- It is wise to insure your home (the building) against fire, flooding, and damage.
- If you have a mortgage, the lender will require you to insure your home at least to cover the loan outstanding.
- Contents insurance covers your home contents against damage, fire, flooding, and theft.
- The BBC website also provides some guidance on home insurance here.
- Third party insurance is compulsory by law. This covers the damage you may do to another vehicle or its occupants in an accident where you are liable. It however does not cover any damage to your own car.
- Comprehensive insurance protects the current market value of your car against loss by theft and damage by fire or accident.
- Car insurance most commonly has a "no claim" benefit, by which the premium is cheaper if you have held continuous insurance and not made a claim in the past few years.
Personal accident and sickness insurance
- You may insure yourself against accidents and sickness. The insurance company will pay the difference between the state benefit and what you would have earned at work.
- In the UK you do not need to have health insurance. Everybody is entitled to treatment on the National Health Service (NHS).
- If you choose to take our health insurance, this covers you for treatment in private hospitals, or for other private medical treatment. It can be extended to things like dental and optical care.
- Health insurance offers the benefits of often being able to choose when, where and by whom you receive treatment in case of illness. It can also lead to reduced waiting times for certain procedures.
- Health insurance does not normally cover all events. For example most GP services and Accident and Emergency procedures have to be done on the NHS.
- If you have a pre-existing condition you may find it difficult to get health insurance to cover it.
- Vets' bills are not cheap and pet insurance will cover at least some of these expenses.
- Travel insurance protects you against a variety of events while travelling. These include; cancellation or curtailing of trip beyond your control, medical expenses while abroad, loss or theft of possessions and legal expenses in liability in case of accident.
- You can purchase travel insurance for individual trips or you can take out an annual policy which covers you for all trips made in that year.
- Make sure you fully understand the terms, limits and excesses of your policy before you agree to it.
- Ensure you have a policy which covers all your protection needs. If you have a family make sure they are also covered.
- Certain activities like skiing and extreme sports require special cover.
- The Association for British Insurers provides further guidance on travel insurance here.
- The basic cover here is for a lump sum to be paid on your death. This is of course most important if you have dependants.
- A term policy offers similar cover, but for a specific limited period only. This is often done when a mortgage is taken out to ensure that money would be available to repay the mortgage should the main earner die.
- Whole life insurance pays out whenever you die. Whole life policies have higher premiums that ‘term’ insurance because the insurance company is guaranteed to have to pay at some point.
- Some whole life policies you pay until you die, others you just pay until a certain agreed age. These are known as ‘paid up’ policies.
- You should consider whether a term policy or whole life policy is better suited to your financial circumstances. For more information on life assurance protection see this guide from the Association of British Insurers.
- Life assurance can act as both as a protection for your family in the event of your death but it can also be a means of long term savings. The Association of British Insurers provides more information here.
Payment Protection Insurance (PPI)
- PPI is widely offered whenever you take out a mortgage or buy something on credit. This type of insurance offers protection in case you fall ill or lose your job and are unable to make the necessary payments.
- As with all types of insurance, read the small print to find out whether there are exclusions and whether the protection covers the whole of the purchase or just payments over a certain period for example.
- Remember that you do not have to take PPI if you think it is not in your best interests. Weigh up the cost against the potential security and see which option makes most sense to you.
- The Financial Services Authority (FSA) provides further information about PPI here.
- Further PPI guidance from The British Insurance Brokers’ Association can be found here.
How to apply for insurance?
- Contact the insurance companies directly
- Contact insurance brokers who can also help you find an insurance policy that would meet your needs. Remember to shop around for the best deal. Price comparison websites can make this process much simpler.
- Ask your bank for advice
Getting value for money
- Assessing your claims history or your risk factor can reduce the premium. For example, you may get a reduction:
- if you have not made a claim within a certain period of time
- if you install security equipment on your property
- if you agree to insure with the same company for a number of years
Association of British Insurers
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