What your insurance cover is not.

Deciding to get the right insurance for something is vital if you want protection for when the worst happens. But regardless of whether you want cover to rent out your room or drive your car to the shops, it’s also important to think about what insurance is and what it is not likely to cover also.

Insurance isn’t a valid reason to neglect your possessions.  

If you don’t maintain your home or you neglect your car engine, your insurance probably won’t cover you if something goes wrong as a result of your lack of care. If you own something, maintain it regularly. Insurers are not replacements for car mechanics or electricians and they will refuse to pay out on claims if they think you haven’t been responsible.

You’ll need to think about expenses, especially if you’re running a business.  

Think about the costs you’re likely to incur as a result of having to maintain your property. Insurers cover you if things go wrong but they won’t cover every day expenses. If you’re renting your house out on sites like Airbnb or Wimdo, you’re probably doing it for extra money so it’s vital you treat it like a business. Make a business plan and list of potential scenarios where you’re likely to incur additional costs, then make a budget. By doing this you’ll know how much money you’re likely to make, but don’t forget to include the taxes you’re likely to incur as well. Thinking about your assets this way not only will increase your income earning potential but will make you think about protecting what you have. Your insurer will see you as a responsible customer and you’ll have a bigger bank balance too.

An insurance policy is not a replacement for security.  

By taking out an insurance policy, don’t think you won’t have to take steps to secure your property. If you leave the key in the ignition of your car or have inadequate locks on the front door of your home, don’t be surprised if your insurer doesn’t cover you in the event of a claim if they think you’ve been irresponsible. If you need to upgrade your security then include the costs of this in your budget.

Insurance won’t cover every worst-case scenario.  

Insurance is there to manage risk but there are some things that even the insurers themselves consider too risky to cover. Stolen cash is one example where home insurers are likely to put strict limits on claiming or exclude altogether as proving how much was stolen (or whether there was any cash in the first place) is difficult. If you’re writing a business plan, you’ll need to think about these scenarios and take steps to reduce these risks. Think about what is most important to you and then check your insurance policy to see if these things are covered.

Think about the target market your insurer is covering.  

Most insurers offer mass market policies that cover a wide net of possibilities. As a result of this, it’s inevitable that they will decline to cover certain types of risk as certain activities will be covered by more specialist insurers. If you decide to become an Uber driver or want to rent your room out on a short-term basis, consider that most insurers may exclude cover for such activities, heavily restrict what you are allowed to do or cancel your policy altogether. If you’re using your car or property for business use and your insurer provides some form of cover for this, be clear what your insurer’s definitions are as not all forms of commercial cover are universal. If you’re struggling to find insurance, consider a specialist insurer or broker instead.