Cutting Back Can Cut You Off

We are well into the credit crunch and some people may be finding it harder and harder to make ends meet. However, consumers should be aware of the dangers in cutting back on essential purchases during the economic slowdown.

A representative from the British Insurance Brokers' Association has maintained the importance of certain insurance policies despite the temptation to cut back on household spending. It has been suggested that there may be other areas in which spending can be curtailed in order to save money.

Recent research by the Association of British Insurers (ABI) has found that:

•    Almost a quarter of consumers have cancelled or failed to renew their home insurance as part of a cut back in household outgoings.
•    Nearly one in five have cancelled or not renewed their buildings cover.
•    One in eight has cancelled life insurance.
•    One in five people are seriously considering reducing or stopping saving.

In addition, similar research has suggested that nearly half of the county’s population will consider not buying or renewing travel insurance.

A major insurance company also discovered that five per cent of people intend to stop paying motor vehicle and home insurance, despite there being legal requirements relating to both.

It may be possible to cut back on some non-essential insurance policies, however, it is very important to check which are required by law. Also, if the worst happens where will the money come from to pay extra expenses? For example if you cut back on pet insurance and your beloved dog then gets run over how are you going to pay the vets bills? These can run into hundreds of pounds if the injuries are serious. Or you cancel the legal cover option on your car insurance. How will you pay if you are involved in an accident and the matter goes to court? It is true that these situations are unlikely but you just never know...

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