As a broker, we understand the frustrations that many homeowners face when it comes to the rising cost of home insurance. With the cost of living increasing, it’s tempting to view insurance premiums as an optional expense. However, cancelling your home insurance could leave you financially vulnerable in ways that far outweigh the perceived savings. Here's why you might be considering cancelling your policy - and why you should reconsider.
Why Are Home Insurance Costs Rising?
Before addressing the consequences of cancelling, let’s first look at why premiums are increasing:
- Increased Cost of Building Materials and Labour - labour shortages and inflation have caused the cost of materials and repairs to skyrocket, resulting in an increase in the cost of claims. Insurers need to reflect these increases in their pricing to remain sustainable.
- Higher Home Values - as property values rise, the cost to insure homes increases, reflecting the higher replacement or repair costs.
- Aging Homes - older homes often require more maintenance and are more prone to issues like plumbing failures or electrical fires, leading to higher risks for insurers.
- Rising Inflation - general inflation affects labour, materials and service costs which drive up the expenses insurers face when processing claims.
- Climate Change & Severe Weather - storms, flooding, and other extreme weather events are becoming more frequent and severe. Insurers are paying out more in claims, which drives up premiums for everyone.
- Increased Claims Frequency - beyond natural disasters, other claims, such as accidental damage or theft, have risen, further pressuring insurers to adjust premiums.
- Underinsurance Concerns - insurers may adjust premiums to address underinsurance, ensuring homeowners have sufficient cover to match the true cost of rebuilding or repairs.
Why You May Be Considering Cancelling
For many households, the financial squeeze is very real. Cancelling your home insurance might seem like a logical way to free up money for other pressing needs. After all, if you haven’t had to file a claim in years, it can feel like you’re paying for something you never use.
But here’s the reality - insurance exists precisely for those unexpected events that can upend your financial stability and the cost of insuring your property is a fraction of the potential cost of not having appropriate insurance.
The Risks of Cancelling Your Home Insurance
- Exposing Yourself to Financial Ruin - a house fire, flood, or burglary could leave you facing tens or even hundreds of thousands of pounds in losses. Without insurance, you would personally have to cover these costs.
- Your Mortgage Agreement - if you have a mortgage, your lender likely requires you to maintain buildings insurance. Cancelling your policy could breach the terms of your agreement, leading to potential legal and financial complications.
- Loss of Valuable Add-Ons - many home insurance policies include features like accidental damage cover, legal expenses insurance, or alternative accommodation cover. These benefits can provide critical support on a timely basis if the unexpected happens.
- Higher Costs in the Future - if you cancel your policy and later decide to reinstate it, you may face higher premiums. Gaps in coverage can raise red flags for insurers, making you appear riskier to insure.
How to Keep Your Costs Down Without Cancelling
Rather than cancelling your home insurance, consider these steps to manage your premiums:
- Shop Around - work with a broker (like us!) to explore the market and find the best deal tailored to your needs. Insurers often have competitive pricing for new customers or those bundling policies.
- Adjust Your Excess - opting for a higher voluntary excess can lower your premium. Just ensure you can afford the excess in the event of a claim.
- Review Your Coverage - ensure you’re not over-insured. For example, do you need accidental damage cover for every item in your home, or could you focus on high-value items only?
- Improve Your Home’s Security - installing alarms, CCTV, and better locks can reduce the risk of theft, making your home less costly to insure.
- Consider Payment Plans - many insurers allow you to spread the cost of your premium across monthly payments, making it more manageable.
A Safety Net You Can’t Afford to Lose
While rising costs are a burden, cancelling your home insurance isn’t the solution. Insurance is a safety net that protects your home and belongings - the cornerstone of your family’s security and financial stability. Skimping on this protection could leave you exposed to losses that far outweigh the cost of your premiums.
If you’re struggling with rising costs, Edgewater can help and find a policy that offers the protection you need at a price you can afford. Remember: your home is one of your most valuable assets - don’t leave it unprotected.