Insurance has always been an important part of thorough financial planning. However, with the prevailing global coronavirus pandemic, its importance become even more pronounced. COVID-19 has been a wake-up call for many people, resulting in a global increase in demand for insurance. Simon Bath, CEO of Moveable, has highlighted the importance of insurance after the pandemic. We take a look.
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How many types of insurance are there?
There are many different types of insurance cover. However, the five we are all most likely to encounter are:
- Home or property – covers your home and possessions against damage from natural or artificial causes.
- Health or private medical – covers the costs of private healthcare, including diagnosis and treatment costs.
- Travel – covers cancelled or shortened trips, medical emergencies, delayed departures or missed transport for reasons beyond your control.
- Motor – covers your vehicle against road accidents, theft, vandalism or damage. It’s commonly available in two forms: third-party insurance, which is cheapest, and comprehensive insurance, which is more expensive but highly recommended.
- Life – cover that pays a lump sum is paid to your beneficiaries or loved ones upon your death.
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How is coronavirus affecting the insurance industry?
Home or property
Aspiring homeowners rushed to take advantage of the stamp duty holiday before the deadline, which created high demand. In the rush it’s likely that some Brits overpaid for their insurance or overlooked the fact that they needed cover entirely. Simon Bath indicates that this might have added to the six million uninsured homes and trillions of pounds of property that’s unprotected.
Additionally, the pandemic has made people realise that their homes need to provide more. According to Moveable, about 700,000 homeowners have made home improvements. However, many may have forgotten to contact their home insurance company to advise them of the changes, which could lead to voided policies.
Health and life
In the early months of coronavirus, insurance companies faced a high number of claims. However, they are gradually recovering as people are now seeing the importance of life insurance. In fact, data from research conducted by Canada Life indicates that about 5.8 million UK adults want to buy or are considering life insurance.
Additionally, data from Aviva indicates that 42% of homeowners with a mortgage don’t have life cover. As a result, this could leave their loved ones in debt if anything were to happen to them.
A report from CompareTheMarket indicates an average 40% increase in sales of health insurance policies. This suggests that many people, especially those with underlying conditions, have realised the importance of insurance as a result of the pandemic.
Travel insurance
With the introduction of the UK’s Covid traffic light system, travel restrictions are lifting. As a result, people are beginning to travel to countries on the green list. This has led to an increase in the number of people requiring travel insurance.
Travel insurance for COVID-19 is crucial, especially as there is a risk that green list countries could be moved to the amber or red list. Without adequate cover, your expenses could increase, or you could even end up stranded.
When researching travel insurance options, it’s recommended that you carefully read and understand the level of cover offered by each policy. This will help you pick a policy that caters for all possible outcomes. Additionally, note that a travel insurance policy may be deemed invalid if you travel against FCDO advice.
