Around 35 per cent of the lowest-income households (earning under £10,000 per year) have no car insurance, home insurance or other type insurance, a new report reveals.

The study, from the Association of British Insurers (ABI), claims that these people need insurance the most however - as they are more likely to be hit by flooding and be the subject of crime or fire.

Around 44 per cent of people in the poorest households buy home contents insurance, compared to nearly 82 per cent of those with average incomes (between £15,000 and £30,000).

"Insurance provides valuable protection to people on all income levels. The poor are least able to deal with financial loss and depend most on insurance. We need to address the issue of low take-up in low-income groups. A lack of spare cash is the biggest factor holding back the purchase of insurance by lower income households," Stephen Haddrill, director general of the ABI, commented.

"The ABI will be addressing this issue through our financial inclusion action plan. In early 2008 we will launch a new campaign, with a special emphasis on insurance with rent schemes, improved financial education and easier access to insurance for customers with particular needs."

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