Key points

  • As long ago as 1999, home contents insurance was identified alongside bank accounts as a key aspect of financial exclusion by the government’s report on Access to financial services.  In the wake of the 2007 floods and the damage they caused, home contents insurance – or rather the lack of it – has ceased to be just a matter of academic or policy interest.
  • Half of the poorest households do not have home contents insurance, compared with one in five for households on average incomes and one in ten for households in the richest fifth.  Both the proportions and the gap between them are similar to a decade ago.  This lack of progress contrasts unfavourably with the progress that had been made with bank accounts.
  • Households with no home contents insurance are more than three times as likely to be burgled as those with insurance.  While theunderlying crime statistics show that the likelihood of burglary has fallen for both households with and without home contents insurance, this unfavourable ratio has remained broadly constant.
  • By definition, low-income households without households insurance are less financially able to replace stolen goods themselves.
  • More than half of all renters do not have home contents insurance, compared with very few owner occupiers (less than 10%).  As a result, most (two-thirds) of households without home content insurance are renters.

Why this indicator was originally chosen

Financial loss affects those on low incomes most.  Furthermore, the costs of protection against crime, including household insurance and strong locks, personal alarms and taxis, are less affordable for poorer individuals.  And, clearly, those on low income but without household insurance are, by definition, are less able to replace stolen goods themselves.

Insurance is a special case as low income areas with high rates of crime typically have the most expensive premiums for home contents insurance, making insurance for those whose need for it may be greatest particularly unaffordable.  Poor people therefore have a lower ability “to insulate themselves against risk and contingency” 1 and the resulting fear of crime damages social cohesion and lowers trust.  The chosen indicator focuses on home contents insurance and the connection between the need for the service provided by insurance and its actual take-up.

Many forms of insurance, especially car and home contents insurance, discriminate by postcode and thus impact upon areas rather than just individuals.  Insurance can cost up to six times as much in postcode areas that insurance companies consider high risk, as in low crime areas. 2

Definitions and data sources

The first graph shows, for the latest year, how the proportion of households without home contents insurance varies according to the household’s income.  Note that the allocation of households to income quintiles uses gross (before tax) ‘equivalised household income’, which means that the gross household incomes have been adjusted to put them on a like-for-like basis given the size and composition of the households.  The data source is the Living Costs and Food Survey (LCFS) and the data relates to the United Kingdom.  For comparison purposes, the equivalent data from the equivalent Family Expenditure Survey for a decade earlier is also presented, although survey limitations mean that the division into income quintiles here is based on unequivalised income and unweighted survey data.

The second graph shows the proportion of households with, and without, home contents insurance that were victims of a burglary one or more times in each of the years shown.  The rates have been estimated using data on burglaries from the British Crime Survey (BCS) and data on household insurance from the LCFS.  The estimates are for England and Wales.  Note that latest year in the graph is for 2008/09 as the relevant insurance data was not collected in 2009/10. 3

The third graph shows how the proportion of households without home contents insurance varies by housing tenure and the fourth graph shows the shares of the households without home contents insurance by housing tenure.  The data source for the third and fourth graphs is the LCFS.  The data relates to the United Kingdom.  To improve its statistical reliability, the data is the average for the latest three years.

Overall adequacy of the indicator: medium.  The LCFS and BCS are well-established government surveys, which are designed to be nationally representative.

External links

Relevant 2007 Public Service Agreements

None directly relevant.

The numbers

Graph 1

Income quintile 2009 1999/00
Poorest 56% 52%
2nd 29% 34%
3rd 18% 22%
4th 14% 12%
Richest 11% 10%

Graph 2

Year Burgled with and without insurance
Households with insurance Households without insurance 
1999 4% 11%
2001/02 3% 10%
2002/03 3% 10%
2003/04 3% 10%
2004/05 2% 8%
2005/062% 7%
2006/072% 7%
2007/082% 7%
2008/092% 8%

Graph 3 and 4

Housing tenure Proportion of households without insurance Share of households without insurance 
Owner occupiers8% 22%
Social renters63% 47%
Private renters65% 31%
1. Danziger N, 1997, Danziger’s Britain, Flamingo. 
2. Anonymous national insurance company. 
3. Also note that the data for years earlier than 1999 was collected on a different basis (via a direct question in the BCS) and is therefore not directly comparable.