Sunday 16 March 2014
ORIGIN OF INSURANCE
The word insurance was originated in late Middle English from Old French enseurance, in the mid 17th century. Its synonym is assurance however, There is a technical distinction between insurance and assurance in the context of life insurance.
WHY INSURANCE?
Financial security is far from being stable in our times. It doesn’t matter how big our monthly budget is, or how many savings we have, there always are situations beyond our possibilities and we can never be completely secured. You can even make a life insurance policy, which will pay a significant amount of money to your family after you are gone, so you can be sure for their well-being even if you are not there to help them. The uncertainty in life is what makes insurances so important. Although we can never predict what will happen to us, with the right insurance policies we can be sure that we will hastily recover from our financial losses, and the insurance company will share the risk with us, to provide us enough security so we are prepared for the most unexpected risks.
DEFINITIONS
The term insurance is defined in many ways by many scholars or companies some of them are-
- “ Insurance is an arrangement by which a company or the state undertakes to provide a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a specified premium” -oxford dictionary
Insurance is the equitable transfer of the risk of a loss, from one entity to another in exchange for payment. It is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. – wikipediaInsurance
A promise of compensation for specific potential future losses in exchange for a periodic payment. Insurance is designed to protect the financial well-being of an individual, company or other entity in the case of unexpected loss. Some forms of insurance are required by law, while others are optional. Agreeing to the terms of an insurance policy creates a contract between the insured and the insurer. In exchange for payments from the insured (called premiums), the insurer agrees to pay the policy holder a sum of money upon the occurrence of a specific event. In most cases, the policy holder pays part of the loss (called the deductible), and the insurer pays the rest. Examples include car insurance, health insurance, disability insurance, life insurance, and business insurance.
NON LIFE INSURANCE
In today’s age of consumerism, insurance requirements have expanded to keep pace with the increasing risks. Gone are the days when life insurances ruled the roost; today we have a wide assortment of risk coverage commencing from health insurance to travel insurance to theft insurance to even a wedding insurance. With affluence and spending capacity on the surge there is a growing trend to fulfill needs, deal with responsibilities and secure one’s possessions, be it good health or wordly wealth.
LIFE INSURANCE
“Life insurance provides a monetary benefit to a decedent's family or other designated beneficiary, and may specifically provide for income to an insured person's family, burial, funeral and other final expenses.” -wikipedia .Life insurance policies often allow the option of having the proceeds paid to the beneficiary either in a lump sum cash payment or an annuity. In most states, a person cannot purchase a policy on another person without their knowledge.
None of us know when we’ll pass away. It could be today, tomorrow, or 50 years into the future, but it will happen eventually. Life insurance protects your heirs from the unknown and helps them through an otherwise difficult time of loss.
Life Insurance is considered to be an important part of an individual’s investment portfolio, not necessarily to accumulate wealth, but to feel financially secure. Other then this when you opt for a life insurance policy you enjoy other benefits also, like tax-deduction options, and in some cases long term capital gains. What is important when you opt for a policy is the term and plan related to that particular policy. Always remember Life Insurance is primarily made keeping your family and those who are dependent on you in mind. There are various companies that would ask you to opt for a policy from them, and incase if you are an amateur investor and try to push things in a hurry, you might end up settling for a wrong deal. Here, we will discuss on a few guidelines that an individual should follow prior to opting for a policy or while assessing an insurance plan. Beside these above mentioned importance of life insurance there are quite other fascinating importance which are listed below:-
1. To Protect Your Family and Loved Ones
If your loved ones depend on your financial support for their livelihood, then life insurance is a must, because it replaces your income when you die. This is especially important for parents of young children or couples who’s partner will find it difficult if they no longer have the source of income provide by their partner.
You will also need to provide enough money to cover the costs of hiring someone to cover the day to day household tasks, like cleaning, laundry, cooking, childcare and everything else a growing family needs.
2. To Leave An Inheritance
Even if you don’t have any other assets to pass to your heirs, you can create an inheritance by buying a life insurance policy and naming them as beneficiaries. This is a great way to set your kids up for a solid financial future and provide for any monetary needs that will arise.
3. To Pay Off Debts and Other Expenses
In addition to providing income to cover everyday living expenses, your family needs insurance to cover any outstanding debts, like the mortgage, credit cards and car loans.
Other expenses include funeral and burial costs that can easily run into the tens of thousands of dollars. You don’t want your spouse, parents, children or other loved ones to be left with any extra financial burden in addition to the emotional burden they’re already suffering.
4. To Add More Financial Security
Like most parents you probably want to know your kids will be well taken care of when you’re gone. You not only want them to get a quality college education, but to provide for other life ventures like getting married or starting a business. For this reason, additional coverage is absolutely essential while your kids are still at home.
5. To Bring Peace of Mind
No amount of money can ever replace a person. But more than anything, life insurance can help provide protection for the uncertainties in life. Without a doubt, having life insurance coverage will bring you and your family peace of mind. It’s one thing you can be sure of and no longer question if they’ll be taken care of when you’re gone.
vehicle or auto insurance
vehicle or auto insurance
Coverage typically includes:
- Property coverage, for damage to or theft of the car
- Liability coverage, for the legal responsibility to others for bodily injury or property damage
- Medical coverage, for the cost of treating injuries, rehabilitation and sometimes lost wages and funeral expenses
Insurance Claims
Claims and loss handling is the materialized utility of insurance; it is the actual "product" paid for. Claims may be filed by insureds directly with the insurer or through brokers or agents. The insurer may require that the claim be filed on its own proprietary forms, or may accept claims on a standard industry form, such as those produced by ACORD.
Insurance company claims departments employ a large number of claims adjusters supported by a staff of records management and data entry clerks. Incoming claims are classified based on severity and are assigned to adjusters whose settlement authority varies with their knowledge and experience. The adjuster undertakes an investigation of each claim, usually in close cooperation with the insured, determines if coverage is available under the terms of the insurance contract, and if so, the reasonable monetary value of the claim, and authorizes payment.
The policyholder may hire their own public adjuster to negotiate the settlement with the insurance company on their behalf. For policies that are complicated, where claims may be complex, the insured may take out a separate insurance policy add on, called loss recovery insurance, which covers the cost of a public adjuster in the case of a claim.
Adjusting liability insurance claims is particularly difficult because there is a third party involved, the plaintiff, who is under no contractual obligation to cooperate with the insurer and may in fact regard the insurer as a deep pocket. The adjuster must obtain legal counsel for the insured (either inside "house" counsel or outside "panel" counsel), monitor litigation that may take years to complete, and appear in person or over the telephone with settlement authority at a mandatory settlement conference when requested by the judge.
If a claims adjuster suspects under-insurance, the condition of average may come into play to limit the insurance company's exposure.
In managing the claims handling function, insurers seek to balance the elements of customer satisfaction, administrative handling expenses, and claims overpayment leakages. As part of this balancing act, fraudulent insurance practices are a major business risk that must be managed and overcome. Disputes between insurers and insureds over the validity of claims or claims handling practices occasionally escalate into litigation
Insurance company claims departments employ a large number of claims adjusters supported by a staff of records management and data entry clerks. Incoming claims are classified based on severity and are assigned to adjusters whose settlement authority varies with their knowledge and experience. The adjuster undertakes an investigation of each claim, usually in close cooperation with the insured, determines if coverage is available under the terms of the insurance contract, and if so, the reasonable monetary value of the claim, and authorizes payment.
The policyholder may hire their own public adjuster to negotiate the settlement with the insurance company on their behalf. For policies that are complicated, where claims may be complex, the insured may take out a separate insurance policy add on, called loss recovery insurance, which covers the cost of a public adjuster in the case of a claim.
Adjusting liability insurance claims is particularly difficult because there is a third party involved, the plaintiff, who is under no contractual obligation to cooperate with the insurer and may in fact regard the insurer as a deep pocket. The adjuster must obtain legal counsel for the insured (either inside "house" counsel or outside "panel" counsel), monitor litigation that may take years to complete, and appear in person or over the telephone with settlement authority at a mandatory settlement conference when requested by the judge.
If a claims adjuster suspects under-insurance, the condition of average may come into play to limit the insurance company's exposure.
In managing the claims handling function, insurers seek to balance the elements of customer satisfaction, administrative handling expenses, and claims overpayment leakages. As part of this balancing act, fraudulent insurance practices are a major business risk that must be managed and overcome. Disputes between insurers and insureds over the validity of claims or claims handling practices occasionally escalate into litigation
History of insurance
In some sense we can say that insurance appears simultaneously with the appearance of human society. We know of two types of economies in human societies: natural or non-monetary economies (using barter and trade with no centralized nor standardized set of financial instruments) and more modern monetary economies (with markets, currency, financial instruments and so on). The former is more primitive and the insurance in such economies entails agreements of mutual aid. If one family's house is destroyed the neighbours are committed to help rebuild. Granaries housed another primitive form of insurance to indemnify against famines. Often informal or formally intrinsic to local religious customs, this type of insurance has survived to the present day in some countries where a modern money economy with its financial instruments is not widespread.
Turning to insurance in the modern sense (i.e., insurance in a modern money economy, in which insurance is part of the financial sphere), early methods of transferring or distributing risk were practiced by Chinese and Babylonian traders as long ago as the 3rd and 2nd millennia BC, respectively. Chinese merchants travelling treacherous river rapids would redistribute their wares across many vessels to limit the loss due to any single vessel's capsizing. The Babylonians developed a system which was recorded in the famous Code of Hammurabi, c. 1750 BC, and practiced by early Mediterranean sailing merchants. If a merchant received a loan to fund his shipment, he would pay the lender an additional sum in exchange for the lender's guarantee to cancel the loan should the shipment be stolen or lost at sea.
Achaemenian monarchs of Ancient Persia were the first to insure their people and made it official by registering the insuring process in governmental notary offices. The insurance tradition was performed each year in Norouz (beginning of the Iranian New Year); the heads of different ethnic groups as well as others willing to take part, presented gifts to the monarch. The most important gift was presented during a special ceremony. When a gift was worth more than 10,000 Derrik (Achaemenian gold coin) the issue was registered in a special office. This was advantageous to those who presented such special gifts. For others, the presents were fairly assessed by the confidants of the court. Then the assessment was registered in special offices.
Turning to insurance in the modern sense (i.e., insurance in a modern money economy, in which insurance is part of the financial sphere), early methods of transferring or distributing risk were practiced by Chinese and Babylonian traders as long ago as the 3rd and 2nd millennia BC, respectively. Chinese merchants travelling treacherous river rapids would redistribute their wares across many vessels to limit the loss due to any single vessel's capsizing. The Babylonians developed a system which was recorded in the famous Code of Hammurabi, c. 1750 BC, and practiced by early Mediterranean sailing merchants. If a merchant received a loan to fund his shipment, he would pay the lender an additional sum in exchange for the lender's guarantee to cancel the loan should the shipment be stolen or lost at sea.
Achaemenian monarchs of Ancient Persia were the first to insure their people and made it official by registering the insuring process in governmental notary offices. The insurance tradition was performed each year in Norouz (beginning of the Iranian New Year); the heads of different ethnic groups as well as others willing to take part, presented gifts to the monarch. The most important gift was presented during a special ceremony. When a gift was worth more than 10,000 Derrik (Achaemenian gold coin) the issue was registered in a special office. This was advantageous to those who presented such special gifts. For others, the presents were fairly assessed by the confidants of the court. Then the assessment was registered in special offices.
Societal effects
Insurance can have various effects on society through the way that it changes who bears the cost of losses and damage. On one hand it can increase fraud; on the other it can help societies and individuals prepare for catastrophes and mitigate the effects of catastrophes on both households and societies.
Insurance can influence the probability of losses through moral hazard, insurance fraud, and preventive steps by the insurance company. Insurance scholars have typically used morale hazard to refer to the increased loss due to unintentional carelessness and moral hazard to refer to increased risk due to intentional carelessness or indifference.Insurers attempt to address carelessness through inspections, policy provisions requiring certain types of maintenance, and possible discounts for loss mitigation efforts. While in theory insurers could encourage investment in loss reduction, some commentators have argued that in practice insurers had historically not aggressively pursued loss control measures – particularly to prevent disaster losses such as hurricanes—because of concerns over rate reductions and legal battles. However, since about 1996 insurers have begun to take a more active role in loss mitigation, such as through building codes.
Insurance can influence the probability of losses through moral hazard, insurance fraud, and preventive steps by the insurance company. Insurance scholars have typically used morale hazard to refer to the increased loss due to unintentional carelessness and moral hazard to refer to increased risk due to intentional carelessness or indifference.Insurers attempt to address carelessness through inspections, policy provisions requiring certain types of maintenance, and possible discounts for loss mitigation efforts. While in theory insurers could encourage investment in loss reduction, some commentators have argued that in practice insurers had historically not aggressively pursued loss control measures – particularly to prevent disaster losses such as hurricanes—because of concerns over rate reductions and legal battles. However, since about 1996 insurers have begun to take a more active role in loss mitigation, such as through building codes.
Gap insurance
gap insurance covers the excess amount on your auto loan in an instance where your insurance company does not cover the entire loan. Depending on the companies specific policies it might or might not cover the deductible as well. This coverage is marketed for those who put low down payments, have high interest rates on their loans, and those with 60 month or longer terms. Gap insurance is typically offered by your finance company when you first purchase your vehicle. Most auto insurance companies offer this coverage to consumers as well. If you are unsure if GAP coverage had been purchased, you should check your vehicle lease or purchase documentation.
What happens if I don't have car insurance?
Anyone who breaks the Continuous Insurance Enforcement (CIE) rules can receive a £100 fixed penalty notice, have their car clamped or even face court prosecution with fines of up to £1,000.
So even if you have a vehicle that you only use from time to time, you need to get it insured or declare it as off the road with a SORN notification from the DVLA to avoid breaking the law and facing a penalty.
If you have an accident while driving without insurance, you will also have to cover all the related costs yourself - including repairs to any cars or property damaged in the crash and any medical bills. This could run into tens of thousands of pounds.
What is car insurance?
Car insurance covers you (and any other 'named' drivers on the policy) when travelling in your vehicle. As a minimum, it insures you against the 'third party' costs associated with damage, injury or death to others in an accident that is judged to be your fault.
Other policies cover your own costs, such as repairs to your vehicle or reimbursement if it is written-off or stolen.
Your policy might even afford you some protection when driving other people's cars.
It is a legal requirement for motorists of all ages. To prevent the problem of some drivers flouting the rules and driving without cover, all cars not registered as off the road via a Statutory Off Road Notice (SORN) must now be insured at all times.
Other policies cover your own costs, such as repairs to your vehicle or reimbursement if it is written-off or stolen.
Your policy might even afford you some protection when driving other people's cars.
It is a legal requirement for motorists of all ages. To prevent the problem of some drivers flouting the rules and driving without cover, all cars not registered as off the road via a Statutory Off Road Notice (SORN) must now be insured at all times.
What factors affect the cost of car insurance?
Car insurance premiums have fallen sharply this year.
But you will not necessarily benefit from this trend if you simply auto-renew with your existing insurer.
To ensure you get the best possible deal, it is crucial to shop around and compare the policies available from a wide range of insurance companies.
Other factors that affect how much you pay include, of course, the car you drive. Every passenger car built to UK specifications is assigned to one of 50 insurance groups, based on factors such as engine size, and using research conducted by the Motor Insurance Repair Research Centre - commonly known as Thatcham.
The higher the group, the higher the insurance premiums you will have to pay, which is why you should check which group a particular model is in at before deciding to buy it.
Your age and experience behind the wheel, claims history (including whether you have a no-claims discount) and occupation will also have an impact on the premiums you pay - as will your postcode and where you park your car at night.
But you will not necessarily benefit from this trend if you simply auto-renew with your existing insurer.
To ensure you get the best possible deal, it is crucial to shop around and compare the policies available from a wide range of insurance companies.
Other factors that affect how much you pay include, of course, the car you drive. Every passenger car built to UK specifications is assigned to one of 50 insurance groups, based on factors such as engine size, and using research conducted by the Motor Insurance Repair Research Centre - commonly known as Thatcham.
The higher the group, the higher the insurance premiums you will have to pay, which is why you should check which group a particular model is in at before deciding to buy it.
Your age and experience behind the wheel, claims history (including whether you have a no-claims discount) and occupation will also have an impact on the premiums you pay - as will your postcode and where you park your car at night.
What sort of car insurance do I need?
There are three levels of car insurance available in the UK today: third party; third party, fire and theft; and comprehensive.
Third party cover, which only pays out for damage to other people and their property caused by you, is usually - but not always - the cheapest. However, you will have to pay to repair or replace to your vehicle if it is involved in an accident, stolen or damaged by vandals or thieves.
You may therefore prefer to take out third party, fire and theft cover, which also protects you against fire damage and theft, or fully comprehensive insurance that also covers damage to your vehicle caused by a crash.
Third party cover, which only pays out for damage to other people and their property caused by you, is usually - but not always - the cheapest. However, you will have to pay to repair or replace to your vehicle if it is involved in an accident, stolen or damaged by vandals or thieves.
You may therefore prefer to take out third party, fire and theft cover, which also protects you against fire damage and theft, or fully comprehensive insurance that also covers damage to your vehicle caused by a crash.
Are there any other types of car insurance?
Over recent years, insurers have launched a number of innovative new policies. These include black box (or 'telematics')insurance, which is particularly popular with younger drivers and involves having a small black box fitted to your vehicle to monitor how you drive. Some policies use an app downloaded to your mobile.
Insurers say careful drivers can typically save up to a third with a telematics policy.
Multi-car households can also save up to a third by covering all the vehicles registered at their address on one, single policy.
Other options include temporary or short term car insurance that will cover you to drive a vehicle for between one and 28 days.
Insurers say careful drivers can typically save up to a third with a telematics policy.
Multi-car households can also save up to a third by covering all the vehicles registered at their address on one, single policy.
Other options include temporary or short term car insurance that will cover you to drive a vehicle for between one and 28 days.
What is a 'named' driver?
'named' driver is another individual who is named on your policy as sometimes driving your car. Younger drivers often find that they can trim the cost of car insurance by adding an older or more experienced driver such as a parent to their policy.
But beware: you must never have a more experienced driver 'front' your policy for you as the main driver to get cheaper cover.
This practice is illegal and could invalidate your cover and result in a conviction for driving without insurance
But beware: you must never have a more experienced driver 'front' your policy for you as the main driver to get cheaper cover.
This practice is illegal and could invalidate your cover and result in a conviction for driving without insurance
What is the policy excess?
The excess is the amount you agree to pay towards any claim - and, within reason, the higher the excess, the lower the premium. So, if you put in a claim for £500 and the excess is £200, the insurer will only pay out £300.
If you are considering making a small claim, it may therefore be worth considering paying for any repairs yourself instead - especially if you stand to lose a no-claims discount.
The excess has two parts - the mandatory excess (which is set by the insurer, usually at £50 or £100) and the voluntary excess (which you choose yourself). It's important not to volunteer to pay an unrealistically high excess that you couldn't afford to pay if you subsequently made a claim - it means you'll basically be insuring yourself up to that level.
What's more, insurers only reduce premiums to reflect a higher excess up to a certain point. If you set the voluntary element beyond a certain amount - say, £500 or more - it will have no impact on the premium.
If you are considering making a small claim, it may therefore be worth considering paying for any repairs yourself instead - especially if you stand to lose a no-claims discount.
The excess has two parts - the mandatory excess (which is set by the insurer, usually at £50 or £100) and the voluntary excess (which you choose yourself). It's important not to volunteer to pay an unrealistically high excess that you couldn't afford to pay if you subsequently made a claim - it means you'll basically be insuring yourself up to that level.
What's more, insurers only reduce premiums to reflect a higher excess up to a certain point. If you set the voluntary element beyond a certain amount - say, £500 or more - it will have no impact on the premium.
Top 10 car insurance questions answered
We all want to pay less for our car insurance. But what's the best way to make deep inroads into your annual premium?
If you do nothing else, shop around when it comes to renewal. Don't just let your current insurer roll your policy over for another 12 months, because chances are you'll pay significantly more than if you moved your custom to a new firm.You can check prices against your renewal offer in a matter of minutes on our car insurance page, and it only takes a few minutes to switch provider.
Read on for a more detailed explanation, along with the answers to other common questions asked by insurance buyers.
1. Why should I shop around for car insurance?
Insurers attract new customers by offering them their best prices. They rely on the fact that most of their existing customers will simply renew each year, even if their premium has edged up. After all, it's very tempting just to let the renewal go through 'on the nod' - I know, I've done it myself.Inertia selling, it's called. For years I was with the same firm - they'd send me a letter just before my policy was up telling me I could relax, I didn't have to do anything, they'd sort it all out and make sure my renewal went through. And because there was always a nappy to change or a kettle to boil, I was happy to be swept along - until one year I used MoneySuperMarket and found I could save over £200 by switching.
I can't bear to add up how much I wasted over the years on unnecessarily expensive car cover. Best just to focus on the savings I'll make from now on.
Here at MoneySuperMarket we battle against inertia selling by encouraging people to shop around every year. Insurers simply don't reward loyalty. So don't reward them with an automatic renewal.
2. Does boosting security make a difference?
Absolutely. Fit an alarm, steering lock and tracking device and you could knock 5% or more off your premium. Chances are you've already got a factory-fitted immobiliser (they've been fitted on all cars since 1998), but it's worth checking. If you fit any security device, it should be 'Thatcham-approved' - Thatcham is a research and development centre funded by the insurance industry and many discounts are dependent on its kit being deployed.3. Does it matter which insurance group my car is in?
Yes. Your premium will be determined in part by the car you drive - how powerful it is, how attractive it is to thieves, how much it costs to repair. Insurers allocate all cars to one of 50 groups (22 for motorbikes and 20 for commercial light vehicles) to help them work out how risky and potentially expensive they are, with the cheapest premiums for the lowest numbers.A car's insurance group number is something to factor into your deliberations when you're buying and want to work out the likely running costs. You can check which group any car falls into at wikipedia.
4. Does where I park matter?
Yes again. Most cars are stolen or vandalised while parked on the street. Your insurer will charge you less if you can park overnight on a driveway or, even better, in a locked garage.5. How does the policy excess work?
The excess (occasionally referred to as a 'deductible') is the amount you pay towards any claim you make. It's made up of a mandatory or compulsory excess, imposed by the insurer, and a voluntary excess, which you set yourself.The sum of these two is the combined excess. If this stands at £200 (£100 compulsory plus £100 voluntary, say) and you make a claim for £500, you'll receive £300 from the insurer.
If you volunteer to pay a higher excess, you should see your premium fall. But it's wise not to set the excess too high because you'll end up having to pay a hefty amount if you make a claim - and you'll price yourself out of some claims completely.
6. Is it worth protecting my NCD?
Almost certainly. You earn a no claims discount by driving claims-free for a number of consecutive years. After five years without a claim, you should be getting at least a 70% discount on your premium. Some insurers will offer an even higher percentage if you don't make a claim for eight or nine years.Clearly, losing a discount of this size would sting, so you can insure your discount as well, meaning you can actually claim once or even twice in a 12-month period without losing the discount itself.
Having a discount doesn't mean your underlying premium won't increase - you'll simply get the given percentage reduction off the new total.
Don't stay with your current insurer in the belief that you'll lose your NCD if you go elsewhere - the discount is 'portable', so you can take it with you. Your new insurer will tell you what you need to do as far as getting documentary proof is concerned - it shouldn't require more than a phone call.
7. What is 'fronting'?
Young drivers can be tempted to save on insurance by putting a parent down as the main driver of their car. But this is illegal - the person who does the bulk of the driving must by law be listed as the main driver. The practice is known as 'fronting' and, if the insurer finds out (it's one of the things they keep an eye open for), it could turn down a claim.And as fronting is fraud, both the young driver and the parent could find themselves in court and subject to a fine.
A lower premium might be obtained by listing the parent as a 'named' driver on the policy - the insurer will work on the basis that this person is driving the car for at least part of the time, diluting the risk it faces over the course of the year.
8. What is 'black box' insurance?
Recent years have seen a significant increase in 'telematics' or 'black box' insurance. This is where satellite technology is used to monitor your driving - the roads you use, the time of day or night you drive, your acceleration and braking habits, your speeds - to help the insurer assess how risky you are. Drive safely and your premiums will fall.These policies usually come with restrictions on the number of miles you can drive annually, and they might impose a curfew (no driving after 11.00pm, say) and a limit on the number of passengers that can be carried.
They are marketed primarily to younger drivers as a way to bring down steep premiums, but their popularity is increasing across other age groups.
9. Can I insure more than one car on a single policy?
Yes. A growing number of insurers are offering 'multi car' or 'family fleet' policies where you can insure two or more vehicles on the same contract, earning a discount of 10% or 15% on the second and subsequent vehicles. It's a neat and tidy solution for families - but don't let having a multi-vehicle policy deter you from shopping around when the renewal date arrives.10. What happens if I modify my car?
Many of us like to modify our cars, whether it be the engine, the lights, the bodywork or the wheels. But it's imperative to tell your insurer about any work you do before you do it. Why? Because changing the manufacturer's specification in any way, no matter how small, could invalidate your cover.Your insurer might adjust your premium if it thinks the car now has a higher risk profile (if you've turbo-charged the engine, say, or fitted a spoiler). If the change is purely cosmetic, the premium might still increase because your car is now more attractive to thieves and/or vandals.
Certain minor changes won't affect your premiums -but don't try to second-guess your insurer's attitude to modifications. Tell them about your plans so you know where you stand.
Please note: Any rates or deals mentioned in this article were available at the time of writing.
What happens when I make a claim?
It's important to contact your insurer as quickly as possible when you need to make a claim, and to have your policy details and the details of anyone else involved to hand.
Once you receive a claim form, you should also complete and send it back as soon as possible, enclosing any supporting evidence.
Other tips include keeping copies of the claim form and other relevant paperwork, and a record of any phone calls or emails, as well as waiting for a list of approved garages from the insurer before undertaking any repairs. Otherwise, you might find yourself footing the bill because the garage you use is not on the list.
Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct
Once you receive a claim form, you should also complete and send it back as soon as possible, enclosing any supporting evidence.
Other tips include keeping copies of the claim form and other relevant paperwork, and a record of any phone calls or emails, as well as waiting for a list of approved garages from the insurer before undertaking any repairs. Otherwise, you might find yourself footing the bill because the garage you use is not on the list.
Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct
How will a home insurance claim hit my premium?
As the clean-up of last week's storm continues, those who've made a claim may be wondering what impact it will have on their premiums next year.
The bad news is, if you've had to make a claim, your insurer is likely to bump up the price of your cover, even if you have a protected no claims discount. Here, we explain how to keep your costs in check... . Be prepared for higher costs
Making any form of claim will usually raise the cost of your home insurance premiums the next year, typically by around 10% to 15%, although this can vary widely depending on what sort of claim you've made, and on your insurer.The more claims you make, the higher your premiums will be, as you'll be considered to be a higher risk proposition by your insurer. So it's a good tactic to think carefully before making small claims, as these are likely to prove costly in the long run.
Even if you have paid to protect your no claims discount, you could still find yourself paying higher premiums the next year. That's because you pay to protect your discount, rather than the amount of the actual insurance premium.
In other words, you'll still get a discount, but the percentage reduction will apply to a large base figure.
Never automatically renew
But the key thing to remember is that you should never just accept the renewal quote offered by your existing insurer, as you may be able to find a much cheaper deal elsewhere. There is rarely any reward for remaining loyal to one provider, so you should always compare lots of different quotes before selecting a policy.If you have recently made a claim on your home insurance and want to switch to a new provider, you can still do this, but any new insurer will usually ask if you have made a claim in the previous three years.
According to MoneySuperMarket, one in 10 people shopping around for home insurance could save up to £200 a year compared to their existing deal.
Kevin Pratt, insurance spokesperson at MoneySuperMarket, said: "We all know what it's like - you're given the opportunity to automatically renew your home insurance without lifting a finger, and it's a very tempting proposition. But it only takes a few minutes to compare a range of quotations and there might be big savings to be had, so you have to ask whether it's worth paying a hefty price for the convenience of letting the policy renew on the nod."
Combine buildings and contents cover
You should be able to reduce the cost of your home insurance by taking out contents and buildings cover from the same provider. Discounts of 10% or more are on offer.If you have separate policies with two insurers, you might have different renewal dates - but if you want a combined policy, the new insurer will arrange cover as required to enable you to coordinate the cover you need.
Consider increasing your excess
The excess is the part of any insurance claim which you must pay yourself. With home insurance policies, there are two different elements to the excess. The first part is a mandatory amount which cannot be changed, but there is also a voluntary excess, which you can decide on and can be as much or as little as you are happy to pay.The mandatory part of the excess is usually between £50 and £100 for a buildings or contents policy, but you can choose to have a voluntary excess of anything up to £400 or £450. There is normally a cap on the voluntary excess.
Raising your excess will reduce your premiums because, if you do make a claim, your insurer won't have to pay out so much. However, don't make the voluntary excess so high that you'd struggle to make a claim at all, otherwise this defeats the point of having insurance in the first place!
Improve your security
The safer your property is, the lower your premiums are likely to be. It's therefore a good idea to consider installing a burglar alarm if you haven't already got one, and it's often worth installing security lights and signing up to your local Neighbourhood Watch scheme too.Always check which alarm system your insurer prefers before installing one, as you'll need to have an approved system to reduce your insurance premiums.
Get your sums right
When buying home insurance, make sure you take out the right amount of cover. That means working out exactly how much buildings and contents cover you need, or you'll risk ending up over or under-insured.The amount of buildings cover you need is based on the re-build cost of your property rather than its actual market value. You can find your property's re-build cost on your survey report, or the ABI has a re-build cost calculator at http://abi.bcis.co.uk/.
When working out how much contents cover you need, it's a good idea to go from room to room and jot down the value of the contents in each so you can then come up with an overall figure. If you don't do this and end up over-estimating how much cover you need, you could end up paying more than you need to for your cover.
Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct
Life insurance - your questions answered
Life insurance is a hugely important financial product for anyone with dependants, so it pays to understand what you're buying. To help you get precisely what you need, here are the answers to the most common questions asked by MoneySuperMarket customers to our advice team.
How much life insurance should I get?
This depends on your circumstances, especially your household income. It's this amount you need to replace over the years ahead, and you need to have enough to clear any debts, such as your mortgage.Some experts suggest having 10 times your annual household income as the 'sum insured' on a 'term' insurance policy. This is the amount the policy will pay out if you die during the term - see below. But there's a balance to be struck: the higher the sum insured, the larger your premium will be.
Who in the family needs cover?
It's not just a question of insuring the breadwinner's income (or both incomes, if two of you are working). If you or your partner stays at home to look after the house and children, you need to factor in how much it would cost to pay someone to do this work if you weren't around and add this amount - on a recurring annual basis - to you sum insured.This will allow the breadwinner to continue working. Of course, following a bereavement, you may decide to change your routines, but having financial provision will at least give you breathing space to decide what you want or need to do.
How long should I take a policy out for?
To cover your family, choose a policy 'term' (the length of time the policy lasts) that coincides with your youngest child reaching 25. At around this age they should be financially independent and your need for cover should cease or reduce.To cover your mortgage, make sure you choose a policy term that matches the time remaining on your mortgage.
Can l cancel my policy?
Yes. Your circumstances might change, meaning you no longer require cover or require a different type. Once you stop making payments, your cover will cease and you will no longer be insured. You won't get any kind of refund or rebate if you cancel.How can I ensure the money goes to my children?
You need to write your policy 'into trust'. This will ensure that, if you die, the money will end up in the right hands. A trust is a legal arrangement where one or more 'trustees' are made legally responsible for holding assets. The assets are placed 'in trust' for the benefit of one or more 'beneficiaries' and managed by the trustees.Do l have to cover my full mortgage amount with life assurance?
There is no legal requirement to do this. However, if you don't you are potentially leaving a shortfall which would still need to be paid off.How long will it take for my policy take to be accepted?
This can depend on a number of factors such as your lifestyle, health and family history.If you have had health issues in the last five years such as raised blood pressure, there could be a delay of up to 6 - 8 weeks because the insurer will write to your GP surgery for details.
Will I get my money back at the end of the term?
Term assurance policies have no monetary value beyond the promise to pay a valid claim. Once the policy comes to an end, you will not get anything back.What about critical illness cover?
Critical illness cover pays out if you contract a serious illness such as advanced cancer, severe heart attack, serious stroke or multiple sclerosis. This type of cover is four times more likely to pay out than ordinary life cover and is well worth considering. You can buy a combined critical illness and life insurance policy from the same insurer.
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