The policies you may be able to live without… if you ‘self-insure’

As insurance premiums soar and the cost of living bites, rising numbers of households are considering cancelling their policies altogether.

One in seven are debating cancelling life cover, according to insurer Vitality, and more than one in ten plan to cancel their contents insurance, says comparison website GoCompare. Last year, one in ten cancelled their pet and travel policies, according to analytics firm GlobalData.

But while ditching these policies is usually a dangerous plan that could cost you dearly, not all types of insurance are indispensable. There are some you could consider giving up to save hundreds of pounds.

Brian Brown, consumer finance expert at Defaqto, suggests that a rule of thumb – to help you decide which policies to keep and which to cancel – is to ask yourself:

If you lost the use of the thing insured, could you afford to, and would you be willing to, repair or replace it from your readily available funds?

Hit with a £5,500 vet bill which had to go on credit card

Hit hard: Andrea Dewhurst cancelled the pet insurance for her sausage dog, Red

Andrea Dewhurst cancelled the pet insurance for her sausage dog, Red, when she became a full-time student and could no longer afford the £60-a-month bills.

However, six months later Red developed a spinal disease and had to have urgent surgery. Andrea, 42, an acupuncturist and owner of The Channel Project, used her credit card to pay the £5,500 bill for Red’s treatment for Intervertebral Disc Disease.

‘Using my credit card was the only option at the time, and thankfully Red has now recovered,’ says Andrea, right, from Hitchin in Hertfordshire.

‘Now it’s impossible to get affordable insurance because of the condition and I’d be looking at £100 a month, which is beyond my means right now. His condition wouldn’t be covered anyway as it would be considered a pre-existing one.’

He says: ‘If the answer is ‘no’ then you probably will want to keep the insurance going – provided the premiums over a few years will still be less than the cost of the thing itself.’

Self-insuring is one alternative to paying out for premiums. You put the money that you would have handed to an insurer into a savings account. That way, should something be lost, stolen or injured, for example, you have the money to replace or fix it.

But if you don’t need it, you can spend it on something else.

Whether or not an insurance product is good value will vary from person to person. However, there are a few that are likely to be less useful for most.

Extended warranty insurance: Around £10 per month for multiple items

When you buy a new household appliance, such as a washing machine or television, you may be offered extended warranty insurance to cover the cost of future repairs.

However, these policies tend to be pricey and are often unnecessary. Most appliances come with a free warranty of at least 12 months from the manufacturer.

Furthermore, if your appliance proves faulty, you are entitled to repair or replacement under the Consumer Rights Act 2015. If an appliance costs more than £100 and you pay by credit card, you should also have protection from your card provider if what you bought was faulty or not as described.

Mobile phone insurance: Around £80/yr for iPhone 13 128GB

If you tend to lose or damage your mobile handset, it may be worth getting it insured. However, you may find that you already have cover under your home contents policy. If not, you may be able to add it for an extra fee – around £30 a year – which is usually cheaper than a standalone policy.

Boiler insurance: £8 per month

If your boiler is relatively new, the chances of it breaking down are low. Just remember to get it serviced every year to keep it in good shape.

Boilers tend to come with long warranties of five to seven years so that should offer some protection if something goes wrong. Boiler insurance policies often come with strict limits, so check these if you do take one out. For example, some will not offer cover if your boiler is older than seven years, some restrict how many claims you can make and some do not include annual services.

Home emergency cover: £40 per year

This covers you for the first emergency call-out if there is an unexpected incident at your home, such as a burst pipe or wasp infestation.

However, more extensive repairs will have to be claimed for on your home insurance, or you’ll need to pay out for them.

If you would be able to pay the upfront cost of an emergency call- out, this type of policy may be nice to have, but not essential.

Ticket cover insurance: £3 per ticket

The number of companies that offer ticket insurance has been rising ever since the pandemic when events such as gigs and theatre shows were cancelled.

However, if an event is cancelled, the provider will normally issue a refund or offer an alternative date. If you bought your tickets using a credit card, you may also be entitled to a refund from your card provider, so long as you spent over £100.

Some tickets are non-refundable if the event goes ahead, so you may want to buy cover if it gives you peace of mind. However, venues are often understanding if you wish to move your tickets to an alternative date.