OREANDA-NEWS. April 20, 2012. Small savings and limited insurance against risk make families very vulnerable financially in the event of accidents in their homes. Only a third of homes in Estonia are insured against accidents, with families’ savings not sufficient to undo the consequences of an accident, reported the press-centre of SEB.  

“SEB estimates that half the people in Estonia have less than a month’s worth of liquid assets and 70 per cent less than two months’ earnings available to cover any unexpected expenses. As age increases, so do cash reserves; however, those under forty have saved less than what is required to undo the consequences of an average accident in their homes,” noted Triin Messimas, Development Manager of Private Loans at SEB.

RSA Kindlustus, a provider of property insurance solutions to SEB’s clients, estimates that when it comes to homes, the cost of an average loss event is on the order of EUR 1500. “In the event of a loss event, an overwhelming majority of families in Estonia are forced to resort to tapping all their savings and even borrowing money on top of it. Considering the fact that the monthly cost of insuring a flat or household appliances normally does not exceed EUR 5 to 7, or EUR 15 for a house, it makes sense to not risk your family’s savings but instead to hedge against any risk by means of home insurance,” Triin Messimas added. “The vast majority of unexpected expenses are not linked to major accidents, like fires or floods, but instead to household appliances failing or some other property breaking. For the sake of your family’s budget, it would be sensible to insure any equipment or other property in your home, as buying new equipment would require, more often than not, tapping all of your family’s savings.”

“When short of cash, families often first stop making insurance payments, even though in actual fact it should be the last expense to be eliminated. The worst scenario is one under which a family with financial problems is forced by an accident in their home to take out a loan. Also, getting insurance should be the first step in any long-term plan. Thus, we advise you to insure against any risks before you make your plans to save or invest. Some of our clients have had to give up on their plans because they have needed the money to reverse the effects of an accident in their home,” Triin Messimas admonished.