Your insurance questions answered


Many people are confused by complicated insurance policies and end up buying cover that is too expensive or won’t pay out if they make a claim.

About £20 billion a year is spent on motor and property insurance alone every year – and insurers believe a lot of that money is wasted.

Maggie Craig, the Association of British Insurers (ABI) acting Director General, said: “In the current economic climate, it is even more important people are not under-insured or put off getting vital cover because they don’t understand how insurance works. 

“People with questions about their insurance should always talk to their insurer or an insurance broker to make sure they have the right level of cover for their needs.”

The ABI has put together a shot list of insurance facts many people fail to understand:

  • Life insurance is based on your health when taking out a policy, not on any changes.

Life insurance is a long term contract, so long as all questions are answered honestly and e full and correct information that might affect the policy is given at from the start, your premiums and your cover, should stay the same as you get older, even if you fall ill.

Insurance companies will check with your doctor before paying out a claim if the policy covers critical illness to make sure you did not make the condition worse through lifestyle choices, like smoking.

  • Your car is worth the purchase price, not what it costs to replace.

If your car is stolen or damaged beyond repair, the insurer will pay the cost of replacement with a similar model today, not what you paid, as most vehicles lose value over time.

  • If your house suffers subsidence it will become uninsurable

Subsidence, landslip and heave are usually covered by buildings insurance.  If, after a claim, you have problems getting subsidence cover, schemes available that can cover properties with a history of subsidence. 

  • The European Health Insurance Card (EHIC) is a substitute for travel insurance.

An EHIC entitles you to any necessary state-provided medical treatment but does not provide full NHS cover while you are abroad, nor does the card pay for emergency repatriation to the UK.  You need travel insurance for these.

  • Insurance policies have an ‘Act of God’ exclusion

Insurance policies do not contain this exclusion. The policy will set out what is insured and what the main exclusions are. If loss occurs from an event covered, then the insurer will pay out, in accordance with the policy terms and conditions.

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