The term cheap insurance can be misleading, for what you are buying is not cheap. Cheap means it costs less than the next best deal but cheap does not mean quality.
When we talk about ‘cheap’ insurance, we are talking about a deal that has been overpriced by companies who are constantly trying to cut back on their costs. There are many factors that can lead to a company’s overpricing of a policy. These factors include the minimum amount required, the exclusion of certain risks and the elimination of a certain policy.
You might have encountered this type of insurance before, but you would also have heard it referred to as ‘value’. In some cases, there is nothing wrong with a policy as long as it contains all the necessary details. However, if you have a low risk and low payout premium then it may be time to get something more expensive.
However, you must also ensure that the cheapest option actually contains all the necessary elements. Some companies are bound by law to charge you an excess fee, in order to cover your claims; others are just willing to make a product that they know they cannot deliver.
Excess is an important part of every policy, and you should look out for excess charges. You will pay excess fees if you opt for another driver or additional car cover, because these extras are known to increase premiums. In addition, you should look out for how long you will have to pay an excess.
For example, some insurers charge you excess for the first five years on a policy of driver only, for the second five years on a policy of driver and two vehicles, for the first seven years on a policy of driver and four vehicles and for the next ten years on a policy of driver and six vehicles. Similarly, some insurers only charge you excess after five years on a policy of full cover and car and contents. Other factors include things like how many vehicles are covered.
In addition, when you find a policy you like, make sure that it contains all the elements that you want in a cover. Be sure to look at the exclusions. If you have a problem with your car or other vehicle, for example, do you want a policy that contains certain exclusions such as the following?
Full caravan cover: Not all policies allow you to add a caravan or caravans onto their cover. If you do have one, be sure to check that it is included in the cover. This is important, as this kind of cover is known to be very expensive.
Minimum liability cover: The minimum liability cover policy only covers you for losses that are directly caused by your actions. If you cause someone to lose money then you are responsible for it. It is therefore best to buy a minimum liability policy.
Protection against loss of use or right to use a holiday home: There are many policies that include protection against the loss of use of a holiday home, and this covers losses caused by damage to the property. However, not all companies cover these losses. Make sure that the cover you are looking at does.
Other types of insurance policies: There are some policies that cover you for things that are not covered by your existing policy. These are known as additional insurance cover.
If you are thinking of getting cheap insurance, then make sure that you are getting the right cover. Remember, the aim of the insurance company is to make money. If they offer you the cheapest insurance then you are being offered an extra premium.