UK renters ‘face greater financial risk’

More than seven million people are currently living in rented accommodation in the UK, but this group could face a riskier financial future than those who own their own home, new research has revealed.

According to a new study from insurer Aviva, the level of cover against a potential loss in earnings is considerably lower among those who rent than those who buy a home.

The figures showed that while 51 per cent of individuals living in a home with a mortgage have life insurance, this figure falls to just 23 per cent for individuals that are renting.

Meanwhile, critical illness coverage stands at 19 and three per cent respectively between the two groups, while 13 and two per cent respectively have income protection.

It is not just loss of earnings cover where there is a considerable disparity in the level of insurance for the two groups though, as 73 per cent of mortgage holders have home contents insurance, but this figure drops to 40 per cent for those in rented accommodation.

Louise Colley, protection director for Aviva, commented: "When someone takes out a mortgage they are often asked to consider how they might pay it if they were seriously ill or if sadly an income-earner was to die. 

"If a family rents, these conversations may not happen, so there's a risk that if a renting family loses an income, they may not have the protection that could help to pay the rent and cover the bills."

She added that increased financial vulnerability could lead to individuals in rented homes running a greater risk of building up significant debts should they incur unexpected costs or suffer a loss of earnings.

It is therefore important for all households to have an adequate level of cover in place to prevent this from happening.

Posted by Joe White