Modern insurance developed in the UK, after the Great Fire of 1666 destroyed 13,000 homes in London. Britons started pooling risk, insuring their houses against fire, their businesses against failure, and, as London became a major trade port, the contents of the ships they sent overseas. Many of these early insurance policies were arranged in the coffee houses of the bustling 17th century capital—one of which became insurance giant Lloyd’s.
We’re a nation of bet hedgers, worrywarts, and doomsday predictors, and it’s made Britain, the 22nd most populous country, the fourth largest insurance market in the world and the largest in Europe. In 2016 Britons paid £225 billion in insurance premiums, according to industry body the Association of British Insurers (ABI). Britons take out insurance on their homes, lives, health, cars, businesses, possessions, mobile phones, valuables, jewellery, artwork, trips, and pets. And those are just standard policies: you can take out insurance against your pregnancy resulting in multiple babies, against a wedding being cancelled due to cold feet, and against all your business’ employees pooling together for lottery tickets and then winning and quitting en masse.
Lloyd’s of London has famously insured the notable body parts of celebrities, from silent film star Ben Turpin’s crossed eyes to Betty Grable’s legs (her ‘million-dollar leg’), Dolly Parton’s breasts to Bruce Springsteen’s voice. And you don’t have to be famous to insure body parts essential to your career: surgeons have taken out insurance policies on their hands and sommeliers have taken out policies on their tastebuds.
But you don’t need to be insuring your fingers and a heirloom Picasso to be paying a significant sum in insurance premiums every year. Only auto insurance (and if you’re a business owner, employer’s liability insurance) is a legal requirement in the UK, but if you do a tally of your bills and valuables, you might be surprised to see for how many items and against how many eventualities you have insurance.
We do the maths to see roughly how much Britons are paying for the main forms of insurance each year.
Car Insurance
If you drive or even just own a car, under Continuous Insurance Enforcement you’ll need to have at least third party insurance for it, or face fines and even prosecution. So it makes sense that car insurance is the most widely held type of insurance product in the UK, with 74% of households purchasing at least one policy in 2016.
According to the ABI, in the third quarter of 2017, the average cost of a fully comprehensive car insurance policy was £485 or the equivalent of £40.41 per month. If you’re a young driver, have an expensive or high-powered vehicle, log a lot of annual mileage, or have a history of previous claims or motoring convictions, you’ll pay significantly more for your cover. Shopping around and comparing quotes can help you find a cheap car insurance policy and keep your costs down.
Home Insurance
Home contents insurance is the second most widely held type of insurance in the UK, with a market penetration of 72%. The popularity makes sense as the ABI found that, in 2012 to 2014, the average British household had £34,900 worth of contents stored in their primary residence. A standalone contents insurance policy costs an average of £135 a year, but homeowners—which 64% of us still are—generally bundle it with buildings insurance, for an average cost of £297 per year or £24.75 per month.
61% of households have home building insurance, whether bundled with contents policies or not. Many mortgage lenders require buildings insurance as a condition of the loan. If not bundled with a contents insurance policy, it runs at an average of £263 a year.
Other types of Insurance
- 6% of households held a private health insurance policy in 2016, according to ABI figures. They spent an average of £528 a year on these policies.
- 22% of households held life insurance policies in 2016, spending an average of £336 on them.
- 7% of households bought travel insurance policies, at an average cost of £160, compared to average annual spend of £1,200 a year on package holidays.
- 7 million households held pet insurance policies in 2018, insuring around 35% of the nation’s dogs, and 16% of its cats, and paying an average of £243 in premiums. Cats were cheaper to insure than dogs, with coverage for moggies running at £150 per year, compared to £287 for dogs. However, there are new pet insurance companies like Bivvy that offer great dog health insurance for significantly lower prices!