Thousands ditch car insurance in bid to cover household bills
Published 12/01/2010 | 05:00
THOUSANDS of people are taking huge risks by cancelling their motor insurance in a desperate bid to save money.
More than one in 10 consumers have cancelled a variety of different insurance policies as they struggle to meet mortgage repayments and pay for food.
Of those who have stopped paying for insurance, one in four has given up motor cover, a new survey has found.
Personal finance experts said consumers were taking huge risks and leaving themselves exposed to big losses by cancelling policies. It is a legal requirement to insure your car.
Research commissioned by Friends First shows 13pc of consumers have stopped paying premiums on a range of policies including travel, life, motor, home and income protection policies.
Of those who have given up paying premiums in the last year, 27pc no longer have travel insurance, while one in four has ditched life insurance. This pays out in the event of a death.
Large numbers of households have also dispensed with home and contents insurance. This is despite the fact that floods and heavy snow and ice have wrecked havoc.
Some of those whose homes were destroyed by flooding had no insurance. The alarming findings come as premiums continue to rise.
In the past year, household insurance has shot up by 17pc, according to the Central Statistics Office.
Health cover is up 21pc, and car insurance 13pc
But many consumers are unable to make these payments, the Friends First survey indicates. It found that seven out of 10 households have been hit by a drop in income.
Four out of 10 consumers say mortgage repayments are their biggest financial concern, with 45pc fearing they or their partner may lose their job.
Women's income has taken the biggest hit. People in Leinster, excluding the capital, have experienced the largest drop in income.
Families with children also report they have suffered larger falls in income than those who are childless.
Friends First head of marketing Eamonn Twomey said: "The results of this research are quite alarming." The Financial Regulator has warned consumers to think carefully before cancelling insurance cover.
Cancelling may seem like a good way to save money but it could cost thousands in the future if something goes wrong, a spokeswoman said.