Insurance guide 19.01
Insurance Buying Guide – What To Consider When Buying Insurance
Remember, on some things and in some activities (like self-employed trades) insurance is a legal requirement. But it needn’t be that expensive and it shouldn’t be complicated to get the insurance that you need to give you piece of mind for you and your family.
So, what should you consider buying insurance? Here’s a quick checklist to get you started:
- What insurance must I have?
- What types of insurance are there to protect me from the unexpected?
- What would happen if I lost my kit? Can I replace it?
- What add-ons do I have and am I over-insured?
- Do I need to protect my own house or one I rent?
- Do I travel a lot or take my kit away from my home?
- What would happen to my family if I’m taken ill?
- Do I undertake work where I could be held liable for any mishaps?
Now let’s look at these points in more detail…
What insurance must I have?
You must have vehicle insurance if you drive on public roads.
You must have professional indemnity and business insurance if you are self-employed and carry out any work where you could be held liable for bad advice or workmanship.
What types of insurance should I consider and why?
The following list covers the most common types of insurance and those that we provide. If you don’t see what you want, you should call us or an insurance broker – make sure any part you deal with on insurance is licensed by Lloyds and the FCA. The list below is split into general insurance and specialised insurance for businesses.
Contents – Contents insurance is often bundled with buildings/house insurance. It can cover the loss, damage or accidental damage of your possessions. Cover is often available for indie the home and for portable items, outside the home. It may include outbuildings or garden fixtures and the tools as well as cycles.
Vehicle Insurance – don’t forget to get the right cover for your new vehicle and remember, it is illegal to drive without insurance! There are three common types:
- Third party fire and theft.
- Third party only.
Gap Insurance – When you buy a new car it begins to depreciate and lose value from the minute you drive it off the forecourt. If you are unfortunate enough to be involved in an accident, crash, or have your vehicle stolen, and your vehicle is written-off by the insurer, you may only receive the price the vehicle was worth at the time of the incident, not the amount you need to get an equivalent replacement. GAP is designed to bridge the gap between the amount you receive from your motor insurance and the original amount you paid for the vehicle.
IT – For small businesses, computer and office equipment, fraud and identity theft as well as data protection can be provided under specialist cover. The cost of cover varies on the type and size of the business.
Professional Indemnity – Professional indemnity cover makes sure that you are insured for your work and can range from consultancy advice through to plumbing. Usually, it is restricted to a single individual when carrying out the work and business insurance is required if you employ or work with other people under your company name.
To find out more about insurance products try our products guide (hyperlink).
Understanding the best way to buy insurance is not as simple as just going on-line to a comparison site. Let’s think about some of the options and the good and bad aspects of each method. First, its important to know some basic rights that you have as a consumer to help you get the right cover and to protect the companies against insurance fraud.
This is important because each person that claims fraudulently or doesn’t give the right information and pays a lower rate of premium is putting your cost of cover up! For example:
Whip-lash claims cost the industry £***m in 2014 and there were loads of firms, some genuine solicitors, who saw a cash-cow and who started filing for personal injury (whip-lash) claims even when there wasn’t any medical or physical proof – I’m sure you’ve had a call at some point, if not you may well do. This led to massively escalation premiums for most drivers – estimated as £** per policy. Eventually, the insurers and government got together to limit the number of false claims.
So, as a customer you are required by law to be honest in filling out your insurance proposal forms so that the quote is appropriate. You have 14 days to amend or cancel the insurance if it’s not the right policy for you. Firms are not allowed to auto-renew without your permission (this was a great way of increasing revenue by increasing premiums without you testing if it was fair) – this is the basis of the most important tip, check your renewal cost and change insurer if they can’t or won’t match a better deal.
Small Print and cover
Some ‘small print’ has exclusions that might affect you – read the small print when you get it. A common exclusion is country cover – often on personal effects or contents outside the home which says ok in EU and a, b, c but not x, y or z countries and you visit relatives in a country z which is on the exclusions list – you might be surprised which countries or holiday destinations might be excluded.
Now that you’ve considered all of this, what should you do now?
Comparison sites – The Internet allows you to research any number of insurers from the comfort of your own home but it can be very confusing and time consuming. Comparison sites have sponsored providers, often do not compare like with like products until you get to the end and find you need to add lots of additional bits like legal cover etc. They also require lots of information and then keep emailing. Is there a better way?
Direct online access –
Our education portal and guide
Money Advice Service