Low income households insurance shortfall
October 20th, 2007 by alexResearch by the Association of British Insurers (ABI) has revealed that 35 per cent of households with an annual income of less than £10,000 have no insurance of any kind.
Whilst 82 per cent of households earning between £15,000 and £30,000 have contents insurance, only 44 per cent the poorest households purchase such cover.
The research found that only a third of low income households had motor insurance and only a quarter had life insurance.
Most worryingly, low-income families were found to be the most at risk of loss through crimes such as burglary and arson and natural events like flooding. It was also revealed that in the face of loss a third of low-income households would turn to credit to fund the replacement of their damaged or stolen goods.
According to Sharon Flaherty of the Poverty Site, households with no home contents insurance are at least three times more likely to be burgled than those with insurance; and they are by definition the least financially able to replace stolen goods themselves.
Stephen Haddrill director general at the ABI said: “Insurance provides valuable protection to people on all income levels. The poor are least able to deal with financial loss and depend most on insurance. We need to address the issue of low take-up in low-income groups. A lack of spare cash is the biggest factor holding back the purchase of insurance by lower income households.”
He added that the ABI are already addressing these issues as part of their financial inclusion action plan and that a campaign targeted at low-income households is due for launch in early 2008.
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