"It's worrying that one in seven British homeowners may well be breaching the terms of their mortgage contracts by failing to insure their homes."
One in seven UK homeowners may be breaching the terms of their mortgages by failing to take out buildings insurance, according to insurance comparison site Quotezone.
Its research found that 14% of residential property owners haven’t insured their homes, even though it’s often a contractual obligation when they take out a mortgage.
When survey respondents were asked why they decided not to take out a buildings insurance policy, 83% confessed they had foregone insurance in order to save money, while 69% also indicated that they didn’t think it was important. A further 24% admitted they were not sure what buildings insurance was.
The majority of homeowners were unaware that they would still be obliged to pay their mortgage each month even if it was completely destroyed by fire, a storm or a natural disaster.
Research suggests it could cost as much as £30,000 to repair a three bedroom house that has experienced a significant level of flood damage. However 51% of homeowners did not realise their home was not covered should their property be damaged by this type of insurable incident.
The research also revealed that two fifths of respondents (42%) do not have contents insurance.
Greg Wilson, founder of Quotezone, said: “Car insurance is usually seen as the only mandatory type of insurance in the UK, but the truth is that if you’re a homeowner and you have taken out a mortgage to buy your home there’s a very good chance you will have a contractual obligation to insure the building itself, even though insuring your contents is always optional.
“It’s worrying that one in seven British homeowners may well be breaching the terms of their mortgage contracts by failing to insure their homes, particularly since so many are foregoing this type of insurance policy in order to save money.
“While being thrifty is admirable, particularly in the current economic climate, if your home experiences a flood, storm damage or some other type of insurable event a suitable home insurance policy will prove much more cost effective than paying for the resulting repair work yourself.”