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Should you cancel your insurance policy to cut costs?

Cancelling your insurance policy to cut costs is always a wrong move.

    Cancelling your insurance policy to cut costs is always a wrong move.

    The Office of National Statistics recently reported that the Consumer Prices Index (CPI) which includes owner occupier’s housing costs (CPIH) rose by 8.8% in the 12 months to September 2022, up from 8.6% in August and returning to July’s recent high. Costs associated with day-to-day living are now at a 40-year high and are expected to climb even further, leading to what is commonly known as the cost-of-living crisis.

    There are various factors that have contributed to the rise in the cost of living including high energy prices, high food prices, and inflation outstripping wages. To help curb costs and manage bills many households are looking for ways to save money, often by cancelling subscriptions and services that seem unnecessary. Both Netflix and Amazon Prime reported record numbers of customers cancelling their subscriptions revealing that almost 800,000 UK households cancelled their subscriptions between April and June 2022.

    All too often insurance policies are bundled into the category of unnecessary subscriptions and payments. However, there is a marked difference between video streaming and insurance policies, and cancelling your cover often isn’t the best way to beat the cost-of-living crisis.

    Why you shouldn’t cancel your insurance policies

    Although it may be tempting to cut costs by cancelling your insurance policies, this could actually be an expensive mistake. Whether you’ve taken out home insurance, life insurance, or contents insurance – you did this to protect yourself, your loved ones, and your possessions. Cancelling these policies could leave you vulnerable and out of pocket should the worst happen.

    Should I reduce my insurance coverage?

    You might consider keeping your insurance policies but reducing the level of cover. While this appears to be a middle ground – keeping you covered but with less expense, it’s not always effective. Reducing your level of cover can mean you are underinsured if you do need to make a claim.

    One of the most worrying trends we’ve seen is the misrepresentation of the level of risk when taking out an insurance policy. For example, not declaring previous car accidents when taking out car insurance. While it might give you a cheaper premium, not being honest can invalidate your insurance cover altogether and leave you liable for any costs.

    How can I reduce the cost of my insurance policies?

    Comparing your current cover is one of the best ways to find out if you can reduce the cost of your insurance policies. As mentioned above, we don’t recommend trying to cut corners by reducing the level of your cover or being dishonest with insurance providers.

    As insurance brokers, The Bateman Group has access to the whole of the market, so we can help you to accurately compare your insurance policies, ensuring you are properly covered and for the best price. Get in touch with our insurance advisors by calling 01926 495 113 to see if you can save.

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