of Bristol), with the focus of the Financial Fairness Tracker being those who are responsible (solely or jointly) for their household finances.
This is the 11th wave of the survey. Previous editions are available here.
* minority ethnic group (Other White, Asian, Black, Mixed or other).