How Well Do British People Understand Home Insurance?
Today I have a collaborative post with my friends at HSBC Life for you. It’s about home insurance and how well people really understand it.
Let’s start with the most basic question, though…
What Is Home Insurance?
Home insurance provides financial protection in the event of something happening to your property (i.e. home) or your possessions. There are two main types of home insurance, contents and buildings.
Contents insurance covers your belongings for loss or damage caused by fire, theft, flood and other disasters. Buildings insurance covers the structure of the building itself, including the walls, floors, ceilings, roof, etc.
While contents insurance is generally optional (though highly recommended), buildings insurance is likely to be compulsory if buying your home with a mortgage. People who are renting will not normally require buildings insurance as this is the landlord’s responsibility, but they may still wish to take out contents insurance.
You can have separate buildings and contents insurance, but if you need both it will usually work out cheaper to get a combined policy. This may also make life simpler when the time comes to make a claim.
Home insurance clearly isn’t the most exciting of subjects, with most people regarding it as a necessary evil. But of course, if the worst happens, having the appropriate insurance cover may stop a misfortune turning into a catastrophe.
HSBC recently commissioned a study from market research company YouGov about people’s attitudes to home insurance. They polled 2,000 people in the survey, the fieldwork for which took place in May 2022.
Survey Results
The main questions asked in the HSBC survey are set out below, along with the results.
What are the main reasons people do or don’t have home insurance?
- 30% say it is expensive
- 18% say it is comforting
- 41% say it gives them peace of mind
- 49% say it is necessary
- 31% say it is reassuring
How much time does the average person spends researching their home insurance?
- 47% up to 1 hour
- 17% 1-2 hours
- 7% 1 day to 1 week
Where they do their research, if at all?
- 60% use price comparison websites
- 16% recommendations
- 12% customer reviews
What consideration is most important to them if they do select an insurer?
- 69% say price
- 71% say quality of cover
- 38% say reputation
Even for those who have purchased, do they understand what they’re buying?
- 72% say they understand what they have purchased
- 10% say they do not understand
Finally, what proportion have made a claim on their home insurance before?
- 39% of respondents have made a claim before
- 61% of respondents have not made a claim before
My Thoughts
One thing the HSBC survey results suggest is that many people don’t fully understand home insurance or give it the careful consideration it merits. In these times of rapidly rising living costs, that could be a serious mistake.
I would offer two main pieces of advice. First, think carefully about what home insurance you require. Do you need both buildings and contents insurance, or just one or the other? Think also how much cover you need, based on the value of your belongings (for contents insurance) and of your property (for buildings insurance). In the latter case, you should insure for total rebuilding costs rather than just market value, as this is what you would have to pay if your house was destroyed by fire, flood or some other disaster.
And second, shop around for your home insurance, as prices vary widely. Using a price comparison service such as GoCompare can be a smart strategy, though bear in mind that not all insurers appear on these platforms (Aviva, Zurich and Direct Line are three that don’t).
I also recommend using cashback sites like Top Cashback, as these frequently offer cashback to people taking out home insurance from companies listed with them. They may also offer cashback to anyone purchasing via a price comparison service listed on the cashback site, giving you the best of both worlds.
- I’d also highly recommend reading my blog post How I Saved £511.08 on my Annual Home Insurance. And yes, I really did save that much. Though as you’ll see I had clearly been paying over the odds for my home insurance for some time. I had separate buildings and contents insurance which, as mentioned above, typically works out more expensive. What’s more, I had lazily allowed both policies to keep rolling over year after year without checking whether better deals were available. Don’t make the same mistakes I did!
Many thanks again to my friends at HSBC Life for sharing their survey results with me and allowing me to reproduce them.
As always, if you have any comments or questions about this post, please do leave them below.
This is a collaborative post.