Guide to home, health and car insurance
There are two types of insurance that you’ll need to fully protect your home.
The first, building insurance, covers your house from any accidental damage that requires building work to be carried out. This damage could be caused by anything from a fire or vandalism to subsidence or a flood. Homeowners with mortgages are required by banks and building societies to take out buildings insurance.
When buying buildings insurance, the ‘sum insured’ is not the market value of your home but rather the amount it would cost to rebuild your home from scratch. It is also the total amount of money an insurer will ever pay out.
Some insurance companies offer unlimited cover, which is based on your postcode and the type of property.
Whether you rent a house or have bought your own place, you might want to consider taking out the second type of home insurance - contents cover. This will protect the possessions within your home from theft or accidental damage. As well as valuables such as jewellery or electrical equipment, contents insurance can also cover furniture, white goods and clothing.
When buying contents insurance you need to decide whether to insure your possessions from accidental damage as well as theft as not all policies offer the former option. You will also need to consider whether to opt for a new-for-old policy that meets the replacement or repair cost of any items, or an indemnity policy that replaces exactly what was there before.
Homeowners can choose whether to buy separate buildings and contents insurance or opt for a combined policy. The latter option is easier to organise and can often be cheaper.
Things to consider
- If you use your property as a business then you will need to find an insurance policy that covers working from home.
- Do you want the cover to include outbuildings such as a shed or garage?
- Do you want to extend your contents insurance to cover any damage or loss of items that you regularly remove from your homes, such as laptops and jewellery?
- Many policies have exclusions so find out what these are before signing on the dotted line.
- Do you want your contents cover to automatically increase the level of cover around Christmas time to include gifts?
- Do you want your insurance to include any offspring living away from home at university?
- Do you intend to sub-let a room or rent out your house? If you don’t tell your insurer your policy could be redundant.
- Do you want any extras, such as cover for home emergency to cover any emergency work needed?
Buying car insurance is unavoidable as UK law states that if you drive a car you must be insured.
The cost of car insurance can vary greatly, because each company will have its own way of estimating your risk of making a claim. It is therefore essential you shop around to get the best deal for your circumstances.
The first thing to consider is whether you want third party or fully comprehensive.
Third party is the legal minimum and will cover you for any personal injuries to other people and damage to other vehicles. So, if you crash into someone else’s car the insurance will pay their costs but not your own.
Third party can be extended to include fire and theft.
If you want more protection, then fully comprehensive car insurance covers every party for damage or personal injury regardless of fault, as well as fire and theft. It can also be extended to include the theft or damage of your personal belongings within the car.
The cost of your car insurance will depend on the type of vehicle you drive as well as your personal circumstances – so your gender, age and how long you’ve had a license will all have a bearing.
Young male drivers tend to be seen as having the highest risk, while older female drivers are seen as having the lowest risk.
Your profession, address, general health will also all affect how much you pay, as will how often you drive your car.
Finally, insurers offer no claims discounts ranging from 30% to 70%. So if you don’t claim on your insurance then you could save some serious cash when it comes to renewal.
Remember, with car insurance is it important to shop around every time your policy comes up for renewal as you might be able to be able to find a cheaper deal as a new customer than an old one.
In the UK, the NHS covers the costs of healthcare “from the cradle to the grave”. But if you want to jump the queues for minor treatment or are unhappy about the level of service the NHS provides, then private medical insurance (PMI) might be for you.
PMI has a reputation for being expensive, but actually many insurers offer deals suitable for anyone, whatever their budget. This type of insurance means any private medical treatment you undertake is covered by the insurer. PMI should not be seen as an alternative to the NHS, but it could be the quickest route for treatment for some minor illnesses, such as a hip replacement.
You can take out PMI an individual, as a couple or family, or as a company.
As it is designed to protect policyholders from the unknown, you are unlikely to be able to get cover on any medical condition that you know you have or have sought advice about. However, some policies may cover pre-existing conditions after a certain period of time.
Most PMI policies also exclude treatment for certain illnesses or health problems. For example, treatment for addictive conditions, self-inflicted injury, psychiatric illness and treatment related to HIV and AIDS. Most are also unlikely to cover infertility treatment and cosmetic surgery.
The cost of your PMI will depend on how comprehensive it is. You can also reduce the cost by opting for a plan that limits the types of treatment covered, places time or cash limits on the different treatments you can claim for, or limits your choice of hospital.
You can also opt for pay for part of your treatment yourself through an excess or a co-payment plan.
Private medical insurance
PMI allows you to skip the NHS waiting list and arrange treatment at a time you choose. With most PMI policies, you pay a monthly premium (the older you are, generally the higher premium) and the policy will then pay out, up to specified cover limits and after an agreed excess, for any treatment you might need. Not all conditions are covered by PMI and you get what you pay for: the more cover you want, the higher your premium will be.
This is more usually a feature of car insurance but it can also crop up in contents, mobile phone and pet insurance policies. An excess is the amount of money you have to pay before the insurance company starts paying out. The excess makes up the first part of a claim, so if your excess is £100 and your claim is for £500, you would pay the first £100 and the insurer the remaining £400. Many online insures let you set your own excess, but the lower the excess, the more expensive the premium will be.
Does exactly what it says on the tin: covers the contents of your home for theft and damage and also may insure certain possessions (jewellery, cycles) outside of the home. Things to watch for include the excess and also the maximum payout on individual items. Another grey area is kitchen fittings, as some contents policies say these are not contents but part of the fabric of the property and covered by buildings insurance and some buildings policies don’t cover them because they regard them as contents.
This type of insurance covers the structure and fabric of your property – the bricks and mortar, not the contents (for which you need contents or home insurance). If you have a mortgage, the lender will insist you have a suitable buildings insurance policy in place. Many lenders offer their own building insurance policies, but you don’t have to buy it from your own lender but you have the option of shopping around. The insurance covers you for the rebuilding costs, not the market value of the property.