I did have another post scheduled for today, but a couple of incidents have prompted me to write on the importance of good insurance.

I didn’t used to be overly concerned with insurance – I was generally a careful person, so didn’t see much point in it. Certainly insurance in the form of “extended warranties” are a bit of a waste of time and not worth the money you pay for them.

However, there are some kinds of essential insurance – some are mandatory in some situations while others are just good to have. The essentials are (IMHO):

• Buildings & Contents Insurance (for home-owners)
• Car/Motor/Auto Insurance (for Drivers)
• Life Insurance, including Serious Illness cover

Buildings Insurance is just for Property Owners, and covers you in case something happens which destroys your building or otherwise makes it unusable. Mortgage companies generally require you to take Buildings Insurance – sometimes with a certain “partner” company, but not always.

Contents Insurance, covers the contents of your home – all your possessions, really. Contents insurance often comes with your buildings insurance (if you have it), but not always. I had to make a claim on my contents insurance today after my wife accidentally broke my iBook. With a broken screen and seemingly something on the inside broken as well, it looks like a replacement will be needed – something I simply don’t have the money for!

My wife also had an accident in the car last week (she’s not been having much luck recently!), causing about £2000 worth of damage. Car Insurance, which is ususally a requirement of owning a car, is paying for the damage. A £2000 repair bill would have sunk us for at least the rest of the year, if not longer, so it’s a godsend the insurance is paying for everything.

Life Insurance is probably the least tangible on this list. You don’t directly benefit from it, yourself. Generally, if a claim is made on your life insurance, it means you’re dead. Life insurance is a way of providing for your loved ones if you happen to snuff it somehow. I whole-heartedly encourage you to take serious-illness cover with your life insurance if you can. This provides you with protection against being unable to work due to a life-threatening illness (heart conditions, cancers, and the like). Life insurance is, in my experience, a requirement when buying a house. Certain policies can also act as a kind of investment – paying out a lump sum to you if you’re not dead by a certain date (charming!).

Being properly insured can save you a fortune in the unfortunate event something should happen. If I’d not been covered, I would be looking at repair bills off around £3000 in the next few weeks. The monthly premiums for my insurance policies is a small price to pay in comparison. If you aren’t properly covered, I suggest you take a look at your options. You’re always paying for “what if?”, but if “what” happens you’ll be glad you were paying.