A policy for every paranoia

Your Money Worried about being kidnapped by Martians or having octuplets? Relax: you too can be covered, says Jean Eaglesham
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The Independent Online
Should aliens kidnap an earthling, seasoned moviegoers will know they are bound to pick on an American. Indeed, more than 100,000 US citizens have taken out insurance against just this possibility.

The British, however, seem reconciled to being ignored by other life forms - just six people have so far shelled out the pounds 100 premium required for a similar policy offered by London insurance broker Grip, which has the added twist of paying out double if the policyholder is also impregnated by the aliens.

Barmy insurance policies like this are easy to dismiss. As Simon Burgess, managing director of Grip, admits: "The policy's just a publicity stunt. If people are stupid enough to buy it, we'll charge them over the odds."

Many unusual insurance offers seem little more than opportunistic. Witness, for example, Eagle Star's decision a fortnight ago to promote its multiple- birth insurance policy on the back of the Mandy Allwood octuplet story. For a typical premium of pounds 41, a mother stands to get a payout of pounds l,000 if she has an unexpected multiple birth (you must take out the policy pre-scan). Given that only 13 in 1,000 births in the UK are of more than one baby, this means the insurer stands to receive premium income of more than pounds 300 for every pounds 100 it pays out. That is a nice earner for the insurer but looks expensive for the expectant mother.

Elsewhere, the mad cow panic earlier this year prompted a number of insurers to publicise the fact that their serious illness policies covered (or would now cover) Creutzfeldt-Jakob Disease (CJD). A stand-alone CJD policy costing pounds 10 a year was also launched by the broker Grip.

In fact, even on the most pessimistic forecasts, incidences of CJD will be far less than those of known killers such as cancer.

Moreover, the quality and cover of serious illness insurances also vary hugely. So clearly people buying such policies should beware buying simply on the basis of CJD being covered - better instead to concentrate on getting a policy that covers the big risks properly and at a reasonable price.

Nevertheless some of these unusual insurances are big business. Pet insurance, for example, grabbed the headlines in May when Patsy Bloom sold the company she founded 20 years ago- Petplan - for pounds 16m to Cornhill.

Elsewhere, big name insurers have put their weight behind, for example, insurance for gnomes and gardens (Norwich Union, for one) or even cancellation of your wedding (although not if it is due to either participant getting cold feet).

But despite the reassurance of such household names, a common problem with unusual insurances is that competition on premiums is much less fierce.

There is generally only a handful of companies offering any one type of policy, compared with the hundreds who compete to sell car and house insurance.

That does not preclude good value in some areas. Classic car insurance, for example, offers motorists good discounts, based on many classic cars being kept off the road all winter. Importantly, it also allows owners to insure their car for an agreed value rather than the standard market value of a car of that age and make.

Whatever the offbeat policy being promoted, there are a number of questions to ask.

o Is the risk already covered by your existing policies? This may sound blindingly obvious, but it is easy inadvertently to cover the same risk twice. This does not give you twice as much cover - you can only claim once for any given loss; it simply means you pay unnecessary premiums.

House contents policies often include an element of insurance for theft of garden furniture, tools and so on. So the question is whether you really need a specialist garden policy as well. Norwich Union, among others, promotes a policy designed as an add-on. But, as a spokeswoman concedes, this will appeal only to people "who are a bit more precious about their gardens". In other words, if you can live with molehills or the dog next door putting a hole in your hedge, do not buy the policy.

Can you extend an existing policy to cover the risk rather than buy a specialised one? This can often prove to be a cheaper option. For example, insuring a pounds 400 flashy new mountain bike in London via a specialist policy can cost pounds 100 a year. Insuring the same bike by paying for an extension to a standard house contents policy could cost pounds 35 or less.

o Is the cover worth the premium? This comes down to the fundamental insurance question: is it financially worth your while to have the cover just in case, or can you afford to take your chances?

Many people will find that the latter is the case. Take, for example, pet insurance. This is not cheap. Premiums for Petplan range from pounds 96 to pounds 197 a year for a dog, depending on where you live and the level of cover. Even cheaper policies such as the horribly named Waggy Tails Policy from Yorkshire-based Aims, underwritten by General Accident, costs pounds 65 a year.

If you could not afford to meet a vet's bill of around, say, pounds 500 if your pet had a serious accident, the cover may be worth having - especially as vet fees are said to be increasing. But if you could cover such a bill in an emergency, then the premiums probably are not worth it.

Jean Eaglesham works for 'Investors Chronicle'.

Are you prepared?

Bobbitting: a Penis Protection Plan sold in the US insures men, by the inch (no joke, apparently), against the kind of attack that befell John Wayne Bobbitt.

Kidnap by aliens: 100,000 Americans can't be wrong, surely; the UK version offers a double pay out if you're impregnated as well.

Disgrace: celebrities can, and do, insure for loss of earnings if they "offend public decency".

Drugs: for pounds 15 a year ("the price of a pill"), London insurance broker Grip offers cover of up to pounds 100,000 for anyone who suffers "permanent total disability" as a result of taking non-injected drugs.

Terrorist injury: for pounds 25 a year, Grip offers you pounds 100,000 of cover against the remote possibility of being a victim of a terrorist attack.

Rock stars and singers: Bruce Springsteen, for example, insured his voice for pounds 3.5m at Lloyd's of London. Wine tasters can also insure their palates, and models and actors can insure various anatomical parts.

Sexually-transmitted diseases and other illnesses for prostitutes: another Grip policy launched recently.