You’re about to buy an
insurance policy. Before you commit, run through this checklist to make sure
you know what you’re buying.
- Beware of buying insurance offered alongside something else
- Have you shopped around?
- Have you compared like with like?
- Does the policy cover everything you need it to?
- Have you answered all your insurer’s questions truthfully
and accurately?
- Do you need expert advice?
Beware of buying insurance offered alongside
something else
For example you may be
offered:
- buildings
and contents insurance, life assurance and critical illness cover when you
take out your mortgage
- warranty
insurance when you buy a new washing machine or computer
- travel
insurance when you book a holiday
- payment
protection insurance with goods bought from catalogues
If you need this
insurance, you may get it cheaper with better cover elsewhere.
Have you shopped around?
Top tip
Go back to your existing insurer with a
cheaper quote from somewhere else and you could drive down the price of your
renewal quote.
Don’t compare on price
alone as the cheapest policy isn’t usually the best cover for your needs, and
it is important to compare both the price and the level of cover. Try to get at
least three quotes.
There are many
different ways to buy insurance, here are the main ones:
- an
insurance broker or independent financial adviser
- comparison
sites and online insurers
- banks
and building societies
- supermarkets
and department stores
Don’t assume that
insurance bought over the internet or from a comparison site is automatically
cheapest, or offers the best cover. If you’re looking for car or home
insurance, then comparison sites are a good place to start. But remember that
no comparison site covers all the insurance companies.
Get quotes from more
than one comparison website and look at them alongside quotes from insurers who
don’t appear on comparison sites.
Have you compared like with like?
Watch out for how
different charges, types and levels of cover, and your excesses are calculated
when you compare policies.
For example, some
insurers set their voluntary excess (the amount of any claim not covered by the
insurer) at a high level to make sure they come out cheapest on comparison
sites.
When comparing
policies and prices, make sure that the features you are comparing – such as
excess amounts – are similar.
If you are buying from
a comparison site, remember to check the level of cover you’re being offered –
insurers often cut down on cover to make sure that they’re the cheapest.
Does the policy cover everything you need it
to?
Buyer beware
Nearly half of us don’t know what our
insurance covers. It’s only when we come to make a claim that we find out,
sometimes with disastrous consequences.
Read the policy
document. At least check the features that are important to you in the policy
summary. Otherwise, you are potentially wasting your money and might not be
covered when you really need it.
If you have already
bought a policy, you have 14 days (30 days for life, income protection, payment
protection and critical illness policies) to change your mind if you decide the
policy isn’t suitable for you. However, for home and car insurance you might
have to pay an administration charge and the cost of any days already covered.
Have you answered all your insurer’s questions
truthfully and accurately?
Whether you’re
applying online, by phone or by application form, make sure you take reasonable
care to answer all the insurer’s questions honestly and to the best of your
knowledge. If you don’t, your policy may be cancelled, or any future claim
could be rejected or not fully paid out.
Do you need expert advice?
If you have an unusual
car or a house that is of a non-standard construction, using an insurance
broker may get you a better deal.
Some types of
insurance – such as critical illness and income protection – vary widely and
have complex terms and conditions. If you’re buying this type of insurance,
it’s worth getting an adviser to help you find the best policy to suit your
needs.
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