New research from Premium Credit has found that more than two million people are borrowing money from family and friends to help pay for their insurance.
14% of people have had to cancel insurance policies and not replace them because they could not afford to pay the premiums.
The premium finance company is warnings that the nation faces a growing crisis of people being under-insured or breaking the law by having no cover when legally they must, such as if they own a car. For a small charge, a premium finance loan allows you to spread the cost of your cover monthly instead of paying for it all in one go.
Premium Credit’s research reveals that 24% of people have cut back on the quality of their insurance cover over the past 12 months because they could not afford it, and a further 18% are considering doing this in 2019. Some 14% of people now claim to be spending over £1,000 a year on their insurance.
66% claim their cost of insurance has increased over the past two years, compared to just 6% who say it has fallen and 15% say it has stayed the same. Over this period, some 15% of people say the cost of their insurance has increased by more than 10% over the past 12 months, and one in four (24%) claim it has gone up by between 5% and 9%.
Only 51% of people are now paying for their insurance in a single payment, with 46% claiming to do this in regular instalments. Some 14% are paying for their insurance through loans or credit cards.
Adam Morghem, strategy and marketing director at Premium Credit, said: “Over the years, many types of insurance premium have been increasing and our research shows the impact this is having on millions of people as they struggle to pay for their cover. Many are turning to friends and family to help, but there may also be a growing number of people taking huge risks by having no insurance at all. In some cases, such as those with cars, they are breaking the law in not having any cover.
“However, there are many cost-effective ways in which to spread the cost of insurance, with premium finance being one of them. Every year, primarily through brokers, we lend more than £3 billion to help people spread the cost of their insurance.”
Of those people who have cut back on their insurance over the past 12 months, 35% have reduced their life cover, followed by 34% who have done this with their home insurance.