Wednesday, 13 December 2017

Three Tips For Purchasing Insurance

Most of us have some sort of insurance at any time, whether that is for travel, car, life, home, contents, pet, gadget or mobile insurance. Of course, when you have something valuable it's very important to take insurance cover out, and this includes life insurance as there is nothing more precious than you. 

If you are new to buying insurance everything may seem confusing and complicated but there are certain things that apply to most areas of insurance and are important to bear in mind. In this post, I will address three main tips for purchasing any type of insurance.

1. Make sure that you don't over or underinsure




Noone wants to pay more for insurance, but if you are not insured for the right amount it could cause problems. 

If you overinsure you are paying too much for the coverage and therefore that is money lost in overpaying on the premiums. It's important to remember it's not the price you paid for something that you are insuring for, its the cost of replacing it. You need to remember this especially for technology cover as devices are becoming cheaper and the cost of replacing is reducing.  

If you underinsure then the insurance company may decide to 'apply average' to a claim. For example, if you underinsure your home and need to claim in a fire, flood or theft a loss adjuster may come to assess your property, if you are underinsured they may only pay a proportion of the value of the items that are lost, and you may not get back the amount you claimed for. 

A way to ensure you have correctly insured your contents is by doing a contents inventory every year, going through your home, room by room, making note of the items in each room and what it would cost to replace.  Adjust your contents insurance accordingly, taking particular note of expensive items such as jewellery and technology.

2. Look at the excess



Insurance policies have an excess - the amount they will ask you to pay if and when you need to make a claim. The excess can vary between insurance companies and different types of insurance policies. 

There are two types of excess - compulsory and voluntary. Compulsory is an excess you have to pay which is determined by the insurer and you don't have a say in the matter, voluntary is an excess you choose to pay, for example, to make premiums lower. 

A compulsory excess is set by the insurer and can be affected by things such as age, medical conditions, experience, type of car etc, depending on the insurance. Voluntary excess can be taken out on top of any compulsory excess. The benefit of this is that insurance premiums can be lower if you have a higher excess, however, you need to weigh up the pros and cons, as if you want to make a claim the excess may be so high it may not be worth making a claim. Only you can decide whether to take out a voluntary excess on an insurance policy.


3. Check and compare policies



Insurance policies vary a lot, so when looking to purchase an insurance policy it's important to compare policies. Don't just compare on price alone, compare on the cover too as the cheapest policy often isn't the best for your needs.

When comparing policies, always get at least three quotes. You could use an insurance broker, your bank or building society, or comparison websites to get quotes, but always remember that no one website or bank or broker will offer all the policies out there. 

When comparing policies you should always compare like for like, check the excess, and ensure the policy covers everything you need. It's obviously important to truthfully and honestly answer any questions when taking out a policy as this could affect a payout if you haven't given truthful information at the start.

When you buy a policy you have a 'cooling off' period in which to change your mind, so always double check this amount of time when buying your policy too.

Insurance is vitally important but it can feel like a complicated process when you need to take insurance out. I hope this article has given you some useful information on what to look out for when purchasing insurance and has been a useful guide.  

in collaboration with https://insuranceadvicebureau.co.uk/

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9 comments

  1. Great tips! I'm looking into contents insurance at the moment and it's pretty confusing, so these will be a great help!

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    1. It can be a bit of a minefield can't it?

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  2. A lot of companies offer a very high contents cover these days which would cover almost everyone quite comfortably. I like that because it gives me peace of mind and saves on the inventory, but I'm probably paying for it.

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  3. Great tips- we've had to claim on insurance a few times so it's really worth making sure you have the right policy.

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  4. Insurance can be such a minefield, I'm afraid I let my husband sort everything out!

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  5. I have just gotten engaged so this is v.useful advice for insuring my ring! xx

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    1. Home contents insurance will only cover jewellery up to a certain amount so its important to check the policy and consider having extra insurance depending on the value of the ring. You may have to have the ring itemised on the insurance too.

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  6. It's really imporant to have insurance and making sure its the right one too

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