Motor and house insurance costs us tens of billions of pounds each year in the UK but are we getting the right insurance for our needs? Maggie Craig, the Association of British Insurer’s acting Director General, said recently:

“In the current economic climate, it is even more important people are not under-insured or put off getting vital cover because they don’t understand how insurance works. People with questions about their insurance should always talk to their insurer or an insurance broker to make sure they have the right level of cover.”
To help consumers get the most from their insurance the ABI published their tips and myths guide for 2010 last week, so here goes:
Top 5 Insurance Tips

1. Disclosure is key. Whether it’s previous medical problems or a recent speeding fine, full and early disclosure avoids any possible problems later. Holding back something that is relevant will be a false economy if it means your claim is later turned down. If in doubt, always tell your insurer.
2. Insure your home for its rebuild cost, not its market value. Your buildings insurance sum insured must reflect the full rebuilding cost of your home, not its market value.
3. Reflect home improvements in your sum insured. House extensions, new kitchens, bathrooms etc., should be included when renewing your home insurance as they increase rebuilding cost and therefore the sum insured.
4. Update contents cover. Always keep a check on the value of contents, especially flat screen TVs, laptops and music players. If you get new expensive goods, ring your insurer to add it to your policy.
5. Life insurance is based on your health at the time you take the policy out, not on your future health. Unlike annual insurance policies, such as motor and household, life insurance is a long term contract. Answer all questions honestly and provide full and correct information at the start, to ensure your premiums and your cover stay the same as you get older, even if you fall ill.

Top 5 Insurance Myths and Facts

MYTH: Your vehicle is worth what you paid for it, not what it costs to replace.
FACT: Insurers will pay you the cost of replacing your vehicle with a similar model today, not what you paid for it, as most vehicles lose value over time.

MYTH: If your house suffers subsidence it will become uninsurable.
FACT: Subsidence (as well as landslip and heave) will usually be covered by buildings insurance. If after a claim you are having problems getting subsidence cover there are some schemes available that can cover properties with a history of subsidence. An insurance broker can help you find these.

MYTH: The European Health Insurance Card (EHIC) is a substitute for travel insurance.
FACT: While the EHIC entitles you to any necessary state-provided medical treatment it does not provide full NHS coverage whilst abroad or pay for emergency repatriation to the UK. You need travel insurance for these.

MYTH: Online insurance comparisons always return the best insurance option.
FACT: Make sure that the policy you buy covers you for what you need, don’t choose on price alone and ensure you compare like-for-like. Also remember that not all insurers are on comparison sites and if you have specialist requirements, it may be more suitable to contact insurers directly.

MYTH: There is an ‘Act of God’ exclusion in insurance policies.
FACT: Insurance policies do not contain such an exclusion. The policy will set out what is insured and what the main exclusions are. If loss occurs from an event covered, then the insurer will pay out, in accordance with the policy terms and conditions.

The Association of British Insurers recently revealed that 80,000 domestic burglary claims totalling £84 million were made last summer. Home owners are being encouraged to be more security conscious and vigilant, especially if you’re planning a summer holiday.

Julie Owens, head of home insurance at moneysupermarket.com says:

“Major cities like London and Manchester and affluent areas are a target for criminals and our research highlights a broad mix of areas across the North and South of the UK so it is clear that no matter where you live, there is always a risk your home could become a victim of theft and it is therefore vital you have adequate home insurance cover in place, something many people still do not do’.

As well as ensuring your home insurance is up to date you can reduce your risk of being burgled by following these top tips offered by Moneysupermarket:

*Keep all items of value away from windows. This will ensure that anything of value is kept out of sight from an opportunistic thief.
* Ensure that you lock all windows and doors before leaving the house. This might sound a bit of a no brainer, but by neglecting this simple measure you are effectively leaving the door wide open for thieves to come in and out. It will also make it more difficult for you to make a claim as there will be no signs of a forced entry.
* Regularly check the state of your locks. It’s easy to forget that locks do not have an unlimited lifespan. If your lock has seen better days then this could make it easier for a thief to break in, so replace any older weaker locks with new ones. This could also drive down the cost of your premiums.
* Don’t leave items of high value lying around the house. If a thief does enter your property they aren’t going to want to stick around for long, so will grab anything in site that may be of value to them. By storing away high value items such as jewellery, laptops, cameras and MP3′s, they are more likely to walk away empty-handed.
* Install a good home security system. An approved and professionally maintained alarm will not only make your home more secure but it could also make your premiums lower. Some insurers will offer a security discount if you have an alarm or other professionally maintained security system installed.
* Time your lights. Set your lights to come on a various intervals when you are away to make your home appear occupied.
* Cancel any unnecessary deliveries. Make sure milk or newspapers won’t be delivered while you are away. You should also ask a neighbour or someone you trust to open and close curtains and collect mail for you until you return.
* Don’t leave keys in obvious places. Thieves may watch your property before breaking in and if they can see that you hide your keys under a door mat, this will give them an easy way in. Also beware of ‘hook and crook’ thieves who will hook your keys through a letterbox if they are left close enough to your door.
* Install security lighting. Not only will this make your property safe for your visitors it will also put off any potential thieves – they are less likely to hang around your property if they are in full view of everyone.

The experts from Which? Money have been busy reviewing UK travel insurance and have identified their top ten tips to help you get the best value travel insurance cover, we think they’re pretty good so here goes:

1. Buy online for the best deals including discounts of between 5% and 10%

2. If you travel more than 2 or 3 times a year, it’s cheaper to buy an annual policy.

3. Check your insurer covers pre-existing conditions.

4. Choose an age appropriate insurer for you, some insurers have upper age limits.

5. Check your insurer covers you for Volcanic ash-cloud disruption, some cover it under ‘bad weather’.

6. Check if you already have travel insurance with your packaged bank account.

7. Take your European Health Insurance Card, but don’t forget insurance too.

8. Travel insurance from a high street travel agent may be more expensive.

9. Beware of credit card ‘travel accident cover’ this is not the same as travel insurance, it only covers you while traveling, not before you leave or after you reach your destination.

10. Buy your travel insurance as soon as you’ve booked your holiday, most good insurance policies will pay out if you cancel before you leave, i.e. due to illness.

Internet comparison sites are the most popular channel for researching car insurance (79%), buildings or contents insurance (72%), motorcycle insurance (59%), and van insurance (58%), according to the latest ComparisonCheck quarterly survey of comparison site users done by YouGov, a professional research and consulting organisation.

For almost all other products listed, comparison sites closely followed internet searches as the most commonly consulted source of information. For almost half of the financial products listed, a higher proportion of consumers are consulting comparison sites in order to obtain information.

The increasing availability of quality comparison sites is helping consumers become more confident about researching and buying insurance and financial products online, with 46% agreeing that they have more control over their financial decisions as a result. ComparisonCheck also showed that 1 in 3 consumers surveyed (67%) indicated they are more demanding of their financial products now than they were this time last year. Consumers are scoring value, price and products features ahead of brand names.

Of those who have bought a financial services product through a comparison site in the last 3 months, over half bought car insurance (53%). The second most commonly purchased product was buildings or contents insurance, with just under a third purchasing this product (30%). The most browsed for products in the past 3 months are Car insurance (59%) and buildings or contents insurance (35%).

Todd Davis, Director of Financial Services Consulting for YouGov commented, “This confidence and control appears to have produced an increasingly demanding consumer. The financial services sector is one which consumers historically have been hesitant to embrace. However, thanks to the rise of comparison sites, consumers now have access to a wide array of information and are thus becoming both increasingly knowledgeable and increasingly demanding of their financial products.”

The 2010 UK Emergency Budget announced on 22 June included increases in Insurance Premium Tax. With effect from January 2011 the tax charge on Car and Home insurance premiums will increase from 5% to 6% and from 17.5% to 20% on Travel insurance, this means Insurers may now be looking to increase their premiums to pass on these increased tax charges.

However as Kevin Kiernan, Director of Personal Lines at Groupama Insurances commented after the budget, it is more likely that the increase in VAT from 17.5% to 20% will have the largest impact on insurance policy holders. Mr Kiernan said:

“The bigger cost to the insurance sector not highlighted as yet is the increase in VAT from 17.5% to 20% in January 2011. This change will increase all repair costs and services which make up the claims on most forms of insurance. As insurance companies are exempt from VAT they will not be able to claim the full effect of this back which will lead to an increased claims cost. This, in turn will eventually hit premiums.”

So, although there was relief that insurance premium tax wasn’t increased as much as was expected, and the Budget changes overall put the UK insurance industry on a par with it’s European counterparts, there will still be a real impact on the UK insurance industry. Only time will tell to what extent but, as Mr Kiernan says:

“There is no doubt that Mr Osborne had a very difficult task and while the changes announced will help reduce the deficit, let’s not under-estimate the impact these will have on brokers, insurers and policyholders.”

If you’re over 65, insuring your car or getting travel insurance can be expensive. Recent Which? Money research has shown that not only are a large number of insurers charging over 65′s significantly higher premiums for car and travel insurance, but some insurers are refusing to even provide a quote!

Which? found a huge range in the price of travel insurance products, with costs increasing sharply as age increases. For example, a 74-year-old would be charged £383 for an annual worldwide policy with Rias, but for a 75 year old this would cost £707 – an increase of £324 for one year’s increase in age. Of the 98 annual worldwide travel insurance policies reviewed, only five policies covered people aged 80 or over. Single-trip policies also have big differences  – a 69-year-old would be charged £57 for a 15-day European single-trip policy with Bupa Premier, but would be charged £86 when aged 70.

The Which? Money experts also found that 60% of car insurance policies were unavailable to those aged 81 and over, and there were huge differences in price between age ranges, even between companies that specialise in insurance for older people. An annual policy with Saga for a 75-year-old woman would cost £702, but increases by 74% to £1,224 for an 85 year old.

The most interesting aspect of the research was the considerable differences highlighted between online and telephone quotes (even between the same companies), showing that it really pays to buy online.  Which? chief executive Peter Vicary-Smith says:

‘Our research shows that many over-65s are getting a raw deal when it comes to arranging insurance simply because of their age. Restrictions imposed by insurers leave many people struggling to pay increased premiums just when they may need cover the most.  It’s vital to shop around to get the best rate due to the considerable differences between quotes over the phone and online, and always ensure you get sufficient cover for your needs.’

Did you know that 28% of family travel insurance policies don’t cover children if they live with an ex partner? Defaqto, an independent financial research company specialising in rating, comparing and analysing financial products recently reviewed the 423 annual travel insurance policies available in the UK marketplace. They found that nearly a third of annual travel insurance policies don’t automatically cover dependent children who are not normally resident with the main policy holder. The author of the Defaqto research Brian Brown is concerned that some insurers’ definitions of ‘family’ are outdated and don’t take into account the insurance needs of families who travel together but don’t live together.  Mr Brown says: “It’s imperative that parents check the detail of their travel insurance policies to ensure that they have the cover they need before travelling. In particular, couples who are not married, or have children from a previous relationship need to make sure that children are covered when travelling with them.”

If you’re thinking of getting a pet, don’t just ask yourself how much that doggy in the window is but how much it will cost you to take him to the vet. Pet insurance is, perhaps surprisingly, the third biggest area of the UK insurance market after car and home insurance. Yet it’s estimated that half or more of cat owners and a quarter of dog owners still don’t have it.

Apart from covering all or part of the costs when your dog becomes ill, including vets bills, medication and consultation fees, there’s also those accidental injuries and scrapes such as the puppy who had to be treated for cuts after wedging his head in a baby gate, and a bigger dog who needed surgery to remove two golf balls he had swallowed, both made a full recovery thanks to their owners’ pet insurance policies!

Dog insurance can cost as little as ₤3.50 a month with maximum vet fees limits ranging from ₤4,000 to ₤12,000. Buying online can also get you between 5% and 20% discount. Using pet insurers such as the RSPCA and Animal Friends means you can contribute to animal welfare causes. Other features offered by the main pet insurers include multi pet discounts, vet fee cover from 8 weeks old to no maximum age limit, tailor made policies for the cover you want, standard and extensive cover levels, access to natural and non-evasive prescribed treatments and 12 months free Petback Protect cover from the Missing Pet Bureau.

Petback Protect cover gives lost, stolen and stray dogs and cats the best chance of finding their way home. The Missing Pet Bureau offers a 24-hour, pet identification and reunification service to protect pets. Working closely with Police, Vets Practices, Dog wardens and Animal charities to help prevent crime and to provide many happy returns.  Over 300,000 dogs and cats go missing every year, Petback Protect has returned 80% of the thousands of dogs and cats they’ve registered back home, with 75% of those found before the owner was aware their pet was missing!

The Internet is going from strength to strength and it’s never been easier or quicker to get your van insured for the best possible price. By cutting out the ‘middle man’ web-based insurance providers are able to pass on savings to the customer. Operating in a larger marketplace means that insurance companies must be more competitive if they want to survive. This is all music to the ears of the consumer.

Arm yourself with your relevant personal and vehicle information and it’s just a case of typing these details into the right boxes and seeing what quotes come back. Once you’ve been offered a quote you’ll receive a reference number which you will need if you decide to go ahead and buy the policy. You may find the insurance company telephones you shortly after you’ve completed the application form to try to secure your business; it’s then that you can try to negotiate a better deal. As a bargaining chip it’s best to get hold of three or four online quotes before you actually speak to somebody.

There are also several online companies who, for a small commission, will do the legwork for you. The idea is simple; you provide your details and they do the rest, which in theory is great – but it can be something of a double edged sword. While the majority of companies will do their best to get you the cheapest van quote, there are some that are little more than shop windows for a host of affiliate companies. If they’re working on a two-way commission it’s unlikely that you’ll get a bargain. The best advice is to use these web-based comparison sites as a starting point and then do a bit of digging yourself.

Unemployment or redundancy protection should be an essential part of anyone’s financial planning, in particular those with dependents and low savings. You never how long you could be out of work, so even having savings may not be enough.

Unemployment protection insurance was designed to overcome the consequences of unemployment. You pay premiums as a proportion of each £100 of cover that you need, then if you become unemployed for reasons beyond your control, you will receive a monthly amount which helps pay your bills and maintain a reasonable standard of living until you find work again. Unemployment insurance is usually a flexible product, in that it can cover anything you need it to cover. It’s not compulsory to have a mortgage or other loan to get this type of insurance, although it can cover the mortgage payments, rent, household bills, loans or any other outgoings.

You can select the amount of cover you want, usually up to a limit, i.e. £2000 a month. The amount you get per month is usually related to your salary when you take the cover out and limited by whatever the Insurer’s maximum is. The benefit is payable for an agreed period, which is usually either 12 or 24 months.  The benefit is usually available after an initial exclusion period, which is agreed when you take out the cover. This is a period of time immediately after your insurance start date during which if you are notified of impending unemployment you will not be covered. After the exclusion period, there is then a further excess period, during which you need to be continuously unemployed or disabled for what is called the excess period (usually 30 days) before you receive your first payment.

The premiums you pay do not have tax relief on them, but the payouts are not taxable. This type of cover is not just available for people who are employed by a company, it is also available for those who are self-employed, or are directors or proprietors of a business assuming their business ceases to trade.  Premiums are not affected by you age or gender, but they are affected by the amount of cover you want, the initial exclusion period and how long you want the benefit to last for.

You should also bear in mind that unemployment protection is only available for those of working age (18 – 64) and you will need to have been actively working in continuous employment (not seasonal or temporary) for more than a certain amount of hours per week (usually around 20). You should also not know of impending unemployment.

Holiday travel insurance is usually left to the last minute to arrange – there are many stories of people who decide not to get travel insurance to, for example, spend a week hiking in the Alps, thinking that as they’re not skiing they don’t need insurance, only to see a boulder bounce down the mountain and miss them by inches or trip and break a leg. Some form of travel insurance is vital for everyone, wherever you are travelling to.

But what’s the best way to get travel insurance? You could buy it from a travel agent, but this can be an expensive option. You could buy it face to face from an insurance broker or direct insurer, but this involves the rigmarole of making an appointment, and then your premiums include the costs of the insurance broker’s offices and their time as well as sometimes their commission. You could buy over the telephone, but, while this is slightly more convenient, you are still paying for the costs of their office (and their telephone bills) along with sometimes their commission.

The cheapest and most convenient way of purchasing travel insurance is online. This saves on administrative costs for the company and you can do it whenever you want. You can usually fill your details in to an online form and get a quote instantly. You can also read all the policy details online in your own time, and in most cases actually apply and pay online as well.

A disadvantage to buying travel insurance online is that some insurers will usually only provide instant quotes for certain types of travellers i.e. young or middle-aged and healthy. If you are more than 65 years old, have been prescribed medicines besides contraception in the past year, or currently suffer from a chronic condition, the website may tell you it can’t give you a online quote and you need to speak to the insurer on the phone.  But shop around because more and more online insurers are targeting niche markets such as Senior citizens and students for example.

When you fill in a quote form, you will be asked for your name, email address and sometimes your postcode, as well as details of the type of insurance you’re after and your travel arrangements. The reason you might be asked for your postcode is because some areas of Britain statistically file more travel insurance claims than others!

Wherever you buy your travel insurance from it’s very important to check each travel policy thoroughly because different policies offer different levels of cover, which can make it more difficult to directly compare different quotes and policies, although several online sites offer comparison tables from leading providers which makes things easier. Always read the policy details and conditions carefully before you apply and commit, to ensure you have the cover you need for your specific travel needs.