Almost half of all respondents cited the cost of living crisis as the main reason for cut backs and 66% said they had seen insurance premium costs increases over the past year

Home and car insurance were the lines in which customers had cut back their coverage the most, with 38% of consumers indicating that these were the lines they would cut first in an attempt to save money during the ongoing cost of living crisis.

This is according to financial comparison website NerdWallet’s research, released today (30 September 2022), that surveyed 2,000 Brits on how they were coping with financial pressures.

The research revealed that 29% of respondents have stopped paying for insurance cover over the last 12 months, with another 11% planning to do so when renewal was due.

After home and motor insurance, consumers said they were most likely to cut back on mobile phone and pet insurance equally, with 35% indicating that they would consider this.

Mobile phone and pet insurance were closely followed by gadget insurance at 34%.

Connor Campbell, personal finance expert at NerdWallet, said: “It’s not a huge surprise that people are saving where they can at the moment and reducing the amount they spend on insurance can be seen as a quick fix in order to cut outgoings.

“However, it’s important not to completely cancel something you need – or reduce it to the point where it is no longer fit for your purpose.”

Cut back pitfall

Almost half (45%) of respondents said the reason for reducing or cancelling insurance cover was the cost-of-living crisis. In addition to this in, 66% of respondents said they had seen insurance costs either slightly or significantly increase in the past year.

Campbell warned that reducing car insurance to third party only, for example, might be a good way to cut down on the initial cost, but consumers should be mindful that they remain able to cover the cost of fixing or replacing their vehicle should the worst happen.

He added: “Since there rarely is any immediate benefit to paying into insurance, we might see it as an unnecessary expense we have to cut costs.

“This works until something goes wrong and you aren’t covered anymore. So, you can not only be left with a much bigger expense than if you had been paying into your insurance, but that expense also comes at the time when you are most financially vulnerable, making things even worse.”