Insurance

What it is....

Insurance is something that will cover your financially if you have an accident at home, on the road, on holiday or if you damage your, or someone else's property.

There are many types of insurance covering many different types of things and the cost of these will vary enormously depending on your age, history, where you live and whether you have had any previous accidents or claims.

The purchase of most insurance is voluntary. You decide on what and how much cover you want. The exception to this is motor insurance. Here the law says that you must have at least third party cover before you can drive a motor vehicle. This means that your insurance company will pay for damage on somebody else's car if you hit it (they somebody else is the 'third party') but they will not pay for repair of damage to yours.

Some types of Insurance

  • Home buildings Insurance
    • Covers damage to the buildings
    • Cost depends on how much cover you have (usually the cost of rebuilding your home), the area you live, the type of home that you have and if you have had any previous claims.
  • Home contents insurance
    • Covers loss and damage to the things in your home.
    • Cost depends on how much cover you have (usually the value of all of the items and fittings in your home), if you want a new for old replacement, the area you live and if you have had any previous claims.
  • Motor Insurance
    • Mandatory - you must have it before you drive any type of motor vehicle.
    • Third Party
      • Covers damage to somebody else's vehicle if you hit it.
      • The cheapest form of car insurance.
      • Not always available to everybody.
    • Third Party, Fire & Theft
      • Covers damage to somebody else's vehicle if you hit it, damage caused by fire to your vehicle and theft of your vehicle.
      • More expensive than Third party insurance.
      • Not always available to everybody.
    • Comprehensive Insurance
      • Covers damage to yours and somebody else's vehicle as well as theft from, and of, your vehicle.
      • Most expensive cover.
      • Not always available to everybody.
    • Cost of cover depends on:
      • Type of cover
      • Type of vehicle covered,
      • Age of driver(s)
      • Location
      • Occuaption of driver(s)
      • If vehicle is used for work.
      • Annual mileage.
      • Past record
  • Life Insurance
    • Covers against your death.
    • You choose the amount of cover.
    • Cost depends on amount of cover, age, health and occupation.
    • If you have a mortgage you will need enough life cover to pay off the mortgage in full if you die.
    • Does not cover suicide.
  • Critical Illness Cover
    • Covers against long term absence from work caused by illness.
    • You choose the amount of cover.
    • Cost depends on amount of cover, age, health and occupation.
    • Some illnesses may not be covered
  • Private Health Insurance
    • Covers you to have certain illnesses treated using private health care such as BUPA.
    • You choose level of cover.
    • Cost depends on level of cover, age and occupation.
  • Travel Insurance
    • Covers loss of luggage, medical expenses, flight delays and sometimes cancellations whilst you are travelling.
    • You can choose cover for a single trip of a year.
    • Cover is sometimes included as part of another insurance policy
    • Cover is sometimes included as part of a package holiday.
  • Loan cover
    • Some loans will offer you cover against illness or unemployment. this means that your re-payments will still be met by the insurer for a period of time if your are unable to pay them yourself because you are ill or unemployed.
    • Not mandatory
    • Can be expensive
  • Extended Guarantees/Warranties
    • Covers against breakdown of an appliance such as a computer, hi-fi washing machine etc.
    • New items will automatically be insured as part of the guarantee.
    • Extended guarantees are normally expensive and not always worthwhile.

Things to watch for

No Claims Discount

  • Most insurance companies will offer you a 'no claims discount' - especially on motor insurance. This means that you premium (the amount you have to pay each year) should get smaller if you do not claim.
  • Your no claims discount maybe protected against a claim by paying an additional premium.

Excess payments

  • Most companies will charge you an excess for each claim. This means that they will deduct the amount of the excess from the amount of money they repay you in payment of a claim.
  • There maybe a minimum excess which will be higher for young people.
  • The greater the excess payment you agree to over the minimum, the cheaper your premium.

Duplication

  • Make sure that you are not paying for insurance twice. You may have travel insurance covered as part of your contents insurance or even as part of the holiday cost if you buy a package holiday.

Cost comparison sites

  • There are many cost comparison sites on the internet.
  • They take a lot of the work out of finding the cheapest quote.
  • They may not quote you for exactly what you want.
  • Wize-links to cost comparison sites

www.moneysupermarket.com

www.gocompare.com

www.confused.com

Wize Tips

  • Only Car insurance and life insurance for a mortgage holder is compulsory
  • Premiums will vary considerably - search around before committing yourself.
  • Make sure you are not duplicating your insurance.
  • Make sure that you are not under insured or over insured. The insurance companies will penalise you for both.
  • Remember that any claim you make will probably affect your next premium.
  • Remember that you will have to pay an excess towards any claim.