"Having the right insurance in place is basic financial hygiene, and it is there to protect you should something go wrong."
- Mona Patel - Premium Credit
Premium Credit’s Insurance Index has found that 75% of insurance customers use some form of credit to pay for one or more policies.
In addition, 54% of insurance customers who use credit have borrowed more in the past year, with cost-of-living pressures cited by 55% as the biggest reason for doing so.
Meanwhile, 23% said using credit is more convenient and a better way to manage their money, and 21% named rising insurance premiums as the driving factor.
56% of respondents said the cost of their insurance premiums has increased in the past 12 months, including 10% who reported dramatic increases.
As a result, 19% said they have cut back on driving or stopped driving altogether due to the cost of motor insurance, and 17% said they had gone on holiday without travel insurance given the premiums.
Credit cards are the most widely used form of borrowing, with 58% relying on them to pay one or more policies, ahead of 24% who use premium finance or finance offered by insurers.
However, one in eight of those who use credit cards to pay for insurance say they have defaulted on interest or capital repayments in the past year, while one in seven said they have been rejected for a card in the past two years.
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Despite the cost-of-living challenges, around 30% of adults believe their financial situation will improve over the next 12 months, compared with 29% who believe it will worsen and 15% who believe it will get much worse.
This is an improvement on six months ago, when 32% said they expected their financial situation to worsen over the next 12 months, compared with 19% who expected it to improve.
"With household budgets under pressure, more people are choosing to spread the cost of their insurance, valuing the convenience and predictability of monthly payments," Mona Patel, consumer spokesperson at Premium Credit, said.
"Having the right insurance in place is basic financial hygiene, and it is there to protect you should something go wrong. Paying monthly smooths out the impact of a single lump sum and improves cash flow whilst ensuring you’re properly covered.
"Spreading the cost of an annual policy into more manageable payments works for millions of UK consumers and businesses, and it can be a good alternative to other forms of credit like credit cards or bank overdrafts."
