21 October 2013

Posted by Discount Insurance on Monday, October 21, 2013
Share this on
With everybody out there offering insurance for this, that and the other, and people claiming back money for cover they didn’t want or ask for, the temptation is to think you’ve got it all covered. 

However, recent research suggests that when it comes to insurance, plenty of us are leaving ourselves vulnerable. 

We look at three reasons why you could be underinsured: 

Purchasing insurance, but not enough  

By increasing the policy excess, you can lower your insurance premiums. However, you need to bear in mind that you are paying less, because you are insured for less.

Raising the excess is sensible in the regard that you should never buy more insurance than you need, but you must have the money to pay your part of the claim if it comes to it.

Sainsbury’s Bank recently found that one-third of car or home insurers who made a claim after increasing the excess on their policy had to borrow from friends, family, or even worse, from pay-day lenders.

Before choosing the high excess option, think about whether you will comfortably be able to find the money needed should a claim arise. The average amount required was £327, says Sainsbury’s – a significant amount in anyone’s book.

Not letting your insurer know about changes to your property

You should always let your insurer know about any significant changes to your home, including extensions, loft conversions and the creation of new rooms, especially bathrooms.

According to recent research, more than half of those who made such improvements last year failed to do so.

If you don’t notify your insurer of any such changes you may have trouble claiming should you need to, or at the very least give the insurer an excuse not to pay up in full.

You should also notify your mortgage lender of any major changes you intend to make to the property, as this could invalidate the agreement.

You haven’t got Income Protection 

Not to be confused with payment protection insurance (PPI), income protection is a vastly superior type of cover and one you could almost certainly do with.

Income protection ensures that you have enough money to pay the bills should you be off work for a long period of time or be made redundant. It can provide an income stream for as long as you are unable to work, which could be several years if need be.

Income protection is arguably more crucial than both life insurance and critical illness cover, yet it remains under rated in the UK.

The likelihood of experiencing a critical or career-threatening injury before the age of 70 is around 59% for males according to recent statistics and around 42% for females.

On top of this, a total of 3.7 million people in the UK have been made redundant in the past five years.

So, if you have a family who depend on your regular income, then it may be worth investing in income protection to give you the peace of mind that you will be able to cover the bills – whatever the future holds.

 Richard Anthony

Get a quote on income protection cover from Discount Insurance today.