Millions of UK renters exposed to financial risks

A growing number of UK households could be putting their lifestyles and possessions at risk because they aren’t insured for unexpected events.

A study from Aviva finds that the vast majority of renting households do not have protection insurance – life insurance, critical illness cover or income protection – which provides financial support to an individual and their families if an income is lost through serious illness, injury or death.

The survey reveals just one in five renting households has life insurance, compared to three out of five (58%) households with a mortgage. This suggests almost 8 million⁽¹⁾ renting households could be without life cover. Just 3% of renting households have critical illness cover or income protection, according to the study.

Without protection insurance, families risk being unable to maintain their family’s standard of living, including rental payments, in the event of an unexpected loss of income due to ill health.

Figures from the Office of National Statistics show that the number of households in the private rented sector in the UK rose from 2.8 million in 2007 to 4.5 million in 2017, an increase of 1.7 million (63%) households.

Findings from the Aviva study suggest that the rental trend could be set to continue, with many residents convinced that they will never become homeowners.

The research also reveals that just two out of five households in rented accommodation have home contents cover to protect their belongings, in the event that they are damaged or stolen. This is in comparison to nine out of 10 (88%) of homeowners with a mortgage. This suggests that almost 6 million renting households across the UK, could be without contents cover for their possessions.⁽¹⁾

Reasons for renting vary, but are mostly financial. Almost two thirds (62%) of renters say they are doing so because they can’t afford to buy, whereas 12% are renting while they save for a house deposit (rising to 28% amongst those aged 25-34). Although a small proportion (11%) say they don’t want the responsibility of being a homeowner.

Paul Brencher, UK Health and Protection Director for Aviva says: “More and more households are living in rented accommodation, as house prices continue to be out of reach for many. There are a number of benefits to renting – it provides flexibility and can allow people to have their own space sooner than if they were saving to get on the property ladder.

“However, renters have the same need to be able to pay for their housing as homeowners. The risk of an unexpected loss of income due to ill health, and the potential impacts for families, are the same for renters and homeowners.

“Our research suggests that many renters could be leaving themselves exposed because they don’t have protection insurance or cover for their possessions. Buying a home is often a trigger for purchasing life and contents insurance, so it’s important that people don’t miss this step, simply because they are renting. Whether buying or renting, we’d urge people to consider how they can protect their incomes and possessions, just in case the unexpected happens.”

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_References:

_{Figures relate to a survey of 2,057 UK adults carried out by YouGov on behalf of Aviva in June 2019, unless otherwise stated. This includes 567 respondents living in rented accommodation and 585 respondents who own their house with a mortgage.}

_{(1)     According to official figures, there are 27.2 million households in the UK: https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/families}

_{(2)     According to official figures, 36% of UK households live in rented accommodation: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/791271/family-resources-survey-2017-18.pdf}

_{(3)    https://www.ons.gov.uk/economy/inflationandpriceindices/articles/ukprivaterentedsector/2018}

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