Insurance; dumping the excess

According to a new book by consumer organisation Which? Brits are wasting thousands of pounds on insurances they don't need. The Money Saving Handbook by Tony Levene says some policies are completely unnecessary and pay out in comparably few cases. Here, Moneyextra looks at which insurance policies are essential and which ones you can do without.

Home insurance

Do I need it? Yes.

Home insurance is divided into buildings insurance and contents. Buildings insurance is compulsory if you have a mortgage although you are not obliged to buy it from your mortgage lender shopping around will work out cheaper. Contents insurance will cover you if you get burgled or your possessions are damaged in a fire or flood there's no legal obligation to have it but it's a good idea if you wouldnt be able afford to replace everything.

Too many people don't have the right contents insurance Are you among them? Check you have enough cover right now.

Travel insurance

Do I need it? Yes.

According to Nationwide one in three people travel abroad without travel insurance so would not be fully covered in the event of any cancellation, medical emergency or theft of personal belongings. Although Brits get free basic medical treatment in the EU, it could cost you and arm and a leg if you have to be flown home early because you're ill. It's also a good idea to make sure your travel insurance policy covers loss of baggage and personal belongings.

Going abroad this year? Try our Travel Insurance comparison service.

Heating cover

Do I need it? Maybe.

Heating and boiler insurance policies cover you in the event of your heating system and hot water packing up. Some policies also cover plumbing and annual inspections and cost anything from about £7 to £20 a month. The average boiler repair bill is about £470 so having it insured can be a good decision. However bear in mind that boilers are unlikely to break down in the first couple of years and will be covered by a manufacturer's guarantee anyway. Also boilers and heating is often included as an extra on home contents policies so check if you're already covered before you sign up to anything.

Motor Insurance

Do I need it? Yes.

Driving uninsured is illegal but if you just have an old banger it will be cheaper to get third party, fire and theft insurance rather than comprehensive cover, as you car may not be worth repairing.

Motor insurance up for renewal? Check out the latest rates now

Mobile phone

Do I need it? No.

Around two million mobile phones are stolen each year, so when you buy a phone most providers will try to sell you insurance. This can add £5 to £10 a month to your bill and should cover you if your phone is lost or stolen and reimburse you for any fraudulent calls made.

However, a replacement handset can normally be bought from as little as £40 and mobile-phone insurance policies tend to come with a lot of exclusions. If you have a very expensive handset the best option is to get it covered on your home insurance. Alternatively you might find you have mobile phone insurance already for instance as a perk of a packaged current account.

22 February 2008 © Moneyextra.com

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