Fire Insurance Claims and Contents Insurance in the UK

Matthew Franchise Anderson

Research published in June by the Association of British Insurers (ABI) reveals that almost a quarter of people admit to cancelling or not renewing their contents insurance and fire insurance to save money. Other insurances are also being ditched, despite the fear of being unable to cope with the unexpected being the biggest single concern for families in the recession.

The survey* highlights that:

* Nearly a quarter of people (22%) say that to save money in the last year they have cancelled or not renewed their home contents insurance. 17% say that they have cancelled or not renewed their buildings cover. In Scotland, the figures rise to 28% for contents and 21% for buildings.
* 13% have cancelled their life insurance.
* One in five (21%) say that they are seriously considering reducing or stopping saving.

This lack of cover is leaving many families even more exposed to their biggest fear in the recession: nearly half (49%) of those surveyed said that they currently worry about their inability to cope with a sudden event, such as a burglary.

With Government figures showing a 4% rise in home burglaries in the last quarter of 2008, the ABI warns that families who are tempted to save money by cutting back on their home insurance should think again. It should also be noted that fire insurance claims were down by 10% last year as people have failed to renew.

Nick Starling, the ABI’s Director of General Insurance and Health, said:
”Many families will be looking to trim their budgets as the recession bites but cutting back on home insurance is a false economy. Last year insurers paid over 6,000 claims, paying out some £7 million, every week, to burglary victims. Without insurance, becoming another crime statistic could plunge you deeper into financial trouble, from which it may take years to recover.

“The insurance market remains very competitive, so shopping around can help you get a good deal, while ensuring that you are not at the mercy of the unexpected.”

Consider and prepare for the unexpected

Businesses and homeowners battling through the recession are being hit by an increasing fire threat according to the most recent figures released. The cost of fire damage in 2008 rose by 16% on 2007 to a record £1.3 billion – £3.4 million every day. So despite a drop in fire insurance claims there is still a great need to be covered

The figures show that in 2008:

* Commercial fire damage cost £865 million, up 15% on the previous year. School fires alone cost £33 million, with a serious school fire occurring every month on average.
* Fire damage to homes cost £408 million, up 17% on the previous year.

Tony Smith, the founding director of Spettro, is alarmed by the increase in insurance claims coming from property fires:
“These figures really highlight both the importance of fire insurance, and reducing and managing the fire risk. Research shows that arson tends to increase during an economic downturn. If it is a fire started on purpose to recover from financial difficulties it is important to remember that claims assessors use increasingly speciliased equipment that can invalidate a claim by proving arson but also that starting fires endangers lives. If a fire is started by someone intending malicious damage or to cover a burglary, it is important to be fully covered to recuperate losses.”

Spettro deals with claims for flood, fire, storm, impact damage and burglaries. They also are involved in rental property refurbishments and detecting the origin of water leaks. Spettro Limited is regulated by the Financial Services Authority which allows them to loss assess and mediate with all the major insurance companies, a service which is free of charge to the insured.

* These are the findings from a national survey of over 2,000 adults conducted by YouGov, on behalf of the ABI.