Insurance

It's not the most exciting subject in the world is it? But it's certainly useful. Being insured means, that someone else will foot the bill if disaster strikes.

For example, if your house burns down or if you fall ill, taking out insurance can help cover the costs. Without it you risk losing a lot because, when you buy an insurance policy, you're paying for peace of mind.

How Insurance Works

Whatever type of insurance you're buying, you pay a premium (usually an annual or monthly amount of money) to an insurance company, which provides you with cover against a particular risk - having your bike nicked, for example.

A specialist - an underwriter - works out how big the risk the insurer is taking on (e.g. how likely it is your bike will be stolen and how much it will cost to replace it) and, from this, how much to charge you for the cover.

Most insurance policies will specify an excess. For example, if you have an excess on your insurance cover of £50 and are claiming £200, you'll have to pay the first £50 and your insurer will pay the other £150.

You can buy insurance to protect yourself against most risks. But if something is certain to go wrong, it becomes an uninsurable risk. For instance, you can't insure a house that's already burning down!