Golden rule for insurance - discuss

lisyloo

There is also another factor to take into account with "care" type insurance.

The example I would use is dental insurance.
It's actually in my dentists interest to advise me correctly to AVOID treatment as that's in his interests as well as mine.
If I did "pay as you go" then it's entirely possible that SOME dentists would give you treatment that you didn't really need purely to make money.

This type of insurance is slightly different (and not strictly speaking an insurance) because the care you receive can actually affect the ultimate outcome.

Personally I'm happy with the situation where it's in my dentists interests to keep me as healthy as possible (win, win situation).

magyar

lisyloo wrote:

There is also another factor to take into account with "care" type insurance.

The example I would use is dental insurance.
It's actually in my dentists interest to advise me correctly to AVOID treatment as that's in his interests as well as mine.
If I did "pay as you go" then it's entirely possible that SOME dentists would give you treatment that you didn't really need purely to make money.

This type of insurance is slightly different (and not strictly speaking an insurance) because the care you receive can actually affect the ultimate outcome.

Personally I'm happy with the situation where it's in my dentists interests to keep me as healthy as possible (win, win situation).

Sure, but you could argue the toss the other way and say that a dentist may avoid treatment of things you COULD do with, although not absolutely necessary. (We all know this happens in the NHS, for example)

catsonic

I would advise everyone who goes abroard to take out holiday insurance.

Even more so after what happened to my mum in law!

She went on holiday end of september on the friday. She went to bed sunday night and never woke up! She died in her sleep. She was only 63.

If she hadnt had travel insurance i dread to think how much it wouldve cost to get her back home!

lisyloo

Sorry to hear about your experience, but you are absolutely right.

A friend of mine's mum had a stroke on board a cruise ship.
She wasn't fit to fly so they took her to hospital at the next port.
There she was provided with an interpreter and family members were provided with flights from the UK to visit her.

Illness abroad can be really expensive.
Coming home can be expensive, for example you may require up to 10 seats if you need to lie down plus a nurse.

I agree that this is one insurance you shouldn't go without.

Astaroth

Stonk wrote:

Precisely true. It economically has to be. If it were untrue, insurance companies would go out of business.

For any given individual, there will be short-term gains and losses from applying this logic, but in the long term you will be better off.

Insurance companies, with many policyholders, see the large-scale averaging effect very much more quickly. If policy pricing was such that it was weighted in favour of the customer, the insurance company would be making a consistent loss pretty quickly.

Though of cause the private motor insurance book then this is making a loss as an industry as a whole and particularly large losses in some cases. This is propped up by a combination of other insurance types remaining profitable or living off the profits of previous years waiting for the profitability to turn.

Back to the OP - in principle the idea is correct however many types of insurance include a third party liability cover and this is what can really increase the cost of claims. A person may decide they dont need to insure their dog as they can afford to buy another/ pay for any treatment but you would also potentially have to consider the cost of a personal injury claim should your dog maul someone.

Obviously these are outside chances but at any one time we have multiple claims with multi-million pound expected settlement figures outside of the compulsory insurance classes of motor and employers liability.

I think the principle is correct but it is somewhat a dangerous game to pay unless you can afford to pay a loss of earnings claim if you were unfortunate enough to be held liable for the death of a CEO of a multinational blue chip company or are prepared to lose everything to pay what you can towards it

magyar

Thanks for all the opinions. I'm intrigued that we've found relatively few examples of insurance that aren't necessary!

It seems a good idea to insure Fido in case he kills Richard Branson, a good idea to join Denplan so your dentists doesn't fill every one of your teeth and a good idea to get travel insurance in case you pop your clogs in Ibiza.

Seems like a good idea to work in insurance!

Astaroth

Your classic examples are the ones without third party liability like extended warranties and PPI (though if you can afford to pay the credit back in full it is questionable why you have the credit in the first place - possible exception of credit cards). These may not be worth buying a policy for but insurance works on the basis of the common pool... ie on average the insurer will make profit but on an individual basis you could get great value for money if all your electrical appliances break down or terrible if none of them do.

When you get into commercial insurance then potentially you have more scope for not getting insurance or for compulsory insurance looking at the likes of self insurance or captured insurers.

I guess for me the defining point is that insurance companies even insure themselves both in terms of "normal" insurance like public liability and also reinsurance (insuring the insurance they write). Add to that the fact that reinsurance companies reinsure the business they write and it does build a fairly convincing case that it is worth seriously considering.

JennyW_2

we have things like pet insurance, house/buildings insurance, life insurance, - the necessities I believe. However my in-laws insure absolutely everything - it costs them in a fortune - they even have insurance for the satellite dish :eek:

magyar

JennyW wrote:

we have things like pet insurance, house/buildings insurance, life insurance, - the necessities I believe. However my in-laws insure absolutely everything - it costs them in a fortune - they even have insurance for the satellite dish :eek:

Out of interest, presumably a satellite dish is probably covered under house insurance, albeit maybe to a more limited degree.

Is there usually a problem whereby two insurers want you to claim of the other's insurance?

Astaroth

Most insurers apply a sharing principle when there is multiple covers in place - for personal lines insurance this is generally a basic equal split across all insurers involved (this can be an "issue" with some travel policies for your possessions as they will share the cost with your contents insurance if that also covered the claim)

With commercial insurance having more than 1 policy is much more common - it can be a single insurer doesnt want to write the risk of £5m of stock for fire damage but will write £1m of it so the company takes 5 policies) When you get to these types of policy the proportion each insurer pays can get more complicated as they may look at the total cost of the claim -v- the sum insured.

When you get specialist policies like the warranty on the Sky system they typically dont have an exclusion of other in force policies and so it is a simple case of only claiming of that one policy rather than an arguement between the sky underwriters and the home insurance.