Did you know that more than £230 million is paid out in the UK each day in pension and life insurance benefits?
Or that over £50 million is paid out every day in general insurance claims, including home insurance and car insurance claims.
Individuals and businesses alike use insurance to protect themselves against the everyday risks they face, ranging from burglary to car accidents to serious illness or even death.
However, it is often feared that some people do not fully understand the insurance that they buy.
Maybe some of the basic principles seem confusing, or perhaps there are confusing nuances and peculiarities hidden away in the small print.
Questions about insurance cover are usually best directed at the insurance provider or maybe an insurance broker.
However, in order to help people better understand certain aspects of the insurance they are buying, the Association of British Insurers (ABI), the organisation which acts as the voice of the UK insurance industry, has compiled a list of tips and myths which should help to clear a few things up.
Top five insurance tips:
1. Disclosure is a must - Whether it's previous medical problems or a speeding fine, full and early disclosure of such information helps to avoid possible problems further down the line. Holding back relevant information will eventually turn out to be a false economy if it means your claim is rejected. The golden rule is: 'If in doubt, always tell your insurer'.
2. Always insure your home for its rebuilding cost, not its market value – When taking out home insurance, the sum insured for buildings insurance must reflect the full rebuilding cost of your home, rather than its market value. The following rebuilding calculator can help you work out the value that you should insure - http://abi.bcis.co.uk/
3. Make sure that any home improvements you have made are reflected in the sum insured - The value added to your property through house extensions, a new kitchen, or a new bathroom should be included when renewing your home insurance, as they will increase the rebuilding cost and therefore the sum insured.
4. Keep contents cover up to date - Always keep track of the value of the contents of your home, particularly with regards to flat screen TVs, laptops and music players. If you buy or are given a new and expensive good, make sure you get your insurer to add it to your policy.
5. Life insurance is based on your health when you take the policy out, not on any subsequent changes in health - Unlike annual insurance policies, such as car and home insurance, life insurance is a long term contract. This means that as long as you have answered all questions honestly and provided full and correct information at the start, your premiums and your cover should stay the same as you get older, even if you fall ill.
Top five insurance myths:
6. Your vehicle is worth what you paid for it, not what it costs to replace –
The truth is, if your car is stolen or damaged beyond repair, the insurer will pay you what it costs to replace it with a similar model today, not what you paid for it. This is because most vehicles depreciate and lose value over time.
7. If your house suffers subsidence it will become uninsurable –
The truth is subsidence (as well as landslip and heave) will usually be covered by buildings insurance. If, after a claim, you are having problems getting subsidence cover, some schemes are available that can cover properties with a history of subsidence.
8. The European Health Insurance Card (EHIC) is a substitute for travel insurance -
The truth is, while the EHIC entitles you to any necessary state-provided medical treatment, it does not provide full NHS coverage whilst abroad or pay for emergency repatriation to the UK. Travel insurance is a must.
9. Online insurance comparisons always return the best insurance option -
The truth is you should make sure the policy that you buy covers you for exactly what you need. Do not choose on price alone and always ensure you compare like-for-like. It should also be remembered that not all insurers are on comparison sites and if you have specialist requirements, it may be better to contact insurers direct.
10. There is an 'Act of God' exclusion in insurance policies –
The truth is insurance policies do not contain such an exclusion. The policy will set out what is insured and what the main exclusions are. If a loss occurs from an event covered, then the insurer will pay out, in accordance with the policy terms and conditions.
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Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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