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Insurance – 10 General Tips

Introduction

Insurance of any sort can roughly be separated into two main areas. There are “compulsory” products, those that you have to buy in order to carry on your daily life, like motor cover or, if you run a business, liability insurance.

Then there are “optional” protection products, such as medical and critical illness insurance, travel cover, pet insurance and so on.

Regardless of what insurance you buy, there are a number of pointers that you always need to be aware of both before you take out cover – and afterwards.

Here are 10 key points to note:

1) Always shop around.

Just like banks, insurers rely on inertia for their profits. They know that most people will tend to stick with one provider for several years at best, indefinitely at worst.

You should aim to get a better deal on your car every year, on your home and contents every two years at least, and every three to four years on your life insurance.

2) “Utmost good faith”

All contracts between an insured party and an insurer are based on this notion. It means you have a duty to disclose any information that may affect the granting of a policy, any exclusion that might have been applied or its price.

At its most basic, fail to tell the insurer that you had a heart transplant a few days before going on a mountaineering expedition and you may well find your medical claim is voided if you fall ill.

Beware that insurers take this point extremely seriously and one of the biggest stumbling blocks for would-be claimants often turns out to be a small piece of information they discover should have been passed on at the time of taking out the cover.

3) Small print

Insurance varies widely not just in price but also in scope.

For example, “Third Party, Fire & Theft” is an accurate description of precisely the areas that are covered by some types of motor cover. But the terms under such cover is applied will change between insurers.

Medical, critical illness and travel insurance policies vary even more widely. Which is why it is essential that you always write down your own checklist the things you believe should be covered by any policy you buy – before you buy it.

Don’t be afraid to pick up the phone and call the insurer whose policy you are looking at, whether online or elsewhere.

Always make sure you check the small print of a policy too. If, say you are taking out annual travel cover but your partner or spouse may also need to travel separately, make sure your policy allows this: many of the cheaper ones only insure a couple if the main policyholder takes part in the trip.

If in doubt, speak to an insurance broker: peace of mind is always worth a few pounds extra.

4) Don’t over-insure

This is a common problem. Many people will take out motor cover that protects them against thefts from their car. Yet they also have “all risks” home contents cover, which would protect their possessions while in transport.

Or they may take out cover that is already provided through their work: life insurance is one example, where many companies offer three or four times an employee’s salary – in which case you do not need as much protection from your insurer.

More pages

Page 1: Introduction
Page 2: 5) Don’t under-insure
Page 3: 10) Go to the Financial Ombudsman

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