High Risk Home Insurance Cover

High Risk Home Insurance Cover

At the end of the 1990s, the General Insurance Board moved to address the issue of the affordability of home insurance for people seen as subject to a higher risk of loss than average.

The public perception at the time was that general insurance products were not available at an affordable level to these higher risk people, and the issue was made more politically sensitive by the fact that the people most adversely affected tended to be from the poorer parts of society.

The increasingly sophisticated premium rating tables that had been produced for general insurance by insurers and actuaries had identified individuals who belonged to high-risk categories. This was supposed to be in the public interest. In motor insurance, for example, young people would be discouraged from buying and driving cars with high power. It wasn't supposed to give rise to a problem.

But in household insurance, there arose allegations that an insurance underclass had been created. This applies to both buildings and contents insurance. Those people who live in high-risk properties in terms of subsidence, flood or burglary can find that insurance is beyond their means. This could apply to both the owners AND the occupiers.

The question the General Insurance Board wanted to address was whether the ability to get relevant insurance cover should be regarded as an ipso facto human right. Should the availability of at least a minimum level of cover at an affordable price be seen as an important feature of an orderly society?

It was found that it was in society's interests to make affordable cover available. There were a few exceptions, for instance, where prospective policyholders have a history of dishonesty, or where a property was subject to frequent coastal erosion or flooding, thus the buyer was likely to have paid a lower price for the property with regard to that fact.

Furthermore, it was found that there actually wasn't a problem with the affordability and availability of buildings insurance, but there was a serious problem with getting contents insurance in high-risk areas, which was worsened for tenants as opposed to owner-occupiers.

The Association of British Insurers found that 90% of owner occupier households have got contents insurance, but those households who were tenants were far less likely to have contents insurance. What's more, the penetration of contents cover was highly correlated with the household's income. So it could be concluded that low-income households perceive a lower affordability of insurance.

The General Insurance Board recommended the possible institution of involuntary pools to cover undesirable risks to the insurance industry. These would be supported by active insurers, depending on the writings they undertake voluntarily.

So, if you are high risk, shop around. There should be someone willing to help you.

High Risk Home Insurance Cover

© AskFinancially.com 2008

Contents Insurance

Insurance & Loans

Copyright

High Risk Home Insurance Cover

© AskFinancially.com 2008

Contents Insurance

Insurance & Loans

Copyright