In honour of Insurance Awareness Day, we look at why insurance matters and how it can help protect you in a range of different circumstances.
What is Insurance Awareness Day?
Insurance Awareness Day takes place each year on 28th June and provides an opportunity to educate people about the different types of insurance on offer and why it’s important to be insured. It also serves as a reminder for people to review their existing policies, understand their coverage in detail, and make more informed decisions about their insurance needs when they come to renew.
Why insurance matters
Whether it’s in place to cover your car, home, business, or furry friend, insurance is one of the only things that you pay for in the hope that you’ll never have to use it. There are many reasons why insurance matters, not least because it offers a financial safety net to ensure your assets and family are protected or you have the resources to recover if the worst happens.
When you take out an insurance policy, you’re making a contract between you and the provider. This agreement will usually last a year and the insurer will agree to pay out if you make a claim that fulfils its eligibility criteria.
Here are five more reasons why insurance is important:
Obey the law
In many cases, being insured is required by UK law. It’s illegal to drive on the road in an uninsured car; the minimum legal level of coverage permitted is third party. Without adequate insurance, you could face penalties including unlimited fines, being disqualified from driving, and your vehicle being seized.
While there’s no legal requirement for your home to be insured, many mortgage lenders will ask that your building and contents are covered in the terms and conditions of your loan. This is because your mortgage is secured against the property and so their money will also be at risk if your home were to be damaged or destroyed without adequate cover.
Enjoy peace of mind
Insurance is there to soften the blow of some of life’s most stressful moments. Whether it’s the travel insurance that steps in to cover the cost of flights home when your plane is cancelled last minute, the car insurance that helps fix the dent from that pole you didn’t see, or the income protection insurance that pays your monthly salary when you’ve been made redundant.
While insurance won’t stop any of these things happening, it can provide peace of mind that you’ll be compensated and able to replace what you’ve lost or continue as normal until you’re back on track.
Protect your assets
While insurance can’t prevent your assets being stolen or damaged, it can give you the funds you need to replace them. Sentimental items aside, knowing that essentials like the laptop you use for work or the TV that keeps the kids entertained can be replaced quickly and relatively painlessly is priceless. Contents insurance can protect your items in your home and sometimes on the go, but you can also insure valuables separately such as investing in mobile phone insurance.
Support your family
Life insurance is there to step in and support your family if the worst happens. Depending on the type of policy you have, it could pay out a lump sum or a fixed amount each year to ensure your family can adjust to losing you and take time to grieve without worrying that they won’t have your wages to help pay the bills. Critical illness insurance provides a similar service by providing a source of income if you’re diagnosed with something that leaves you unable to work.
While no-one wants to think about coming down with a serious illness or passing away prematurely, many people’s primary concern is that the people they leave behind won’t suffer. Having insurance in place can help take away these anxieties so you can focus on making the most of your time or recovering from your illness.
Save money
In some cases, insurance policies can be cheaper than paying out of pocket. Pet insurance is a great example; you might be paying £20 a month towards your dog or cat’s insurance policy, but this can be a minimal amount compared to the amount you’d be charged for an operation or lengthy stay at the vets.
The same could be said of GAP insurance. This type of insurance is designed to plug the gap between the amount you paid for your car (or borrowed on finance) and how much it was worth when it was stolen or written off. With a GAP insurance policy, you could be saved from having to make up the difference to buy a similar car or settle your finance.
How to get the right insurance for you
No matter the type of insurance you’re looking for, there are a few things to consider to ensure you get the right deal for you at the best possible price:
- Use a comparison website
It takes just a few minutes to compare quotes from different providers with an online comparison site like Compare the Market or MoneySuperMarket.
- Check the coverage offered
Not all insurance policies are created equally; double-check that the policy you’re buying covers everything you need it to before clicking buy. - Look at the excess
Most insurance policies come with an excess, which is the amount you need to pay before the insurer pays out. While a low excess can keep your premium low, you’ll have to be prepared to cover that amount from your own savings if you need to claim. - Assess the customer service
A cheap insurance policy is no use if you can’t get in touch with them after an accident or have trouble submitting a claim. Look at the customer reviews to understand the type of service you can expect to receive before choosing a provider.
