Everyone aims to save money, as it doesn’t feel good when paying over the odds for a product or service, particularly one like insurance that you may never need to use. When it comes to insurance, there are a few classic mistakes that people make which, can result in losing money on premiums, or losing out in the event that a claim is necessary.
Here are 5 mistakes to avoid and 5 tips for better buying:
(1) Insuring a home for it’s sale price not the cost of a rebuild
When it comes to home insurance, insuring your home for the value of an expected sale price, is a common mistake people make, when actually it is the cost of a rebuild that is the more relevant figure.
Market values of property go up and down and may not truly reflect the cost to replace your home in the event of a disaster such as a fire or flood, where everything is destroyed.
TIP – Value your home insurance based on the total cost of a rebuild + the value of your total belongings.
(2) Choosing an insurance policy just on price
It is natural to want to save money on your insurance premiums, but there are other factors that are also important, such as the service provided by the insurance company, their reputation and financial health, plus reviews from other consumers.
TIP – Read reviews about the insurance company, particularly regarding the ease of their claim process. Working with a reputable insurance broker also means they will steer you towards insurance companies with a sound reputation.
(3) Purchasing the minimum cover for your car insurance
As with most things financial, opting for the minimum cover can have consequences. If you do have an accident, needing to fall back on more comprehensive cover when it is not there, can leave you seriously out of pocket.
TIP – Find a medium ground. Don’t opt for the minimum cover, instead seek a policy that is affordable but one that also enables you to have the maximum, relevant protection for your circumstances.
(4) Excluding flood insurance from your home insurance
Standard home insurance doesn’t always cover flooding, and sometimes extra insurance or an addition to the policy is needed.
However, some home insurers do not provide cover for flood claims, particularly if you live in a high-risk area. If you find this to be the case in your home, don’t assume you are uninsurable.
In the last year, something called FloodRE has been introduced to allow insurers to offset the flood section of cover elsewhere. This means with the right advice and policy, you should be able to obtain this cover.
Whilst your property may not be in a high risk area for flooding, strange weather patterns can cause unsuspected flooding and it is always important to remember the absolute damage which can result from a flood.
TIP – Look into the details of your insurance policy to see what is covered. If you are in a high risk area then considering additional insurance is essential.
(5) Not taking out tenants insurance
Tenants insurance covers your personal belongings and furnishings whilst renting. Some tenants forget, or choose not to take out this insurance, particularly for first-time tenants trying to keep their maintenance costs down.
Failure to take out tenants insurance is risky as it means none of your possessions are insured in the event of fire, flood or theft.
Some tenants insurance provide cover if someone is injured in your home. Others also cover certain personal items, such as your mobile phone or laptop, even outside the property.
TIP – Instead of avoiding paying for this cover, look for a low-cost premium that at least covers your most valuable items.
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