To enable the customers make the right choices to buy insurance, the ABI published its tips and myths guide of 2010. According to ABI to make the right buying decision it is required that the customer is rightly and thoroughly informed.

According to the ABI’s acting director, the current economic scenario makes it even more necessary that the people are not under insured or putting of any vital cover due to lack of knowledge about the insurance and its products.

There are 5 tips which are highlighted by ABI as follows:

  • Disclosure of all facts and matters whether it is about a serious previous illness or a recovering one. It is important to clear all doubts if any with the insurer. If some information is hidden the claim can be turned down on its disclosure at a later stage.
  • The home should be insured for rebuilding cost and not the market value. The buildings insurance cost must reflect the full amount of the rebuilding cost and not the market value of the home.
  • Home improvements must be reflected in the sum insured. The extra value from improvements such as house extensions, new kitchen, bathrooms must be included when renewing the home insurance as it increases the rebuilding cost and the sum insured.
  • Updating of the content cover. The value of the contents may change due to more number of music players and other stuff. The insurer must be informed when there is any expensive purchase of any items.
  • Life insurance is based on health when the policy is taken and not on any subsequent changes. Life insurance is a long term contract. So as long as true and fair information is provided the premium amount shall stay unaffected as you get older, even if you fall ill.

There are 5 myths which are cleared by ABI as follows:

1. Myth: your car is worth for what you paid for and not what it costs to repay.

Fact: incase the car is stolen or damaged beyond repair, the insurer pays for the cost that is required to replace the car with a similar model today and not the cost that you paid to purchase the car as most vehicles loose the value over time.

2. Myth: If your house suffers subsidence it becomes insurable.

Fact: Subsidence (as well as landslip or heave) will usually be covered by building insurance. If after the claim you are having problems getting the cover there are some schemes available that can help cover properties with a history of subsidence. An insurance agent can help you with these.

3. Myth: The European Health Insurance Card (EHIC) is a substitute for travel insurance.

Fact: While the EHIC entitles you to any unnecessary state provided medical treatment, it does not provide full NHS coverage whilst abroad or pay for emergency repatriation to the UK. For these travel insurance is required.

4. Myth:Online insurance comparisons help choose the best insurance option.

Fact: make sure that the policy you choose serves you with what you need. Don’t choose the price alone and ensure you compare like-to like. Not all insurers are on comparison sites. It is more appropriate to contact the insurer directly in case you want some special requirements.

5. Myth: there is ‘Act of God’ exclusion in insurance policies.

Fact: there is no such exclusion in insurance policies. The policy will set out what is insured and what are the exclusions. The insurer will pay out for the loss that occurs according to the terms and conditions.