Insurance myths dispelled

When we think of myths we are taken back to the times of the Jason and the Argonauts, Medusa or the Loch Ness monster. However, in the world of insurance there are many myths and misconceptions that a lot of people believe to be fact! Unfortunately, unlike believing in the Loch Ness Monster, making insurance decisions based upon a myth can have a far more detrimental effect on you, your property or business. Read on as Leon Price our Commercial Manager dispels 10 insurance myths for you…

“1. It’s fine to insure your car in a parent’s name”

As some of you may very well know, young drivers are hit with sky-high insurance premiums for the first few years they are on the road.

Consequently, it is tempting for a lot of young drivers to cut the cost of their insurance by insuring their cars in a parent’s name and adding themselves as a named driver – a practice known as ‘fronting’.

However, whilst tempting as it may be, ‘fronting’ is actually illegal and will invalidate the policy. As a result, any claims made could easily be rejected.

2. “Policy excesses only count if you are ‘at fault’”

The excess on your home, business, travel or motor insurance policy is agreed at the inception of the policy and is the amount that you will pay towards every claim made against that policy. Irrespective as to who was at fault.

In some motor insurance circumstances a recovery of the excess can be made from the guilty party. If they’re a) insured and b) providing you have uninsured loss recovery attached to your policy.

3. “You can always claim for items stolen from your car or van”

I bet most of you here carry a number of high-value gadgets, such as MP3 players, mobile phones and SatNavs, tools or equipment in your vehicle.

But did you know that most policies restrict cover for these items to £100 – £150 and would insist on them being locked away in a boot or glove box to be covered.

Some home insurance policies will extend to cover them in full, albeit with the same precaution requirements.

The only way to ensure that they are fully covered is to take out a specific Tools in Transit policy or take them with you! For more information, please feel free to call us.

4. “If I take out comprehensive cover, I will automatically get ‘driving other cars’ cover, meaning that I am covered fully comprehensively on any car I drive with the owner’s permission”

Most policies will only provide this benefit in certain circumstances (dependent on age, occupation, direct insurers, vans).

Even where such cover does exist, it only applies third party cover. As such, if you are involved in an accident with another vehicle you could be liable for your own damage, which could prove very costly.

5. “You can claim for any item worth up to the overall policy limit”

Buildings insurance covers you for the rebuild cost of your property. If an incident occurs and you turn out to be underinsured, your insurer will apply a calculation to the claim called ‘average’.

Simplified, this means that the amount claimed will be proportionally reduced by the amount underinsured regardless of whether you’ve reached the policy limit.

Example:            £100,000 cover, actual rebuild is £200,000
EVERY CLAIM REDUCED BY 50%

In addition, there are often internal and external single items limits and if the item claimed for exceeds these limits, it will either not be insured or only insured to the limit.

6. “You don’t need travel insurance if you have an EHIC card”

The free European Health Insurance Card (EHIC) entitles the holder to medical treatment in state run hospitals in any EU country (plus Iceland, Norway, Liechtenstein and Switzerland) at the same cost as a local hospital – which often means it is free.

Every traveller to Europe should therefore get one and keep it on them – especially as some insurers will reject medical claims made by those without one.

However, the card should never been seen as a substitute for travel insurance. Travel insurance covers costs incurred if EHIC treatment isn’t free and private hospital treatment, as well as cancellation, repatriation, baggage loss or theft and more.

7. “Buy to Let Insurance will automatically cover me if the tenant damages the property”

Wrong – Imagine the nightmare scenario, your tenants have disappeared and you return to your let property to find the kitchen has been destroyed incurring damages far in excess of the rental deposit. Not all let property insurance policies extend to cover malicious damage by tenants and cover could also vary depending on the tenants occupations. When purchasing a buy-to-let policy, compare the landlord insurance cover carefully to make sure you have exactly what you need or speak to a specialist advisor.

8. “Insurers reward loyalty”

It would be nice to think that insurers would offer their best deals to loyal customers. But that is not always the case. Instead, they reserve their most competitive deals for new customers and rely on their existing customers being too lazy to shop around once their policies come up for renewal.

Which is why you need a broker on your side to review the market for you and negotiate the best price and terms accordingly!

9. “All insurance policies are the same”

Far from it – there can be vast differences in cover between insurance companies, particularly on comparison sites where it is vital for the provider to come out near the top of the quotation list.

How do they do it? They simply strip out covers, often expected to be included as standard (courtesy car, windscreen cover for example) to compete.

10. “Cheapest is best”

While price is an important factor when buying insurance, it’s not the only consideration. It’s also vital to ensure you have the right level of cover.

When shopping around you must ensure it is like-for-like and that you are comparing apples with apples.

It is important that the provider you are using is independent and has authorisation to offer impartial advice so that they can get to know your requirements and find the right policy for you.

Get a professional in to do it for you!!

Invicta House, Amherst Hill, Riverhead, Sevenoaks, Kent, TN13 2EL
Tel: 01732 471950 Email: info@invictainsuranceservices.co.uk
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