-Buying insurance & need for insurance

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Before buying insurance, one must make sure that he analyses his personal situation, with respect to whether he really needs insurance or not. There are a few compulsory insurance that you may have to take, like while buying a car, you must compulsorily have atleast a third party accident insurance. At the same time, there are other insurance schemes which may not be compulsory but optional, like insuring your pet dog, travel insurance, etc.
There are hundreds of insurance policies and type available in the market. Should you take each and every type of insurance? You don't have to take out most insurance but for your own satisfaction and peace of mind, you may like to consider some of the insurance policies. You may like to try the Financial healthcheck link offered by FSA to help you prioritise your insurance goals and requirements.
Insurance firms and agents or brokers selling insurance policies and those providing insurance cover (underwriting the risk) are usually regulated by FSA, or they are authorized agents of a regulated firm. There are some exceptions, for example travel agents that sell travel insurance do not usually need to be regulated by the FSA.
Regulated firms and their agents are put on the registered accounts of FSA and they find a place on FSA register only if they meet certain criteria and standards. While buying insurance policies, always make sure that the firm you use is registered with FSA before giving over your money. If they aren't regulated by FSA and things go wrong, you won't have access to complaints and compensation procedures through FSA. To find out if a firm, broker or agent is registered with FSA, you may Check the FSA Register.
Once you’ve checked the credibility and authenticity of the insurer or firm offering insurance, you can buy insurance in one of the following ways:
• directly from insurers over the phone,
• on the internet through their website and online payment
• by mail, sending them all the required documents and cheque
• you can also buy insurance from other types of firms such as banks, building societies, insurance brokers, financial advisers, mortgage brokers, or supermarkets – more on these in a later article.
First, set your requirements and then get the facts about the insurance policy you buy:
Insurance differs in what it covers and what it doesn't cover (the exclusions). Read the policy summary that the insurance company will give you to find out exactly what you're getting and use it to shop around and compare other policies.
Whatever type of insurance you decide to take out, always:
• ensure the firm is authorised by FSA to sell insurance using Check the FSA Register..
• disclose the full facts when applying for insurance – if you don't, you could invalidate your policy and the insurance company will not pay out in the event of a claim;
• read the policy summary for exclusions – to ensure that you choose the right policy for you; and
• shop around using the documents to ensure you get the best deal for you. Some policies might be cheaper than others, but they may not offer the same level of protection.
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Types of insurance

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This article provides an overview of the different types of insurance available in the market. The FSA is the regulatory authority and ABI, Association of British Insurers' (ABI) Information represents the interests of UK Insurance industry and maintains information for the customers and the various insurance firms in the UK.
Insurance can be broadly classified into 2 categories:
• Pure Insurance
• General Insurance

FSA regulates the policies and implementation of sales of pure protection and general insurance.

What are pure protection and general insurance?

As the name suggest, pure insurance is the type which is solely taken for a purpose of getting compensated in case of any unwanted incident occurring. Pure protection insurance includes:
• term assurance (like life insurance for security of life);
• critical illness insurance (like refund in case of hospitalization);
• income protection insurance (like loosing a job or business); and
• payment protection insurance – includes elements of pure protection and general insurance (like preventing situations when one fails to make a payment towards a loan taken).

General insurance includes:
• motor insurance (like your car being stolen or meeting an accident);
• household insurance (like house being burgled or losses due to fire);
• some travel insurance (for accidents/losses while traveling overseas);
• health cover; and
• pet insurance.
FSA also regulates the sale of payment protection insurance, which often includes elements of both general insurance and pure protection insurance.

What is not covered by FSA rules?

Along with knowing what is covered by the regulatory authorities and its rules, it is also important to know what is not covered by it. The selling rules of FSA don't cover:
• travel insurance sold in connection with travel arrangements (eg a holiday or a flight);
• the sale of extended warranties on non-motor goods (such as on electrical goods);
• where the person selling the insurance is also arranging the travel or providing the goods.
However, the good thing is that even where the FSA rules don't cover the sale of a policy, they do cover the insurance company providing the policy, providing they are based in the UK and regulated by FSA – if so you will still receive a summary of the policy.
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Insurance: How Insurance Works and General Information

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Insurance made clear
This website covers all the fine details of insurance and helps citizens to identify the requirements and help them select the best insurance schemes for their requirements.

Why do you need insurance OR Do you really need insurance OR what all things you need insurance for? The unexpected sometimes happens. If your house is burgled, insurance can pay for you to replace the things that were taken by the burglar. If you need medical treatment, health insurance can pay for private healthcare, and replace some of your income if you can't work. If you die, life insurance can pay a lump sum to the family you leave behind.
In this section, we explain the main things you can insure, how it works and things to think about to help you decide whether you need insurance.

What is insurance?
Insurance is a way of protecting yourself and your belongings against a particular adverse event, for example, a burglary, or losing your income because of illness. If this happens, insurance will pay out an agreed amount, or an amount to cover the damage, as appropriate and described in the insurance policy document. Of course, unfortunate events may not happen, but you have to decide whether you're willing or able to take that risk. Some insurance, like motor insurance or car insurance, is compulsory – you have to have it if you drive.

How does Insurance work?
The amount you pay for insurance will be based on the information you give to the insurance company (also termed as the underwriter) and the type of risk you want to insure. Insurance companies use underwriting criteria, for example, where you live, if you smoke or what type of activity you would like to be covered for to help them work out the price (premium) of the insurance. Remember. The more risky situation is, the more costly the insurance becomes. For e.g., if you want to insure your house against earthquake and your house is in earthquake prone region, then you will have to pay more insurance premium. If your house is in a safer area, then the insurance premium amount will come down. Similarly, while taking car insurance, a driver with no accident record will pay less insurance premium, while the one who may have had an accident or two will find the same insurance costly. For health insurance, a smoker will have to shell out more money for insurance as compared to a non-smoker.
You might find that some insurance companies may not be able to give you a price for the cover you need. This could be because that particular insurance company doesn't offer insurance for the type of risk you want to insure (for example things like antiques or vintage cars). If you want this type of insurance you might have to go to a company that specialises in this type of insurance cover.
The insurance company agrees to pay out if the event which you're insuring against happens. For example, your travel insurance policy may pay out for loss of luggage. It is important that you give the insurance company the correct information when buying insurance as incorrect information might affect your claim.
You pay either a sum for the whole year (or sometimes longer), called a single premium, or a regular premium, usually monthly, into the policy. You can choose which company's policy to buy yourself or you can go to an insurance broker, who'll help you choose.
Most insurance lasts for one year at a time and you can renew your policy when it ends, or go somewhere else for a better deal. But make sure you don't lose out by switching and always check that a new policy covers what you need it for. Always compare what's covered by a policy, not just the price. Some might be cheaper than others, but they may not offer the same level of protection.
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European Union and United Kingdom Laws regarding motor insurance

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In 1930 the UK government introduced a law that required every person who used a vehicle on the road to have at least third party personal injury insurance. Today UK law is defined by the The Road Traffic Act which was last modified in 1991.

The Act requires all motorists to be insured against their liability for injuries to others (including passengers) and for damage to other persons' property resulting from use of a vehicle on a public road or in other public places. This is called Third Party Insurance. It is an offence to drive your car, or allow others to drive it, without at least Third Party insurance whilst on the public highway, on private land no such legislation applies.

The insurance certificate or cover note issued by the insurance company constitutes legal evidence that the vehicle specified on the document is indeed insured. The Law says that an authorised person, such as the police, may require a driver to produce an insurance certificate for inspection. If the driver cannot show the document immediately on request, then the driver will usually be issued a HORT/1 with seven days, as of midnight of the date of issue, to take a valid insurance certificate (and usually other driving documents as well) to a police station of the driver's choice. Failure to produce an insurance certificate is an offence.

Insurance is more expensive in Northern Ireland than in other parts of the UK.

Motorists in the UK are required to display a Vehicle excise duty disc in their car when it is kept or driven on public roads. This helps to ensure that most people have adequate insurance on their vehicles because you are required to produce an insurance certificate when you purchase the disc. However it is a known practice for some people to purchase insurance to gain the certificate and then to cancel the insurance and gain a full refund within the statutory 14 day cooling off period.

The Motor Insurers Bureau compensates the victims of road accidents caused by uninsured and untraced motorists. It also operates the Motor Insurance Database, which contains details of every insured vehicle in the country.

Today there are different types of car insurance available, and dependent on your circumstance one policy will be more suitable than another. In order to buy the most suitable car insurance it is important to understand the differences between the policies available and the effect these differences will have on you as a policy holder and other road users.

In the UK , the car insurance market is comprised of different types of insurance companies such as Norwich Union, thousands of brokers, and direct insurers like Esure. Direct insurers revolutionised the insurance industry by advertising directly to the customer and reducing prices by excluding brokers from offering their products. Aggressive marketing ensured that direct insurers are seen as household brands, a direct contrast to brokers!

The result to the customer was a far greater choice of insurance companies but this made the prospect of purchasing the right policy at the right price more difficult. Today, if you use a broker to find an insurance policy you can only expect to search 40% of the available market; the other 60% is controlled by direct insurers!
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