The Association of British Insurers has recently published its guide to popular myths and tips to help consumers make the right choices when buying everything from home to travel insurance.
It’s vital with any insurance policy that you disclose all relevant information – if you’re insuring a car, unless you tell your insurer otherwise, it’ll base its cover on the factory spec and not include those expensive alloy wheels or premium sound system you installed yourself afterwards.
Was a time when not disclosing would have meant any claim was rejected outright but don’t expect your DIY additions to be covered, unless you disclose or update your insurance company when they’re fitted.
Vehicles are insured for there current market value and not what you paid for them, despite miss-leading questions about the value of your vehicle on insurance application forms. Of course if you underestimate your cars value, then it’s likely the insurers will go with your value first.
buildings cover is for the re-build cost
It’s the same with home insurance – buildings cover is for the re-build cost, not the market value of your home. So if you carry out extensive modifications like extensions, loft or garage conversions etc, even new kitchens and bathrooms and of course not forgetting conservatories and porches, then it’s vital you let your insurance company know straightaway.
It may well mean a slightly higher premium but that’s worth it in comparison to finding out your conservatory etc isn’t covered.
Remember, if you’ve taken out a loan to pay for your home improvement or you financed the project, you may well still have to pay those monthly instalments despite no longer having the use of the new kitchen or loft conversion etc.
Same with a car – if you’ve bought it with a loan or other finance. That’s why most finance options for cars will insist on fully comprehensive cover, so even if your car is written off and the accident was your fault, they still get their money back (check the small print that any difference between market value and outstanding payments owed is covered).
The ABI recommends anyone with questions about their insurance cover contact their insurer or broker to make sure they have the right levels of cover.
Here’s the ABI’s top tips and myths:
Disclosure is key.
Homes should be insured for the rebuilding cost, not for the market value.
Home improvements should be reflected in the sum insured.
Check and update home contents cover.
Life insurance is based on your health when you take the policy out, not on any subsequent changes.
Your vehicle is worth what you paid for it, not what it costs to replace.
If your house suffers subsidence, it will become uninsurable.
The European Health Insurance Card is a substitute for travel insurance.
Online insurance comparisons always return the best insurance option.
There is an ‘Act of God’ exclusion in insurance policies.