Those people unemployed looking for good deals on their home insurance policy might be in for a disappointment.

One of the country’s largest comparison websites has issued a warning that unemployed people in the UK could end up paying more for their home insurance. The team at confused.com argue that with unemployment in the UK at its highest for over a decade, many will be unaware of the knock-on effects the situation can have on other household finances that reach beyond the loss of earnings.

The problem is that when carrying out risk assessments for home insurance premiums, insurance providers take many factors into consideration and the key one is the employment status of the homeowner.

And here the main question for the insurance company is the likelihood of defaulting on payments. It’s logical that as household budgets become stretched, payment of monthly premiums could be overlooked as other responsibilities such as mortgages are prioritised.

As this is not only a perceived, but also very real risk to a house insurance provider, it is therefore likely to be reflected in the price of the premium.

And some people are mistaken in thinking that insurance prices may be lowered as the home is occupied during the day, reducing the risk of burglary. In reality, an insurance provider perceives the likelihood of accidental damage occurring is far greater as the home is occupied at all times, thus affecting a premium.

Darren Black, head of home contents insurance at Confused.com said: “With so many people out of work, Britain’s homes are under serious financial pressure. It may come as a surprise to many people that unemployment means pricier premiums. However, with the house occupied for longer periods of time, by more people, it is realistic for providers to perceive higher risks associated with this. It is paramount that the importance of paying premiums is not overlooked. As soon as you miss a payment, the policy is in jeopardy which could mean disaster should a major event such as flood or fire affect a home. Taking a chance, and leaving your home uninsured is very dangerous for those already strapped for cash as a result of being out of work.”

The comparison site strongly recommended that those who are unemployed, or become unemployed during the lifetime of their policy, need to call their providers and notify them of the change of circumstances. Although many insurance providers will change premiums, such a change will only usually be applied at the renewal stage.

Guest Article by Neil Camp