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What impact has the pandemic had on home insurance claims?

What impact has the pandemic had on home insurance claims? | Insurance Business UK

What impact has the pandemic had on home insurance claims?

Hearing aids, exercise equipment, and hot tubs topped the list of items commonly appearing on home insurance claims, while incidents of theft and damage from iron burns dropped drastically as Brits stayed home because of the pandemic lockdowns, recent data released by Aviva has shown.

A new analysis conducted by the insurance giant on home insurance claims it has received from clients at the height of the coronavirus outbreak between 2020 and 2021 has revealed interesting changes, some of which are expected to remain even after restrictions have eased.

“We certainly saw a few fluctuations throughout the [COVID-19] pandemic,” said property claims director Kelly Whittington. “Some of these changes seem to have been related to a particular moment in time, but there are wider behavioural trends, such as hybrid working, which are likely to impact our claims experience in the longer term.”

Read more: Revealed: the UK's 'most loved' car and home insurance brands

Which home insurance claims go up during the pandemic?

With pandemic restrictions confining many UK citizens inside their homes, Aviva has seen a rise in certain household-related claims. These include: 

  1. Face mask-related claims

The London-headquartered insurer has handled more than 1,000 home insurance claims related to hearing aids, earrings, and eyeglasses being lost or damaged while people put on or removed their face masks. Over 70% of the claims were for hearing aids, with an average value of £1,400.

  1. Claims involving exercise equipment

Accidental damage claims related to exercise equipment jumped 200% in 2020 compared to the average in the years leading up to the pandemic as workouts became home-based. These include tablets, phones, and other mobile devices being knocked off while people used exercise equipment, and weights being dropped on tiles and laminate flooring.

In one instance, a customer’s daughter spilled water on a TV set during a Joe Wicks exercise session, according to Aviva.

  1. Damage claims for hot tubs

Home insurance claims involving hot tubs nearly tripled in 2020, posting a year-on-year rise of 188%. Scenarios included a grass strimmer bursting an inflatable tub, birds pecking holes in a spa cover, and an engagement ring ripping a tub lining. Although accidental damage claims for hot tubs dipped by 12% the following year, they were still way above pre-pandemic levels.

  1. Garden fires

Aviva saw a 27% rise in claims related to garden fires in 2020 compared to the previous year. Most stem from people burning household rubbish and garden waste on bonfires or in incinerators as local refuse sites were closed. 

Barbecue fires also went up during this period as more Brits entertained themselves at home. Figures fell in 2021 as lockdown measures were lifted, but the insurer still urged people to take care when setting blazes at home.

  1. Bicycle theft

The pandemic saw thousands of UK citizens jumping on their bikes to enjoy the outdoors. Unfortunately, this activity also led to an increase in bicycle theft. Pedal cycle thefts accounted for 34% of total thefts in 2021, rising from just 20% in 2019.

Read more: Is bicycle insurance worth having in the UK?

  1. Thefts away from homes

Thefts that did not involve breaking into a property increased 44% between April and June 2021 as pandemic restrictions eased. Among the items commonly stolen were smartphones, bags, laptops, and bicycles. Aviva, however, is anticipating the losses to drop as people begin carrying less stuff when they leave their houses. 

Which home insurance claims decrease during the pandemic?

Some claims, meanwhile, registered significant declines as flexible work arrangements and remote learning was implemented, including:

  1. Carpet iron burns

Accidental damage is the biggest driver of home insurance claims, based on the insurance giant’s analysis, with carpets being one of the most-damaged items. However, claims for iron burns declined by 42% in 2021 compared to the 2017 to 2019 average as more people worked from home and favoured casual clothing, which did not require ironing.

  1. Thefts from homes

Unsurprisingly, thefts from homes fell drastically during the pandemic, particularly during lockdown periods. Thefts from outbuildings, garages, and sheds also dipped, although not as much as those in the main dwellings.

Aviva, however, still urged British households remain vigilant, especially with recent data from the Office of National Statistics (ONS) showing that almost two-thirds (64%) of burglaries in England and Wales between April 2019 and March 2020 happened while residents were at home.

Read more: Theft claims surge post-lockdown

  1. Claims involving children

Claims that mentioned “children” or “kids” also decreased in 2021, particularly those involving damaged TVs and dropped items.  

“The pattern broadly aligns to heightened claims in 2020 when schools were closed and children were at home more – followed by a reduction when restrictions were still in place for adults, but children had returned to school,” the insurance giant wrote in its analysis.

“Whatever the potential problem, whether it involves a hot-tub or a hearing aid, an iron or an exercise bike, we’d always urge customers to keep a look-out for potential hazards,” Whittington added. “We’re constantly looking at how claims trends change and evolve, so we can help to protect our customers.”

What impact has the pandemic had on home insurance premiums?

Despite the rise in accidental claims, average home insurance premiums dropped by 1.2% to £145 at the height of the pandemic, according to insight business Consumer Intelligence.

Read more: UK lockdowns impact home insurance claims and premiums

Data gathered by the analytics firm revealed that Londoners paid almost 50% more for their home insurance at £215 in March 2021 – the highest during the period – compared to the national average.

By contrast, homeowners in the North East forked out just £129 for an annual policy – the lowest at that time – with those living in the South West (£130) and West Midlands (£132) also benefiting from cheaper premiums. The South East, meanwhile, was the only other region where their homeowners paid more than the countrywide average at £147.

The data analytics firm calculated the average cost for an annual buildings and contents policy based on the cheapest premiums offered by all major price comparison websites and key direct insurers to 2,100 UK homeowners.

“With any insurance, claims frequency and severity will dictate pricing movements and as the world shifts to slowly reducing COVID-19 restrictions, we will expect to see small shifts in pricing as a result,” said John Blevins, head of product at Consumer Intelligence, in a March 2021 press release.

These “small shifts” were evident even after a year with the latest figures from the Association of British Insurers (ABI) showing that the average premiums for buildings and contents insurance hitting their lowest levels since the trade body began gathering data 10 years ago.

Read more: ABI: Home insurance premiums down to record lows

According to the ABI’s Household Insurance Premium Tracker, the average price for buildings insurance fell 7% to £225 while contents premiums dropped 11% to £114 in the first quarter of 2022 – both record lows – compared to the same three-month span in the previous year.

The average price for combined buildings and contents cover, meanwhile, went down 2% to £307 – the lowest in four years. Unlike conventional surveys, however, which calculates premiums based on quotes, the association’s tracker instead looks at the amount paid by homeowners, the only one to do so.