While car insurance is a must-buy, there are so many other types of cover available, it can be hard to work out which ones you really need – and even what you might already be covered for. Use our guide to ‘must-have’ and ‘do-without’ insurance to make an informed decision about the cover you take out.
Essential if your partner, children or other dependents rely on your income to cover the mortgage, rent or other living expenses. Life insurance will pay out a lump sum or make regular payments to them if you die. It won’t pay out if you can no longer work due to illness or injury: you’ll need income protectionor critical illness insurance for this. Before you take out a life insurance policy, think carefully about your personal circumstances. For example, how long do you need the cover for? If you only need cover that runs until you have paid off the mortgage or until your children reach 18 years of age, consider a fixed-term policy. You can buy life insurance for as little as £7 a month.
Building and contents insurance
Buildings insurance is usually a condition of your mortgage and covers damage to the structure of your home, while contents insurance covers your possessions. You’ll usually pay extra to cover accidental damage or personal possessions that you take out of the house, such as your phone.
If you couldn’t comfortably pay an unexpected vet’s bill of £750 (the average pet insurance claim), you should consider pet insurance. Remember, expenses can quickly add up if your pet develops a long-term condition.
Third-party insurance is the legal minimum. However, a good policy will cover things like windscreen damage, loss or theft of your keys and recovering your car from the scene of an accident. Look out for other desirable features such as new car replacement, and cover for legal costs and transport costs after an accident.
The average travel insurance policy costs £37 a year, whereas the cost of medical care and repatriation (getting you home) after a serious accident or emergency can run into six figures. It’s a no-brainer.
POLICIES YOU CAN DO WITHOUT
You’re probably already covered by the manufacturer’s standard warranty or the top-up warranty that many retailers throw in free of charge. Plus, the Consumer Rights Act 2015 means it’s up to the retailer to prove a product wasn’t faulty when you bought it if something goes wrong after purchase.
Check your home contents insurance or any bank account extras – you may already be covered for personal possessions you take out of the house.
Payment protection insurance
If it’s unlikely you wouldn’t be able to make monthly credit card repayments due to unemployment, for instance, you probably don’t need this cover.
Cover for accidental death is generally included in life insurance. You won’t necessarily need additional cover unless your occupation means there is a greater risk of accidental death, or you take part in dangerous sports. Check your life insurance policy to see exactly what you are or aren’t covered for.
Private medical insurance
If you’re comfortable getting medical care through the NHS, or you have private medical insurance as part of an employee benefits package, you can do without this cover.
GHI TIP: Cheaper isn’t always better when it comes to insurance. Make sure you know exactly what is covered before you take out a policy. Remember that insurance policies will only pay out if you keep up your payments so it’s important to ensure any cover you take out is affordable.