With the latest research estimating that over 9 million UK renters are under-insured, home contents insurance provider, Paymentshield, has warned that the UK is facing a tenant insurance blackhole.
According to a recent YouGov poll of over 1,000 adults, 67% of those living in a rented property do not have contents insurance, equating to over 9 million renters in the UK living in a home where their possessions are not protected from being lost, stolen or damaged.
In comparison, homeowners are taking a much more proactive approach, with 84% having contents insurance in place.
There are likely multiple reasons behind the low numbers among renters, including tenants underestimating the value of their contents and deeming insurance to be unnecessary or expensive. Paymentshield also feels that the figures demonstrate that the industry isn’t talking adequately enough to tenants about their needs.
Rob Evans, Paymentshield CEO, explains: "These figures present a stark warning for tenants, landlords and lettings agents, as not having the adequate insurance in place can lead to disastrous financial consequences. Many tenants moving into privately rented or social housing wrongly assume that their landlord’s insurance will cover them for their own belongings.
"The onus is on the tenant to get the right insurance in place, but the lettings industry also has a duty to help educate incoming tenants and plug the insurance gap.
“The financial advice industry centred on mortgages is a £multi-billion market."
When homeowners arrange a mortgage, they typically get holistic financial advice and are required to take out buildings insurance by their lender – adding contents cover is a natural progression. Yet, most tenants don’t discuss their protection needs when they enter into a new home, and so many are unaware of the risks they are exposed to or the cover available.
Rob adds: “As our research shows, very few are going looking for themselves, resulting in millions of tenants being uninsured”.
Worryingly, the research also found that 25% of those that had insurance in place were unsure if the cover was adequate. Paymentshield has warned about the pitfalls of inadequate insurance coverage.
Paymentshield has recommended the following five steps to ensure contents insurance provides the best value:
1: Beware – the cheapest insurance doesn’t always offer the best value. If it doesn’t pay out in your time of need, it isn’t worth it.
2: Look for products that are tailored to your needs – some insurers include cover specifically designed for renters, such as tenant liability and tenants’ home improvement insurance
3: Ensure you have enough cover for all your belongings and that the contents of those you live with are also covered
4: Check the policy limits and have selected appropriate cover for high-value items, such as engagement rings and bicycles
5: Read your policy documents carefully – it’s important to understand exactly what your chosen policy covers you for; what you need to do in the event of a claim; and if there are any additional admin costs to cancellations, making changes, or taking your policy with you if you move.
Rob concludes: “With a huge percentage of the UK population spending a lot more time at home, contents insurance has never been more important. Home and flexible working has become the norm for many and is likely to continue beyond the pandemic. Recent research has revealed a sharp rise in accidental damage in these new circumstances, so it is important to review your insurance from time to time to ensure that you have the appropriate cover”.