Think twice about these insurance policies…

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Some insurance policies are an absolute necessity. For example, if you’re a motorist then it’s a legal requirement to have cover in place before driving on public roads. Likewise if you want to protect your home from theft and damage, you’ll need to take out a policy. And if you have a mortgage, your lender will require you to have one.

However, there are some policies that could be seen as less of a necessity. Sometimes these policies are pushed on to unsuspecting customers who don’t fully understand the product they’re being sold.

Consider the following 3 types of cover. Maybe you have one of these policies, or you’re considering getting one – but it might be worth thinking twice about how useful they really are.

Mobile Phone Insurance

Mobile phone cover from your phone supplier could cost about £10 a month, sometimes even more. After several months, the payments you’ve made towards the insurance can often exceed the value of the handset. There are also some very strict terms and conditions that can apply around leaving your phone unattended in public places.

If you want to protect your phone, you could check your existing home insurance policy. Your phone may already be covered for any damage that occurs under ‘ any ‘accidental damage’ clause the policy may have. Take note of the excess payable though; the amount may be more than your phone’s actual value. You might be able to add extra cover to insure your phone when it’s away from home. This should be fairly cheap to do and less expensive than a specialist phone insurance policy.

Payment Protection Insurance (PPI)

Payment Protection Insurance (PPI) has had some rather scandalous press. In the past, it has been mis-sold alongside loans to people who would have found it virtually impossible to make a claim on it. There have been more than 1 million complaints about this over the last 5 years and nearly 3 million people could be in line for compensation.

PPI is normally sold alongside loans and credit cards and is designed to help you meet repayments should you lose your income (e.g. through illness or redundancy).

There’s nothing wrong with this type of insurance in principal, it’s just that it remains hugely overpriced in many cases is very difficult to claim on. Some policies are so pricey, the maximum amount you could claim might be around the same price you pay for the policy over the course of a year. Often, PPI policies will only cover your repayments for a limited period (typically 12 months).

If you do feel you really need this cover, it’s best to look for an independent policy that’s separate from the company providing your mortgage, loan or credit card.

Identity Fraud Insurance

This type of insurance is designed to help cover costs if you become a victim of identity fraud. Of course, the policy won’t make you less likely to be a victim – but it can help you deal with the financial repercussions.

This might seem a little unnecessary when it comes to your banking as the FCA (Financial Conduct Authority) rules ensure that banks will refund any money that’s been taken fraudulently. So, even though you might not have realised it – you do actually have some protection in place anyway.

Identity Theft Insurance can help cover the other related costs of identity fraud. So what are the other costs? Possibly the replacement of official identity documents or access to a specialist fraud advisor. Check what these policies can actually offer you and decide whether you think it’s worth the money.

Some bank accounts may offer identity fraud protection as standard or as an optional add-on, which may be cheaper than buying a stand-alone policy.

Policy Expert

Whether you want assistance in finding the right policy or even handling a claim, we make sure it’s all handled by experts. For more information speak to one of our experts on 0203 014 9300 or email ask@policyexpert.co.uk

The views expressed here are solely those of the author and do not necessarily reflect the views of Policy Expert.