How we're missing out on £5bn in insurance savings

Taking steps to avoid accidents and prevent crimes could shave £5bn a year off the overall insurance bill for the country.

The figure has been revealed by insurance company Axa, which says that more than a third of the £15bn paid out each year in car and home insurance claims could be avoided.

If we all took steps to avoid accidents and secure our property then the savings to insurance companies would result in reduced premiums, according to the academic study by Imperial College London that Axa commissioned.

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Taking basic steps to make your home secure could avoid claims. For example, not hiding a spare key near the house and cancelling deliveries when you are on holiday could prevent burglaries and cut claims by at least £200m a year.

Keeping an eye on your taps and water pipes and tackling drips could cut water damage claims by £387m. Trimming trees before they damage the foundations of a property could save up to £216m.

"This report demonstrates clearly the value, in both financial and emotional terms, of taking simple, preventative measures," said Amanda Blanc, chief executive of Axa UK.

"No-one likes to make an insurance claim – if you have to, something has gone badly wrong. While insurers are there to pick up the pieces when the worst happens, giving people that crucial piece of mind, what is often overlooked is the emotional impact of being forced out of your home following a flood, getting in a car accident or losing a treasured possession," Blanc adds.

"In many cases these shocks are avoidable and stopping them from happening benefits both the customer and the insurer. In short, prevention is better than cure."

The biggest savings came with reducing your risk of a car accident. Buying a car fitted with built-in safety systems such as automatic braking systems could save as much as £1.5bn in car insurance premiums and a further £1.3bn from a fall in insurance claims.

However, it seems most of us aren’t too worried about protecting ourselves from needing to make insurance claims. Almost half of people said they don’t worry about buying a car with an alarm fitted. Despite the fact a burglar alarm could cut your home insurance premiums by 15 per cent, seven in ten people said they wouldn’t worry about their home not having an alarm.

One area people were concerned about was flood defences. Almost 80 per cent of people said they would feel more secure if their property had been adapted to feature flood prevention measures.

Taking steps to protect your home not only potentially cuts your insurance premiums, it also reduces the chances of you having to make a claim and also avoid the emotional trauma of dealing with a break-in, a car accident or a flood in your home.