"Self" insurance & extended warranties

Gossy68

I've just had a financial clear out and I have given my mobile phone insurance policy the flick along with a couple of extended warranties for white goods and my sky box. I have opened an e-savings account and started paying the premiums to myself instead. This way I can have the potential build up a pot of money and manage it myself. I like this as its totally flexible and I carry the risk but might get to benefit in the long term.

So I an now insuring some minor myself. Why I didnt think of this before! If I can build a pot them I couild look at insuring expensive items myself (e.g. household theft) but obviously draw the limit at 3rd party liabilities etc!

Any of you doing this and what other savings could I target?

Regards

InsideInsurance

Insurance is a risk transfer mechanism, you exchange the risk of having a large loss for the certainty of a small loss (ie the premium).

You evidently need to decide how risk adverse you are and what you can comfortably afford to deal with yourself. Personally I dont take out warranties, gadget insurance, mobile insurance or the hundred and one add ons that they try and flog you in connection with other major insurances (eg key cover, tyre insurance, PA etc)

vaio

On average self insurance will work out cheaper but it is a risk that you might not be average. On average your house will burn down once every 500 years but that no consolation if you self insure and it's your turn for a fire next month.

On small stuff I'd not think twice as I could just go out and buy a replacement but I still insure things that would be life changing, house burning/falling down and anything that could involve injury to others. Basically things where I couldn't just put my hand in my pocket and fix it myself.

I'd go with "insurance is for disasters, not for broken washing machine/boiler/phone"

eddddy

You can also apply this strategy to home insurance, car insurance etc by investigating the impact of increasing your excesses.

If increasing an excess to say £500 or £1000 reduces your premiums significantly, you could consider putting the premium saving into your e-savings account as well. And should you ever claim, pay the excess out of the money you have (hopefully) saved.

dacouch

eddddy wrote: »

You can also apply this strategy to home insurance, car insurance etc by investigating the impact of increasing your excesses.

If increasing an excess to say £500 or £1000 reduces your premiums significantly, you could consider putting the premium saving into your e-savings account as well. And should you ever claim, pay the excess out of the money you have (hopefully) saved.

Increasing your Home Insurance excess to £500 or £1000 is unlikely to produce the type of saving unless you're paying a very high premium

vaio

yep but can produce significant savings on car particularly if you have the sort of car that can be replaced for pocket money so in the old days you'd have gone for TPFT rather than own damage cover too.

Comp with a big excess is effectively TP with frills but means you are in the "normal" pool so lots of competition rather than in the TP pool where competition is less & prices can be silly.

InsideInsurance

You should try multiple excesses though as when you get into VERY big you are ruling out the mainstream players who dont offer that sort of level and so you may actually find a upper middle of the road value is actually the cheapest price.

Likewise you are possibly starting to see negative selection issues with the highest excesses offered where those that used to pick TPFT because theyre a bad risk so v high premiums are now selecting comp with max xs thus starting to push the prices up