18 January 2012

Go for the higher excess

Insurance is a fact of life. You must have it for your car and your home, most of us have it for our health and some have it for income protection and life.   When you choose to pay a higher excess you are basically self-insuring for a part of the policy. You do this by taking the chance that you won't get sick, the house won't burn down or your car won't be stolen so you pay a lower premium. Most insurance companies offer different levels of excess. The higher the excess the lower the annual premium.  Choose the highest excess you can afford and then make sure you are covered by banking the excess amount immediately. Hopefully you'll never need to touch it, but if you do it will be there, ready to be used.

1 comment:

  1. You are quite right with this idea but I have taken the self-insurance much further. It is 55 years since my grandfather taught me to be very wary of insurance. During my career I thoroughly studied disasters particularly flooding, and the role of planning standards and insurance. I do not insure anything except my cars for third party property loss only.

    I have not had a car accident because I drive with care. I never buy new or "attractive" cars but if one were lost then a cheap replacement will be available. My house has not burned down because I do not have fuel or electric heaters, my electrics are professionally checked every five years, and all wiring is replaced and upgraded every thirty years. 'Tis better to not have a fire than to spend money on insurance to repair a house after an event. I recently replaced the roof and had its structure upgraded to a higher modern wind rating.

    I have all the usual possessions but none would be a huge loss to me. My invested savings are on hand to replace all basic items. My photographs are digitised and copies are held elsewhere. I don't have medical insurance either but that's another story.

    I have saved a vast amount of money over the last 50 years by not subsidising people who live in risky areas, who drive with undue care and who overcapitalise with personal possessions.


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