Top Insurance Myths and Truths Revealed

Myth-Busting Insurance TruthsEarlier this month, the ABI (Association of British Insurers) revealed their top insurance myths and tips. They’ve put together this collection of myth-busting facts to help consumers make an informed choice when buying insurance.

Here’s a run-down of their need-to-know facts:

  • INSURANCE MYTH: Your vehicle is worth what you paid for it. Your car insurance will therefore cover you for this amount.

TRUTH: If your car is stolen or damaged beyond repair, your insurance company will normally pay-out what it costs to replace your vehicle with the same, or similar, model today (rather than the amount you paid for it). This will normally be less, as most vehicles lose value with age.

  • INSURANCE MYTH: If a property has subsidence it will become uninsurable

TRUTH: Subsidence, along with landslip and heave, will usually be covered by buildings insurance. If you’re finding it difficult to insure a property with a history of subsidence – there are some schemes available that can cover this particular problem.  Look out for specialist providers who deal specifically with this insurance need. For more information on this topic, check out our article how to spot signs of subsidence.

  • INSURANCE MYTH: The EHIC (European Health Insurance Card) is sufficient insurance when travelling abroad.

TRUTH: The card is not a substitute for travel insurance. It will entitle you to basic, state -provided medical treatment (as a local resident would receive). However, it does not provide full NHS coverage and will not stretch to cover additional expenses like repatriation back to the UK (which could be as much as £15,000). For more information on this, see our article Injuries abroad: don’t rely on your EHIC.

  • INSURANCE MYTH: If your insurance claim is accepted, you won’t have anything to pay. Your insurer will take care of all expenses.

TRUTH: Most insurance products will have an excess attached. In the event of a claim – you will be required to pay this ‘excess amount’ yourself before your insurer will pay-out. Make sure you know how much you’d be required to pay if you needed to make a claim.

  • INSURANCE MYTH: Searching online will always give you the best insurance option.

TRUTH: Online comparison is certainly a quick and easy way to search a wide variety of policy options. However, it’s important to compare insurance policies by the level of cover they provide as well as by their price. Not all insurance providers feature on comparison sites and some specialist insurance needs may be more difficult to quote for online.

  • INSURANCE MYTH: Your valuable items will automatically be covered under your home contents insurance.

TRUTH: Most home contents insurance will specify a maximum level of cover for any single item covered by the policy (e.g. £2,000) If you have a valuable item that’s worth more than this maximum amount – you’ll need extra or specialist cover to protect it. When applying for cover, you’ll also need to specify if you want your valuable items to be insured when taken outside the home.

  • INSURANCE MYTH:  Some insurance policies contain an ‘Act of God’ exclusion

TRUTH: There is no such exclusion in insurance policies. The policy details will carefully outline exactly what events you are covered for as well as  any eventualities you are not covered for.

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