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Last Updated: Saturday, 11 March 2006, 15:23 GMT
Millions lack contents insurance

By Sonia Rothwell
BBC Radio 4's Money Box

A semi-detached house
The report said the situation had worsened in the last decade

Three million Housing Association tenants have no insurance for the contents of their homes, a leading insurer has found.

Yet this group is twice as likely to be burgled than people who live in privately-owned properties.

Royal & Sun Alliance believes affordable insurance is an important part of financial inclusion and has sponsored a report on the issue.

It wants the government to look at ways of improving access to insurance for people on low incomes.

Royal & Sun said one way of getting more people to take up insurance might be to encourage more housing associations to offer it to their tenants.

The impact of having no insurance can be serious. Tenants may prioritise replacing everyday items over things like rent.

Alan Kelly from the Northern Housing Consortium, which represents nearly 200 landlords, said it can be particularly hard on single parent families.

"They may have four children. They get burgled and they lose their TV. They don't have much in life so it's important to replace the TV for the children straight away.

"As a result of that a lot of other things go out of the window," he said.

Higher risk

People on low incomes often have difficulty getting insurance for their possessions because many insurers are not prepared to take the risk.

To solve the problem some housing associations across the UK have devised exclusive insurance policies to offer tenants.

For example, the Northern Housing Consortium has set up the SIMPLE scheme.

The programme was broadcast on Saturday, 11 February, 2006 at 1204 GMT

Premiums can be paid weekly alongside tenants' rent and start at less than a pound per week.

SIMPLE has several other special benefits such as a low "minimum amount insured" of around 7,000, which is around half of what is standard across the industry.

Royal & Sun Alliance is one of only a handful of insurers which are prepared to offer insurance in this market and is behind the SIMPLE scheme.

It says it can offer cheap premiums for several reasons.

The main one is that the broker and Housing Association provide the administrative support and ready market of customers, which saves money on collection and administration.

But SIMPLE is only open to tenants and cover is limited.

For example in the case of claims for valuables - items such as jewellery, watches, clocks - if the total sum insured under the policy is 7,000, the maximum amount of cover for those valuables is limited to 10% of that total, in this case 700. There is also a maximum single item payment of 500.

Business opportunities

There are lots of schemes like SIMPLE across the country but no national network.

Dave Greaves, Royal & Sun Alliance
We would like to offer additional products and services to this customer base
Dave Greaves, Royal & Sun Alliance
Take-up for them is also generally low. Only one in eight of the Northern Housing Consortium's tenants buys SIMPLE for example.

Insurance companies who provide this special sort of cover say such schemes are socially beneficial.

But a spokesman for Royal & Sun Alliance, Dave Greaves, also admitted it could offer the company further business opportunities.

"We would like to offer additional products and services to this customer base if there is a need and desire for that," he said.

BBC Radio 4's Money Box was broadcast on Saturday, 11 March, 2006, at 1204 GMT.

The programme was repeated on Sunday, 12 March, 2006, at 2102 GMT.

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