With so many insurance policies available, it can be difficult to see which ones you really need. But as the cost of living continues to rise, more of us are reviewing our household finances in a bid to save money in the coming months.
When it comes to insurance policies, it’s easy to see why you may think some might be dispensable, but before you ditch any, we take a look at the ones that everyone should have and some you can do without.
Which home insurance do you need?
There are two types of home insurance—buildings and contents.
If you’re a homeowner, there’s no escaping buildings home insurance, which covers the structure of your home and permanent fixtures and fittings. Legally, you need buildings insurance as a condition of your mortgage. If you’re renting, however, buildings insurance is the landlord’s responsibility and not something you need to worry about.
As for contents insurance, whether you’re a homeowner or renting, think very carefully before you forgo this one.
Ask yourself how much it would cost to replace all your worldly possessions if there was a theft, fire or accidental damage.
According to the Association of British Insurers, one in four households doesn’t have home contents insurance. But while this may only cost you a few hundred pounds a year, the bill for replacing all your goods could run into many thousands.
Do you need life Insurance?
Whether you need life insurance very much depends on your individual circumstances. If you’re financially independent, don’t have dependents, you are single and not a business owner, then you may not need it.
But, if you have people who rely on your income, such as children or a partner, then life insurance could prevent them from falling into financial hardship should the worst happen to you.
This isn’t an easy one to think about, but as we have learnt from COVID-19, it’s important to prepare for the unexpected.
According to Canada Life, eight million people have thought about or taken out life insurance policies since March 2020, but there are still 32.9m people who are not covered, leaving their families at possible financial risk.
There are two types of policy you can buy—term life, which you hold for a fixed term, or whole of life, which will pay out to your family whenever you pass away.
Life insurance isn’t as expensive as you may think, starting from around £5 a month.
It’s worth noting, though, that you may have some cover from your employer for ”death in service” and this may seem adequate.
Should you get pet insurance?
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Working from home has certainly seen more people acquire a pet, with an estimated 44% of UK households now owning one, according to the RSPCA.
If you’ve acquired a lockdown puppy or kitten, then not having pet insurance leaves you at risk of paying hundreds, if not thousands, in vet bills should your furry friend get ill or need treatment.
Surgery for a cat’s broken tibia, for example, can set you back by nearly £2,000 and treatment for a dog with diabetes may cost around £1,200 over a two-and-half-year period.
Not having pet insurance can lead you into debt, so it is worth considering.
The cost of the pet insurance may depend on your pet, its age, and the type of cover you want, but the average premium is around £145 a year, according to providers.
Why you need travel insurance
The pandemic has certainly highlighted the importance of travel insurance, and now is not the time to let your guard down and travel without it.
Whether you’re going abroad or having a staycation, travel insurance is a must. It can protect you against lost items and cancellation as well as medical treatment costs abroad.
Almost nine million holidaymakers go away without cover according to ABTA, meaning they could lose money if their trip is cancelled, their luggage is lost or they get ill when away.
Travel insurance may cost as little as the price of a family meal, but should you need an air ambulance from Majorca, you could face a bill of more than £25,000.
Why motor insurance is vital
If you own a car, then you will know that legally you need car insurance. But you can choose the level of cover from third party; third party, fire and theft; or fully comprehensive, depending on the level of protection you want.
Which insurance policies you don’t need
- Phone insurance: Whether it’s the latest iPhone 13, the Galaxy Z Flip or the new Google Pixel, it is understandable you’ll want protection for loss or damage. But before you buy phone insurance, check if your phone is covered by your home contents insurance (if it’s not, you may be able to add it). If you have a packaged bank account (such as Virgin Money) you may already have gadget cover.
- Extended warranties: A salesperson may well try to convince you that you need these with electrical goods, but don’t forget your purchase will have a manufacturer’s guarantee and you are also protected under the Consumers Rights Act 2015, meaning your product must be of satisfactory quality, be fit for purpose and be as described.
- Private medical insurance: We have an amazing NHS, so you don’t have to pay for healthcare insurance. You may also get this benefit from work.
Insurance advice
- Always be honest when buying insurance, otherwise your policy could be invalidated.
- The cheapest policy isn’t always the best—make sure you buy the right level of cover for your needs.
- Always use more than one comparison site when comparing policies, such as gocompare, moneysupermarket and uswitch, for example. It’s also worth calling providers directly for a competitive price.