Money Watch – Personal Finance Blog

Insurance comes in many different forms, but ensuring that you only have the right insurance, and with adequate cover can be difficult.

A recent report by Which? suggests that thousands of pounds is wasted each year on unnecessary insurance – but of course, what is unnecessary for one person, is an essential for another. For example, life insurance is an absolute must for many people with families, but for those without dependents, it’s probably not a priority.

I’ve been considering my own insurance situation, how I can optimise the cover and find better value deals. I’ve also been thnking about which are the most essential, and which I can potentially do without. Here’s my list, in order of necessity:

1. Life Insurance – so that the other half and kids are looked after, should the worst happen. I’ve recently increased the sum assured, and with the death in service payout they’d get if anything nasty happened to me, they should be left in a reasonably secure financial situation.
2. Car Insurance – I guess this could easily be #1 on the list, as without it we cannot legally drive. I’ve been with the same provider since I started driving back in 2002, so it could be time to start shopping around.
3. Buildings & Contents Insurance – should anything happen to the house, then we’ll be covered. We shopped around when we renewed our policy a few months ago – but ended up going with our previous insurer anyway. There are a lot of deals around on home insurance at the moment, so if you’re currently looking for it, you should be able to get a low premium, with many providers offering to pay your first few months for you.
4. Mobile Phone Insurance – I’ve paid £5 every month for this over the last three or four years, and never even thought about claiming on it. It could be time to knock this on the head. It might also be covered under my buildings & contents policy.
5. Trave Insurance – I’ve recently bought a single trip family policy for a holiday later in the year, having searched the internet.

And that’s it – all in all I don’t currently insure very much. I’ve been thinking about adding some critical illness and income protection to the list, but other than those I think I’m pretty much covered for all that I need to be.

The Which? report highlights ID fraud insurance, payment protection insurance and extended warranties as often completely unnecessary.

It said many people were paying for insurance when they were already protected by existing policies, while others were taking out cover which was unlikely to pay out. For example, under the banking code, innocent victims of identity fraud should be reimbursed by their bank or building society. In addition, Which? argued accidental death and injury cover is often included under life insurance, while mobile phones may be protected as part of contents insurance.

Think about your own insurance – which are essential, and for those that you consider essential, do you have adequate cover? Is there any insurance you could do without? What extra cover do you think I need?

Photo by FatMandy.