Insurance is expensive and it is a good idea to think hard about whether you are getting good value for money and you might even be tempted to think about whether you should even bother with insurance at all. It is worth thinking about the pros and cons to decide if it is worthwhile.

Risk of not being Insured

It is good to think about the alternative to insurance. If you do not have something insured, what is the risk that you are taking. For example, if you do not have your contents insured, then if they are stolen, you will have to pay to replace them yourself. This can be expensive and you may feel that you will not be able to afford it and you want to be able to claim on insurance for it. However, you may not have many valuable possessions and you may feel that you are happy to take the risk because you will be able to afford to replace the main things without too much of a struggle. Different insurances will obviously cover different things and it is worth getting quotes and thinking about whether it is worth the risk of going without or not.

Legal Requirements

With some insurance there is a legal requirement to have it. In the UK this applies to car insurance where you have to have at least third party cover. This insurance cover will ensure that the costs of any damage that you cause as a driver is paid for. However, you can opt to have more than the basic cover but this will cost you more money and you will need to decide whether you want to cover the cost of repairing your vehicle and other extras or just the basics.

Contractual Obligations

There are some cases where you have to take insurance. This can mainly be when you take out a mortgage. You have to take out life insurance so that mortgage is paid off if you die. You also have to take out building’s insurance on the property. When you sign the mortgage agreement you will also sign an agreement to this as well.

Making Insurance Better Value

If you decide that you do want to take out insurance, whether because you have to or because you want to, then you should make sure that you are not paying more than necessary for it. There are lots of things that you can do to check this.

  • Use a comparison website – comparing costs is really important. Just go to a comparison website and find out what different insurers are charging. You may not want to pay the minimum, which is understandable, but it is good to check and see whether it looks like you are paying considerably more than necessary or whether you are paying a reasonable amount. Some people do this search yearly so they ensure that they are never paying too much.
  • Check what is covered – it is well worth checking what you are covered with for the insurance. This is because you may find that you are covered for more things than you thought you were. It may be that you do not think that some of the things are necessary. Some insurances have some flexibility where you are able to remove some parts of the policy so that you can only pay for what you actually will need.
  • Consider increasing excess – the excess is the amount that an insurer will make us pay before they pay out. They put these in to stop us making small claims. There is often an option for making the excess bigger which will reduce the cost of the premium and you need to decide whether this is something that you want to try out.

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