With the number of unemployed people in UK rising, many do not realise how it can affect household finances . As well as there being a greater potential for debt problems, there are also wider implications for areas such as home insurance .
A number of risk factors are used by home insurance providers to determine the premium they will charge. Unemployment is one of these factors as it is considered an indicator of the likelihood that a policyholder will default on the premium payments. In addition to this is the increased risk of accidental damage as the home is occupied more of the time.
When a person is made redundant, their prime concern is to cover the essential bills, such as the mortgage and it is likely that home insurance premiums will have a lower priority. However, as Darren Black, head of home insurance at Confused.com, commented: “It is paramount that the importance of paying premiums is not overlooked. As soon as a payment is missed, the policy is in jeopardy which could mean disaster should a major event such as flood or fire affect a home .”