Homeowners take risks this winter as home emergency cover declines

 

General insurance (GI) specialist Paymentshield is cautioning homeowners against cutting back on home emergency cover in the run up to winter, as its latest data suggests homeowners are increasingly opting for less thorough cover in a bid to save money. 

Take-up of home emergency cover declined in the six months from April 2023 to its lowest level since April 2020 among homeowners, indicating cost of living pressures are leading to cutbacks in protection.

We’re approaching peak time for issues occurring in the home that would typically result in home emergency claims. Paymentshield’s claims data shows that December consistently sees the highest spike in claims, with the most common type of claim relating to boiler breakdowns due to frozen pipes.

December 2022 was one of the worst months on record for claims, as a 10-day spell of arctic airmass brought some of the lowest winter temperatures the UK has ever seen. Just over 65% of all Paymentshield home emergency claims in 2022 were heating or boiler related. 

The average cost of a claim was £275, with total home emergency claims from Paymentshield policyholders amounting to over £110,000 in 2022.

The trend for declining cover – while incredibly risky – is not entirely unexpected. In research from Paymentshield earlier this year, conducted with over 2000 UK adults in partnership with YouGov, 51% of adults said they’d be looking at their financial products more this year with a view to saving money.

And new research from Defaqto, one of the UK’s most trusted sources of financial product and market intelligence, shows that just over one in ten people have cancelled an insurance policy this year to help combat cost-of-living.

Emma Green, Distribution Director at Paymentshield, comments:

“We understand that people are trying to make savings where they can, but scrimping on cover really is a false economy. For many people, unexpectedly having to fork out hundreds of pounds of their own money in the run up to Christmas, and as heating bills rise, is simply not manageable.

“Many people will need guidance on where is a sensible place to make savings and where isn’t. We’d really recommend speaking to a financial adviser who will be able to help, and who can share examples of what exposure to certain risks could look like financially.

“Naturally, consumers can expect to pay slightly more for a policy that covers them adequately for home emergencies, but a few extra pounds could save them big long-term.”  

Angela Pilley, a home insurance expert at Defaqto, adds:

“It is understandable in the current economic climate that consumers are looking to make savings where possible with some reviewing financial products and the insurance covers that they have in place. This can be risky if consumers don’t fully understand the benefits of a product or the potential consequences of removing cover. Home Emergency cover is an example of this especially as we are approaching the very unpredictable British winter.” 

Find out more about home emergency cover 

Article last updated: 01/12/2023

Get more insights from our in-depth guides

A guide to Tenant's Contents Insurance

A guide to tenant's contents insurance

A handy guide to have in order to understand the insurance you might need as a tenant. Plus, the key features and benefits to look out for when purchasing a policy.

In Home life

Buyers-guide-home-insurance

A buyer’s guide to home insurance

A handy guide to have in order to understand the key features and benefits to look out for when purchasing a policy.

In Home life

freezing-temperatures

A guide to fighting freezing temperatures

A guide to help you understand what you might need to do to prepare your home for freezing temperatures, coping during them and tips for how to get back on your feet afterwards.

In Home life

landlords guide

A buyer's guide to landlord’s insurance

This guide helps explain the key features and benefits you'll need to look out for when purchasing landlord insurance.

In Landlords

A-GUID~3

A guide to beating the storm

Our storm guide is full of advice to help you understand the risks and how to keep safe until the storm has passed.

In Insurance tips

house a home-39

How to make a house a home

Give your home the ‘wow factor’ and get helpful guidance on when you may need to seek professional advice.

In Home life

ULTIMA~1

The ultimate guide to moving home

Moving to a new house or getting your first home? Our guide is here to make the lead up to move in day as stress free as possible.

In Home life

A-GUID~2

A guide to keeping afloat in a flood

A guide to help understand what to do for a flood and how to get back on your feet afterwards.

In Insurance tips

Lets-talk-money

Let’s talk money

Created in collaboration with Defaqto, this guide gives you information about money at every stage of life

In Insurance tips

A-GUID~1

A guide for tough times

In this guide, you’ll find practical tips to help when times are tough. It provides reassurance that there's steps you can take.

In Home life