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thinkmoney's guide to insurance

Published 20 April 2012 by

Insurance is a way of managing risk in case something bad happens. You insure things for your peace of mind - and in some cases because you have to - because there's no way of knowing what's around the corner.

The most common things that people insure are the things they use every day. Think about the things you use every day. Could you afford to replace them if they were lost or stolen, or repair them if they were damaged?

Think of your mobile phone, your laptop, furniture and white goods in your home as well as your vehicle - and whether you could replace them if something happened to them.

We could help you to find various kinds of insurance, so take a look at our insurance page and we will try to provide you with access to the latest available insurance policies.

Read the thinkmoney guide to insurance for a run-down of some of the most common insurance policies and why you might need them.

Car Insurance

If you own a car in the UK, you have to insure it, by law. Insurance companies offer different levels of insurance and you only legally need the most basic level of insurance, which is known as 'third party'.

Third Party

This is the required basic level of cover. This would cover the passengers in your car and any other people or property damaged or injured if you had an accident. It's absolutely essential to have at least this level of insurance on your vehicle.

Third party fire and theft

The next level of insurance is third party fire and theft, which covers the same things as third party as well as covering your car if it was stolen or damaged by fire.

Comprehensive cover

Comprehensive insurance can cover you for a wider variety of things that could go wrong, including your own expenses if you were involved in an accident. You can get different kinds of comprehensive cover, which might include glass replacement, accidental or deliberate damage to your car, or a courtesy car to use while yours is being repaired.

How much you pay for car insurance can depend on your postcode, your age, your gender (although not for much longer), the make and model of your car, whether you have any points on your licence, how long you have been with your provider, whether you are insuring a second driver for your car, etc.

Home insurance

Broadly speaking, there are two kinds of home insurance - buildings and contents.

Buildings insurance

Buildings insurance is essential for homeowners and landlords; it can pay for repairs to the building itself, and mortgage lenders will insist on it. Consider the kinds of things that could go wrong with a property - the drains, foundations, hole in the roof, not to mention how much it would cost to repair a fire-damaged home. A property is most likely going to be the most expensive thing you would ever purchase, so paying for buildings insurance makes a lot of financial sense, as well as being a requirement for anyone with a mortgage.

Contents insurance

Buildings insurance will only cover the fabric of the building itself, along with permanent fixtures and fittings (fitted kitchens, baths, etc.).

You need separate contents insurance for your actual possessions. The amount you pay for contents insurance will vary between providers, and will also depend on the value of your possessions and your postcode.

Life insurance

Some people might see insuring their life as a bit morbid, but it can really help a family cope with the financial impact of a loved one's death. There are different kinds of life insurance, but they all have one thing in common - to help your family / dependants to cope financially when you're gone.

Here's a brief look at three kinds of life insurance.

Decreasing term life cover

If you're looking for life insurance that would repay your mortgage if you died, then decreasing term life cover (also known as mortgage term insurance) might be suitable. These policies gradually taper off the amount they pay out over time, as the amount of money required to pay off the rest of the mortgage decreases.

Level term life cover

Level term life cover, on the other hand, would pay your family a fixed amount in the event of your death. You can choose how long you want the policy to last, as you might plan it to end once it's no longer so essential: when your kids move out of home and become financially independent, for example, or when the mortgage is repaid in full.

Whole-of-life insurance

Whole-of-life insurance is for those who want to leave money behind them after they're gone, which their children or grandchildren could use for whatever they want. These policies are guaranteed to pay out whenever the individual dies, as long as the terms and conditions have been met.

Gadget Insurance

Are you 'attached' to your Smartphone or iPhone? If you are, you're not alone. If your phone was lost, stolen or damaged, it's not just phone numbers you lose, but these days it's your diary, photos, apps and other features too.

But the gadget itself can cost a lot to repair or replace, so it can be well worth insuring your camera, laptop, tablet and any other gadgets that would be expensive to replace / repair.

thinkmoney can tell you more about insuring gadgets you feel that you couldn't live without.

In fact, we can provide you with access to a full quote for all of the insurance policies included in this article if you want to take a look at our insurance quote page.

Finally, a note about insurance: all insurance policies will require you to stick to the terms and conditions, and if you don't, you could well find your insurer rejects any claim you might make, so always read the small print.Ā