Keep An Eye On Insurance When Economising

In an effort to make ends meet, it seems, some of us are cutting costs by cancelling some insurance policies. However, this can be dangerous as some are required by law and some would make life very difficult if we were not covered.

Insurance customers must decide what policies are essential when they are considering cutting their cover, it has been suggested.

Those who decide to reduce their outgoings by jettisoning certain types of insurance could end up costing themselves more money in the long run, according to the British Insurance Brokers Association (BIBA).

A Technical and corporate affairs executive at BIBA expressed his concern at the fact some people may ditch the wrong things.

"What we believe they should do is to get their insurance broker to advise them on what are their 'need to have' and what are their 'nice to have' areas of cover," he said.

Examples for insurance policies that are essential include the following:

•    Motor insurance – this is required by law if you own a car. If you are caught without insurance the usual penalty is a fine often in the hundreds of pounds depending on the situation.
•    Buildings insurance – although not required by law this is usually a prerequisite of having a mortgage. The bank will not give you a mortgage without cover as they want to know that the property can be rebuilt in the event of a disaster.
•    Contents insurance – again not a legal requirement this one covers everything you own, your worldly possessions. Imagine how you would replace everything if you were not covered. In addition this type of cover is usually very cheap and can often be included in a deal with your building cover.
•    Pet insurance – again not required by law but can be considered advisable. Vets bills can run into the hundreds of pounds, how many of us could find that sort of money in a crisis? Also many pet insurance policies cover more than just vet’s bills.

A spokesperson for a leading insurance company also commented on these types of cost-cutting measures and suggested they can be "false economy".

If you want to know more about insurance why not ask AnswerBank Insurance.