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| Your Guide to Vehicle and Home Insurance |
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If you own a vehicle or house then insurance is something you will have to think about. While it is the law to have road vehicles insured, insuring you home is also something you will certainly want to do to protect yourself against potential losses, and if you have a mortgage it may in fact be required by your lender. There are many different types of insurance available to suit different needs and budgets, so use this guide to learn a bit about what you can expect from insurance.
When it comes to buying insurance look for competitive rates of cover, but bear in mind that insurance is vital for your peace of mind and safety, and is not something worth cutting corners on.
Whichever insurance you do decide to purchase you should take care to familiarise yourself with the terms of your policy so that you know what it will cover you for and the limits of the compensation it will provide. You should also remember that every time you make an insurance claim you will have to pay what is called an “excess”, which is the first part of any claim, with the amount agreed with your insurer. Alternatively, you can pay a waiver fee on top of your insurance premium and this means that you don’t have to pay the excess if you make a claim.
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Vehicle Cover
You essentially have two options when it comes to vehicle cover: Comprehensive insurance or Third Party Only insurance.
Third Party Only Cover
This is the minimum that you must get as you are legally required to have insurance that covers you for accidental third party damages. Third Party cover means that if you are responsible for an accident, your insurance covers you against claims made by the other people involved – the third party. So compensation for damages to third party property, compensation for third party medical expenses in the event of injury and compensation in the event of third party death, will be provided by your insurer. However, Third Party Only cover is just that – only cover for third parties, which means that in the event of an accident that you are responsible for, the damages to your vehicle will not be covered and nor will your medical expenses in the event of injury (except possibly a very small contribution.) Moreover, you are not covered for the theft or loss of your vehicle unless you choose a Third Party cover with the specific addition of cover against these eventualities. You can also get Third Party insurance which may cover you against the damage caused in the event of lightning or an explosion.
Comprehensive Cover
This is the best option if you can afford it, as it includes all the cover provided by Third Party Only insurance plus the additional cover of your own vehicle against accidental damage, loss and theft. A comprehensive policy will also cover the additional costs involved with an accident such as vehicle towing and car hire while your vehicle is repaired. If you choose to do so you can also get additional cover for items such as your sound system or events such as hail damage, but these may come at an extra cost.
When are you covered?
Your insurance may only provide cover for when you are driving the vehicle on your policy, but it may also cover you when you drive another vehicle or when another person drives your vehicle with your permission.
When are you not covered?
Even when you do have insurance you will not be covered in all circumstances. There are requirements that you must adhere to for the insurance to apply and if you do not meet these conditions then you will be liable for the cost of damages in the event of an accident. Circumstances when your insurance will not cover you include not having a valid license, driving under the influence of drugs or alcohol, your vehicle not being roadworthy or having an endorsement for reckless, negligent or drunken driving. You will also need special insurance to cover you if you use your vehicle to earn an income or for racing.
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Home Insurance
Home insurance is vital as the potential losses caused by theft or accidental damage are very high. Your home is probably your most valuable asset and it is worth getting the right insurance to ensure that it stays that way. There are two types of insurance to consider for your home: Home Contents insurance and Buildings insurance.
Home Contents Insurance
This covers you against the loss or damage to the items in your home that you would normally take with you when moving house. You will be covered in the event of theft and break in, and also damage caused by events such as fire, storms, floods, explosions, falling trees and earthquakes.
What contents are insured?
Your home contents insurance will cover you for items such as personal possessions, furniture, theft of garden furniture, stolen money and bank cards, death of you or your spouse, medical expenses due to an injury caused by a defect in the building and rent to live elsewhere if you cannot live at home because of damages covered in your policy. However it will not cover everything, for example items stolen from outbuildings or individual items insured under another specific insurance policy. Most insurers insist you specify particularly valuable items separately, such as jewellery or antiques, or items that can be easily removed, such as lap-top computers and bicycles, so that this can be valued separately to calculate your total premium.
What happens if you are under-insured?
Your home contents are under-insured if the cost of replacing all the items of your home with similar ones at the time of claim is more than the value you had insured them for. When making a claim your insurer will calculate whether or not you are under insured, and if you are then you will only receive a proportion of the total claim you make. In light of this it is important to insure your contents for their full value rather than trying to save money by under-insuring.
Buildings Insurance
This covers you against damage to all the things you would leave behind when moving house, such as the house itself, walls and fences, swimming pool, tennis courts garages and outbuildings. You will be covered for damage caused by events such as fire, lightning, explosions, floods, impact to your house by an aircraft or other vehicles, malicious and intentional damage, as well as theft and break-ins. However, Buildings Insurance will not cover everything, such as fire damage to a thatched roof or damage to non approved buildings (buildings the relevant local authority did not approve the construction of.)
What happens if you are under-insured?
You must insure your home for its replacement value, which is the amount it would cost to rebuild the house and outbuildings, tennis court, walls etc. with new material at the time of the claim. If you are under-insured then you will only receive a proportion of the claim you make, so it is important to insure your buildings for their true value and have regular valuations to stay up to date.
With any insurance, to ensure you have the right level of cover you must be open and honest with your insurer so they can assess the risk and provide you with the right policy.
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