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Do I need insurance?

From the mundane (household contents) to the morbid (life insurance), TheSite.org uncovers the truth about insurance.

girl on uninsured phone

"Really? Do I?"

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What is insurance?

If something is insured and it gets lost, broken or stolen, you can ring up your insurance company and they’ll give you the money to replace it. So if your phone gets nicked for example, if you’ve paid for insurance you can claim the money back.

If you are a risk taker you may think you don’t need insurance, whereas if you’re very cautious you may be tempted to take out every policy available. The truth probably lies somewhere in between. Before you take out insurance, it’s important to compare different policies and read the small print.

Do I need contents insurance?

Contents insurance covers what’s inside your home, so stuff like your clothes, television, fridges, laptops, jewellery and so on. In other words, what you would take with you if you moved.

If you’re renting, you don’t need to worry about the building and the things your landlord has put there. You just need to insure your valuables, especially because good insurance policies will also cover them when you take items out of your home as well.

If you own your home you will also need building’s insurance and you can normally get this with contents insurance on one policy.

Do I need to insure my phone?

It depends how much your phone is worth – your old brick probably doesn’t need insurance (after all, who would steal it?) but if you have the latest phone, it’s worth protecting.

You can include your phone in your contents insurance, but the excess for these policies is often quite high. For example, if the excess is £500 and your phone is worth £400 – there’s no point claiming.

You can insure your phone on its own policy which will have a lower excess, although it’s more money going out of your bank account every month.

Your phone network, or the shop you bought your phone from, may also offer insurance. This can be expensive, but it often means you can get a replacement phone more quickly.

Do I need car insurance?

If you have a car it has to be insured. Even if it’s just basic ‘third party insurance’ which only covers you if you injure someone or damage their car.

Car insurance can be eye-wateringly expensive if you’re under 25 but there are ways to make it cheaper. This article offers some practical tips on keeping those premiums down.

Do I need any other types of insurance?

The other big type of insurance is travel insurance, which pays out if your holiday is cancelled, your luggage is stolen and – most importantly – if you become ill or have an accident. Find out more on our travel insurance article.

People also take out life insurance, health insurance, payment protection insurance… the list goes on.

How do I choose an insurance policy?

There are three things you need to think about:

  • How much an insurance policy costs (in other words, which is the cheapest?)
  • Does the policy cover everything you need it to (For example, if it’s travel insurance do you need to be covered for ski accidents?)
  • What the excess charge is

Fortunately there are now loads of comparison sites to help you work this out.

Excess charges

Insurance policies often have hidden costs and hard-to-understand small print. Look out for ‘excess’ charges; the higher the excess, the more of the first part of any claim you will have to pay. Some policies have an excess of £50, others of £200. You can sometimes reduce the premiums you pay by volunteering to take a larger excess.

How do I make an insurance claim?

  • Keep any evidence: Depending on the situation either get the names and addresses of any witnesses, keep any relevant receipts or take photographs.
  • Contact the broker/insurer: Give them a ring then follow up with a letter or email, keeping a copy for yourself. They should send you a claim form or tell you how to claim online.
  • Depending on the type of policy you have, you may be asked to provide two or three professional estimates for the repairs with the form or the insurance company may arrange the repairs from an approved panel of companies.

Don’t assume you’re covered for all eventualities

It’s easy to assume that, once you’ve bought insurance, you’re covered for everything, but that’s unlikely to be the case. Policies vary widely between different providers so it’s really important that you read the small print (dull as it is) or talk to a broker who understands the differences between them.  If you’re unsure about what is and isn’t covered, give the insurance company a call to double check and make sure you get the details confirmed in writing.

Who can I complain to?

If you aren’t happy with the way your insurance company is acting you can contact the Financial Ombudsman Service on 0300 123 9 123 for free, independent advice on resolving disputes with insurance firms.

 

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Updated on 07-Aug-2014

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