With the emergency budget just around the corner, fears are growing in the insurance sector that the government could be about to increase significantly the amount of tax on standard insurance premiums.

At the moment, tax on insurance premiums stands at 5% for standard policies such as car insurance, home insurance and pet insurance. But there is now speculation that the government could at the least double this rate on June 22 when the budget is announced.

Travel insurance is slightly different because it already carries a 17.5% tax rate. There are now fears that other insurance policies will see this level introduced. Premiums are expected to go up even without the extra tax imposed, meaning that the overall prices could rise significantly.

At present the Treasury earns about £2.3 billion a year from insurance tax revenue. If the rates were to rise to 17.5% the Treasury would gain billions of pounds in tax revenues.

But experts say that the higher premiums could stop people buying policies in order to save money in these cash-strapped times. Higher rates will put more pressure on both households and businesses, and this could see people cutting back on vital home and car insurance and playing the odds.

This can lead to huge financial problems if something goes wrong. The ABI (Association of British Insurers) and BIBA (British Insurance Brokers Association) have both said that they will do what they can to persuade the Treasury not to increase the tax rates before the emergency budget is announced.

Home insurance should be considered one of the essential expenses for anyone who either owns or rents a home. Buildings cover and contents cover provide essential financial back-up should the building be damaged or the contents within lost or stolen.

And yet, according to research from Clydesdale and Yorkshire banks, many people in the UK simply don’t have any.

The research has revealed that one quarter of the population doesn’t have contents insurance in place, and that one third doesn’t have buildings content.

This is an incredible and worrying figure. Perhaps the economic situation is taking its toll on the population who see home insurance as an added expense that they cannot afford.

By failing to take out adequate home insurance, however, people are leaving themselves unprotected against financial losses for contents and damage to the actual building, which could prove catastrophic should they experience any problems.

Clydesdale and Yorkshire banks revealed that the average cost of replacing belongings and making repairs to a property is £1,260, which is far more than anyone would have to pay out if they had sufficient home insurance. Uninsured burglary victims alone pay out an average of £200 million each year.

And to make things even worse, those who do have insurance in place often invalidate it by doing things such as leaving doors and windows open when going out.

Speaking from Clydesdale Bank, Steve Reid said that even if security measures are taken, they “are not fool-proof and you can still fall victim to a determined burglar”, adding that home insurance “can’t stop the crime from happening, but it can ease the burden should the worst happen”.