Personal insurance deals with a wide range of types of cover and insurance policy that are broadly devoted to providing the individual and their families with a range of insurance protection designed to mitigate financial risks to the individual arising from a whole selection of possible claims that may occur. Whilst people refer to personal insurance, it is in fact a very broad terms that encompasses and huge variety of diverse insurance contracts.
With an effective personal insurance programme, as with any other, the starting place is to identify the areas where claims may occur and assess the economic effect of a claim on the individual. You are then in a position to decide whether you wish to transfer this risk to an insurance company and whether the premium the insurer requires for providing the cover is cost effective to you.
There are of course exceptions to this, certainly in the case where you have a mandatory duty to hold insurance, the most relevant and often the only case of this applying to the individual is in the legal requirement for motor insurance if you own and operate a car or any other motor vehicle.
Even with motor insurance, you still have to consider the risks that apply you beyond the legally required cover, such as whether you want to protected against losses arising from theft of the vehicle, before deciding which policy to actually purchase.
Most people’s approach to insurance is not based on this early consideration in the decision process but is simply based on an acceptance that they should have motor insurance and probably should have home insurance and beyond that, what is the lowest price they can buy it for.
This approach does not really help you to appreciate the value of the insurance product as a risk transfer tool and does lend itself to cutting corners in the level of cover and leaving yourself open to economic risks along with perhaps not gaining a full understanding of what cover is actually available to you. For most people spending the amounts of money that is spent on say car insurance without a consideration of why you are buying it and what are you actually getting for your money compare to what may be available is a total unusual concept for almost any other product.
Proper consideration of your insurance requirements does lend itself to a greater understanding of the product you are purchasing and a much clearer sense of the value that you actually receive from the policy.
It is the individual alone that can make the decision as to what risks they face and whether they should arrange insurance to mitigate these losses, yes it can be assisted by discussions with a professional insurance intermediary, such as Blackfriars, who can offer potential solutions to the areas you have identified and raise issues that perhaps been relevant to others in your position previously, but it is only the individual that is fully aware of their own circumstances.
This is not to say that price is not a important factor, it is extremely important and indeed forms a central part of your decision making process but it is certainly not the only factor that you should be considering when you purchase personal insurance and it should not be the starting place for your considerations.