How much is your annual 'peace of mind' bill?
21 May 2021 02:08 PM
Is there such a thing as insuring your insurance? And if there is, how much would it cost for that financial peace of mind? You may be surprised to learn that the answer is actually…nothing.
Every year, we as consumers spend thousands of pounds insuring the things we care about the most: pets, homes, cars, health, holidays (remember those?), jewellery…the list goes on.
We’ve all heard horror stories about extortionate vet bills that crippled someone’s finances, or a holiday from hell that didn’t qualify for compensation. These common anecdotes are all we need to persuade us to take out cover against unforeseen circumstances, providing us with that all-important peace of mind.
In 2019, the overall total amount of household spending on insurance reached £21.4bn in the UK alone*...evidence that protecting the things we love can be a costly business!
Can I insure my insurance?
But how many of us stop to think about what would happen if the insurer that protects our most precious commodities was the very thing to face disaster?
Rather than our travel operator going under, what if it was our insurance company that failed? What would happen to all that money we’d spent on safeguarding?
It’s a terrifying thought! So, is there such a thing as insuring your insurance? And if there is, how much would it cost for that financial peace of mind?
You may be surprised to learn that the answer is actually…nothing. All you need to do is carry out three simple steps before taking out any insurance policy:
- Check the insurance provider is authorised by the Financial Conduct Authority (FCA), or the Prudential Regulation Authority (PRA) if they are based in the UK. You can do this by checking the FCA’s financial services register.
- If you choose a UK-based broker who you think might represent a non-UK based insurance company, ask your broker to clearly identify the insurance company they are placing your insurance cover with and also ask them if that insurer is FCA authorised. Again, you can check for yourself if the insurance company is authorised on the FCA’s financial services register.
- Check your chosen insurance product is FSCS protected. Visit the insurance page of our website.
Let’s be honest, choosing the right insurance product for our individual needs isn’t something many of us are well practised in. Knowing exactly what questions to ask your service provider can be confusing, so checking our key questions may provide you with that extra level of comfort before starting the process.
Ensuring the above measures are in place means that should your insurer fail at any point in the future, you’ll be protected. Dependent on the final outcome, here’s how we’d look after you:
- If your broker was able to find a different insurance provider to take on the failed insurer’s policies, FSCS would fund your new insurance policy using ‘premium refund compensation’. In this event, you’d simply have a new like-for-like policy, with a solvent, authorised insurance company.
- If your policy didn’t get transferred to a new provider and you were only part-way through your policy period, FSCS would pay ‘premium refund compensation’ directly to you (or directly to the finance company, if the premium was originally paid with the use of a loan).
- If you had an outstanding claim, providing that claim is valid under the terms and conditions of your policy, FSCS would pay 90% or 100% of the agreed claim value (different insurance types carry different compensation limits – you can find a full breakdown of the various limits on the insurance page of our website.
So, the ultimate cost for financial peace of mind? Just a little of your time.