Things to think about before you renew an insurance policy
While some people cancel insurance policies instead of renewing them, and others renew without asking questions, there are certain things everyone should think about when a notice to renew an insurance policy arrives. Decisions should be made with all the facts in mind, and taking into consideration what is best for you and your family.
Copyright David Hilowitz - Creative Commons
Be careful about cancelling insurance policies at renewal
These days, insurance is expensive, so many people cancel an insurance policy when it's due for renewal as they feel they can't afford to pay it. Before you cancel any insurance policies, and particularly something like building insurance, make sure you know you legally can do it and that it's in your best interests.
If you have a mortgage on your house, building insurance is normally mandatory. Plus, consider how much it would cost you if your house burnt down and you didn't have insurance to rebuild. Cancelling something like building insurance isn't usually cost-effective. Consider carefully before you do.
Get new quotes
Just because you've had the same insurance policy with the same company for years, it doesn't mean it's not time for a change. Insurance premiums go up and down and, in a year, a company you had a previous quote from can suddenly be a lot cheaper. Get quotes from several places before you automatically renew with your current company.
Assess your coverage
Do you still need the same level of coverage you have? Should you decrease it, or increase it? A reduction in level of coverage can be a big money saver.
Look at motor insurance, for instance. When you bought your car it was worth more, so you may have needed comprehensive insurance. Do you need it now, or can you save money by reducing your coverage or raising your deductible?
Don't insure yourself twice
People often don't realise they're already covered for something under an existing policy when they take out a new one. Read all the small print on every policy you already have, and compare what each covers.
Reduce coverage or cancel policies that are insuring you for the same thing.
Not everyone needs life insurance
Millions of people every year are talked into buying life insurance because it's a "great investment" or it "takes care of your family". Not everyone needs it.
If your family depends on you then, by all means, renew your insurance policy. But, if you don't have dependants or your spouse makes a lot more money than you, it's not always worth spending thousands of pounds a year for life insurance.
A life insurance policy isn't always a good investment either. There are often far better places to put your money.
Get advice on your insurance needs
If you're still not sure you should renew an insurance policy or let it lapse, get some advice from the experts.
DirectGov (direct.gov.uk/en/MoneyTaxAndBenefits/ManagingMoney/Insurance/DG_10034569) has excellent advice on insurance policies, as well as links to some of the best resources on the internet.
You'll also find information about getting an insurance broker, if your situation is complicated. It will save you time, and could save you money.