Home Contents Insurance for People on low Incomes
Posted On November 10th, 2011 by boiler in Home InsuranceA 1998 report by the Policy Studies Institute, funded by the Joseph Rowntree Foundation, found that 60 per cent of council and housing association tenants had no home contents insurance whatsoever. This was due to a number of factors; not least that contents insurance is relatively more expensive for people on lower incomes than for people with higher incomes – two per cent of income for the poorest 20 per cent of households compared to 0.5 per cent for the richest 20 per cent. However, many respondents said that they were planning to take out Policy Expert contents insurance in the future, so it was not simply a matter of affordability, but had just as much to do with the natural human tendency not to think about insurance until something goes wrong.
The Knowledge Gap
Worryingly, the report showed that many people incorrectly thought that they were covered under contents insurance when they were not. Housing association tenants in particular often believed that contents insurance was included in their rent; when, in reality, most housing associations at the time adopted a policy of letting tenants make their own arrangements. However, in response to the report’s findings, the insurance industry, in partnership with local authorities and housing associations, developed ‘insurance with rent’ or ‘affinity’ schemes that attempted to address this problem.
‘Insurance With Rent’ and ‘Affinity’ Schemes Today
Today, many such schemes exist. They have lots of features in common, such as low premiums, flexible payment options and 100 per cent coverage with no excess to pay. The main difference is that with ‘affinity’ schemes, the landlord merely introduces the tenant to the insurer, whereas with ‘insurance with rent’ schemes, the landlord does much of the administration work and receives a commission from the insurer. From the tenant’s point of view, however, there is little difference between the two.