The main principle of insurance is offsetting the negative results of something that is fairly unlikely to happen. The less likely an issue is, the cheaper the insurance is likely to be, but the payout will be more valuable to you should that particular disaster happen. For example, a natural disaster might be unlikely where you live, but getting buildings insurance will protect your asset value should one occur.
Insure What Needs to be Insured
The first rule of insurance is that you should only insure what needs to be insured. This might sound obvious but basic things like furniture are often overlooked as having a value. Imagine what your home would be like without all your stuff and you will realize that insurance is necessary here.
But there are also unnecessary insurance policies. For example, you might be afraid of being abducted by aliens but at the current rate of 0 abductions per year, it looks highly unlikely that it will ever happen to you.
To summarize: be sensible about your insurance policies.
Always Search for the Best Deal
Searching for the best insurance deal has become something of a game now with constant adverts offering cheap car insurance, cheap home insurance and cheap insurance generally. But, even when it looks cheap, you should still compare deals to check which is the cheapest.
But don’t just use one comparison website, check for deals on all the comparison websites and the company website you are interested in as they may vary. This is because the insurers pay a commission to the website which is reflected in their pricing. You might also like to try clearing your cookies and closing then reopening your browser to see if that makes a difference.Renew Your Insurance Every Year
The final rule is to make sure that you shop around for insurance every year. Many insurers are happy to put you on a retainer that will gradually increase in price each year. This is great for them because they make easy money, but not so great for you because you are missing out on better deals.
Instead of allowing your insurer to renew your deal each year, go through the whole process again, comparing their offer with other offers around. It might be that their offer is still the best deal – especially if you have consented to a black box in your car for future savings – but looking around is the best way to check.
Buying insurance comes down to making a sensible decision based on how likely an event is to take place versus how much you are putting yourself out now. By this rule, if it makes you feel better to pay for insurance against alien abduction and you can afford it, you should go for it. But car, home and contents insurance should be your priorities.