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What to consider when buying insurance

Make sure you're not paying for insurance you don't need. Answering these 6 questions can help you choose a policy that’s right for you.

What do I want my insurance to cover?

Are you worried about breaking your mobile phone? Getting ill while on holiday? Being burgled? Think about what’s important to you and the sort of events you’d like to be protected from. This will help you work out what features to look for.

Also consider who you want your policy to cover. Is it just for you? You and your partner? Or your family too? Sometimes, it can be cheaper to insure the whole household, than to take out separate policies.

Am I OK with what’s not covered?

Arguably, even more important than what’s covered is what’s not covered. This can be where people get caught out.

Read the exclusions carefully. Are you happy being uninsured for things that are listed? For example, many mobile phone policies don’t cover water damage. So, if you’re prone to dropping your phone down the loo, you may want to find a different level of cover – or a different policy altogether.

You need to make sure you’re comfortable with the exclusions before buying a policy. Otherwise, you could find yourself trying to claim for something that’s not covered. 

Am I paying for things I don’t need?

Check the policy features carefully to see if there are any you don’t actually need. A courtesy car could be useful if you only have 1 car. But if you’ve 2 cars or more, would you use it?

Annual family travel insurance could save you money over single-trip insurance – but only if your family has plans to make several trips over the course of the year.

Another thing to consider is whether you have any existing cover. For example, does your mobile contract include mobile phone insurance? Or do you already have an annual travel insurance policy? If you have a ‘packaged’ bank account, the answer to that might be yes.

If you’re duplicating cover, you could be wasting money.

Can I afford to increase my insurance excess?

The insurance ‘excess’ is the amount you’ll have to pay towards any claim you make.

For car insurance, the total excess is likely to be made up of a compulsory and voluntary excess. You have no control over the compulsory excess – the insurance provider will decide that. However, you can choose how much voluntary excess you’re willing to pay.

For home insurance, you can usually increase or decrease the excess to the level that suits you, within a given range. 

Why would you want to increase your excess? Because it usually means you’d pay cheaper premiums. As your contribution towards a claim will be higher, the insurer offers you a lower price for the policy.

Is it worth it? That depends on your situation. If you have savings you could dip into if you needed to claim, then it may be worth increasing your excess. However, if you can't afford the extra excess, you'll be put off making a claim, which defeats the object of being insured in the first place.

Am I being tempted by the lowest quote?

Cheap insurance might not offer the best value for money as it may not give you the cover you need. Paying a little more often means your cover will be more comprehensive. For example, it might provide:

  • higher policy limits
  • higher total claim limits
  • lower compulsory excess
  • fewer exclusions

As before, the important thing is to always read and understand the detail before taking out a policy. That way you're comfortable with what’s covered and what’s not.

Another thing to think about is the claims service. This isn’t something people tend to think about when buying insurance. However, if something goes wrong, it will be at the front of your mind.

Before taking out a policy, it’s worth doing some research on the insurer’s claims service.

Have I been accurate?

Under-estimating the value of your things or the number of rooms in your house may make your policy a little cheaper. But it’s an unnecessary risk, which could lead to your claim being reduced or even rejected.

And if this happens, it could make it hard for you to get insurance in the future and your quotes may be more expensive. This is why you should always answer the questions honestly and to the best of your knowledge.

Not sure about a certain aspect? You can always give the insurer a call to make sure you understand what’s covered and what’s not.