Data from a new survey, conducted by YouGov with over 1800 UK adults overall, revealed that 16% of tenants surveyed have suffered a fire, flood, theft, burst water pipe, lost keys or damage to their or their landlord’s belongings in the last 12 months.
Despite this, only 46% of tenants have a contents insurance policy in place – meaning that many would face significant financial risk in the event of one of those scenarios occurring.
The survey has shown that 72% - which alarmingly includes many of those who do have contents insurance in place – said they would cover the loss out of their own pocket. This is an approach that could put tenants at significant financial risk considering the contents of an average property amount to £25,126.
33% of tenants stated they would use existing savings to recoup the cost, 31% would save up, 18% would charge it on a credit card or overdraft, and 11% would borrow from friends or family.
Rana Ali, Paymentshield’s Head of Business Development, comments: “What these figures capture is the vulnerability of renters to financial disaster, either due to not being covered by a tenants’ contents insurance policy in the first place, or by not being aware of what exactly a policy covers them for and when policyholders are eligible for compensation.”
“These worrying findings send a clear signal to the industry: almost the entire cohort of renters is highly exposed to financial loss, regardless of having insurance or not.”
Indeed, the research also revealed that 39% of renters don’t feel confident when it comes to understanding what services contents insurance products provide, and 41% feel they aren’t confident enough that they’d have the right knowledge to buy the right contents insurance policy.
Despite this, the research shows that many tenants are anxious about the prospect of facing a detrimental event – over 1 in 3 renters (33%) worry about losing their belongings due to fire or theft and approximately 1 in 5 (18%) worry about having their possessions damaged because of floods.
Rana continues: “Despite relatively high levels of anxiety, many renters seem to falsely believe that nothing will ever actually damage their belongings. But detrimental events such as floods do happen, and, unfortunately, are becoming commonplace in the UK. Paying out of pocket to cover the cost of such damage could effectively wipe out people’s life savings.
“We call on insurers and every party within the lettings chain – from landlords to tenant referencing firms - to go further in raising awareness both with current and prospective tenants on the value of contents insurance and the conditions for making a claim.”
