Insurance: Get covered in all the right places

You want to rely on insurers in a crisis, but Chiara Cavaglieri says you shouldn't rely on them to tell you what cover you need

Insurers love a good horror story, hoping it will scare you into buying cover for absolutely everything. When it comes to our finances, we all fear the unknown and the right insurance policies offer welcome protection, but with providers focusing on lining their own pockets, it's up to you to decide what is really worth paying out for.

With new regulations coming into force next month, which are likely to push up the cost of various policies for women, it could be the perfect time to check that you've got cover where it's needed.

Car insurance

There's no getting away from car insurance – it's a legal requirement – but there is an art to picking the right policy. Basic third-party, fire and theft policies are cheaper but if you opt for a more expensive policy, there are ways to cut costs.

"The golden rule is to never automatically renew any insurance without making two essential checks," says Andrew Hagger of MoneyComms. "First, have a quick read through the details of your cover – a dull task I know, but very important. Is everything still relevant? Has anything changed?"

For example, your annual mileage may be lower if you've moved house or changed jobs, or an additional driver may no longer need to be on your policy – making these changes can significantly cut the cost. You could also save money by ditching optional extras such as legal expenses, free courtesy cars and breakdown recovery. Adding safety measures such as an alarm or immobilising/tracking device and parking in a garage or driveway at night should cut your premium too.

"The second check is to see what price you can get elsewhere – car insurance costs have fallen over the past 12 months, but just because you got a best-buy price last year, it doesn't mean that you're still getting the cheapest cover today" Mr Hagger says.

Shopping around takes only minutes and could save you a few quid on your annual bill, but check the level of cover on offer and always start off by comparing costs for fully comprehensive cover and then work your way backwards.

Life insurance

If you are single with no dependents, or you're near retirement and have your mortgage paid off and pension sorted, life assurance isn't for you. However, if you are the main breadwinner and have people relying on your income, it will give those loved ones a lump sum or monthly income to help them financially if you die unexpectedly.

There are many types of life cover and you will need to decide how much cover you need, over how long and whether you want this to reduce over time (often in line with a reducing mortgage), stay level, or increase. Some policies have additional cover for critical illness, or investment elements, but these extras will make it more expensive so only pay for what you need and check you haven't got cover elsewhere. Ideally, take independent advice before you make your decision.

"As a starting point you should find out if your employer provides you with any life assurance benefits. Many do, but they don't always do a good job of communicating that to their employees," says Patrick Connolly at the independent financial adviser Chase de Vere.

Review your policy regularly as you may need more or less cover in the future. You may also find a more competitive deal as life assurance premiums often become cheaper as people live longer – but never stop an existing policy until a new one is in place.

Travel insurance

If it was more expensive, it would be easier to dismiss travel insurance. Insurers are all too clever when it comes to worming their way out of paying for claims – excluding cover for volcanic ash, hurricanes, missed flights due to traffic, and bankrupt airlines, to name a few. However, when it comes to medical costs, travel insurance is a worthy product. We have all heard the nightmare stories of holidaymakers racking up ridiculous medical bills, particularly in countries such as the US where it can cost hundreds of thousands of pounds if you have a major illness or accident.

This may be less true if you are travelling in countries covered by the European health insurance card (EHIC) because this entitles you to state-provided healthcare, but it still does not cover repatriation to the UK, and travel insurance is so cheap – as little as £20 a year – that it seems foolish to go without.

Home insurance

If you apply for a mortgage, your lender will insist on building insurance, but regardless of this, it is important protection to have in place. It covers the cost of rebuilding your home if it is damaged by anything from fires and floods to theft and falling trees, all of which, in most cases, would be far beyond most homeowners' means.

Note that the rebuild value is not the same as the market value, so in the South-east and particularly London, the market value is often much higher than the rebuild cost, while in other areas it is lower. Get it right by using the Association of British Insurers' online tool at to calculate the sum insured.

Contents cover is for everything inside the house – including clothes, white goods, furniture and personal belongings. Don't underestimate how much your contents are worth, because if you are underinsured the insurer will only pay out a proportion of the claim.

Kevin Pratt at MoneySupermarket says: "Insurers worry about burglary so make your house more secure, fitting alarms and better locks on doors and windows for a discount of maybe 5 or 10 per cent. And if you buy your building and contents insurance from the same company they often give you a discount."

But don't bother with …

For every insurance policy that offers welcome peace of mind, there are countless others that are quite simply a waste of money. Whether it's extended warranties and ID fraud protection that offer cover you can already get for free, or policies such as accidental-death cover that are notoriously difficult to claim on and better replaced by life insurance, you need to be picky about what you can afford to take a risk on.

Dental insurance and private medical insurance (PMI) are luxuries and may actually offer fewer benefits than you would hope. For example, many dental policies won't cover cosmetic procedures (tooth whitening and some orthodontic treatments), and PMI is no use in an emergency as private hospitals don't have A&E departments.

You can self-insure relatively easily for mobile phones and bicycles, or you may find that these are already covered by your home contents policy, or can be added for a small extra cost.

Susan Sarandon described David Bowie as
peopleSusan Sarandon reveals more on her David Bowie romance
Arsenal supporters gather for a recent ‘fan party’ in New Jersey
sportDidier Drogba returns to Chelsea on one-year deal
Have you tried new the Independent Digital Edition apps?
Arts and Entertainment
The Secret Cinema performance of Back to the Future has been cancelled again
Life and Style
Balmain's autumn/winter 2014 campaign, shot by Mario Sorrenti and featuring Binx Walton, Cara Delevingne, Jourdan Dunn, Ysaunny Brito, Issa Lish and Kayla Scott
fashionHow Olivier Rousteing is revitalising the house of Balmain
Arts and Entertainment
Christian Grey cradles Ana in the Fifty Shades of Grey film
filmFifty Shades of Grey trailer provokes moral outrage in US
BBC broadcaster and presenter Evan Davis, who will be taking over from Jeremy Paxman on Newsnight
peopleForget Paxman - what will Evan Davis be like on Newsnight?
Life and Style
fashionCustomer complained about the visibly protruding ribs
newsComedy club forced to apologise as maggots eating a dead pigeon fall out of air-conditioning
Arts and Entertainment
Jo Brand says she's mellowed a lot
tvJo Brand says shows encourage people to laugh at the vulnerable
Life and Style
People may feel that they're procrastinating by watching TV in the evening
Tovey says of homeless charity the Pillion Trust : 'If it weren't for them and the park attendant I wouldn't be here today.'
Rhys Williams
commonwealth games
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Senior Risk Manager - Banking - London - £650

    £600 - £650 per day: Orgtel: Conduct Risk Liaison Manager - Banking - London -...

    The benefits of being in Recruitment at SThree...

    £18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...

    Test Analyst - UAT - Credit Risk

    £280 - £300 per day + competitive: Orgtel: Test Analyst, Edinburgh, Credit Ris...

    Trainee Recruitment Consultants - Banking & Finance

    £20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

    Day In a Page

    Evan Davis: The BBC’s wolf in sheep’s clothing to take over at Newsnight

    The BBC’s wolf in sheep’s clothing

    What will Evan Davis be like on Newsnight?
    Finding the names for America’s shame: What happens to the immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert?

    Finding the names for America’s shame

    The immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert
    Inside a church for Born Again Christians: Speaking to God in a Manchester multiplex

    Inside a church for Born Again Christians

    As Britain's Anglican church struggles to establish its modern identity, one branch of Christianity is booming
    Rihanna, Kim Kardashian and me: How Olivier Rousteing is revitalising the house of Balmain

    Olivier Rousteing is revitalising the house of Balmain

    Parisian couturier Pierre Balmain made his name dressing the mid-century jet set. Today, Olivier Rousteing – heir to the house Pierre built – is celebrating their 21st-century equivalents. The result? Nothing short of Balmania
    Cancer, cardiac arrest, HIV and homelessness - and he's only 39

    Incredible survival story of David Tovey

    Tovey went from cooking for the Queen to rifling through bins for his supper. His is a startling story of endurance against the odds – and of a social safety net failing at every turn
    Backhanders, bribery and abuses of power have soared in China as economy surges

    Bribery and abuses of power soar in China

    The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
    Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

    Highland terriers steal the show at opening ceremony

    Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
    German art world rocked as artists use renowned fat sculpture to distil schnapps

    Brewing the fat from artwork angers widow of sculptor

    Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
    BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

    BBC takes viewers back down memory lane

    The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
    Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

    Nicolas Cage shines in low-budget drama Joe

    Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
    How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

    Make your own ice lollies and frozen yoghurt

    Think outside the cool box for this summer's tempting frozen treats
    Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

    Fiesta is UK's most popular car of all-time

    Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride
    10 best reed diffusers

    Heaven scent: 10 best reed diffusers

    Keep your rooms smelling summery and fresh with one of these subtle but distinctive home fragrances that’ll last you months
    Commonwealth Games 2014: Female boxers set to compete for first time

    Female boxers set to compete at Commonwealth Games for first time

    There’s no favourites and with no headguards anything could happen
    Five things we’ve learned so far about Manchester United under Louis van Gaal

    Five things we’ve learned so far about United under Van Gaal

    It’s impossible to avoid the impression that the Dutch manager is playing to the gallery a little