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What is insurance? ๐Ÿš‘

what is insurance

What is insurance?

Introduction ๐Ÿ‘‹

There are lots of different emergencies that could happen, which could make you lose a lot of money. ๐Ÿ˜ฑ

Things like:

  • Getting robbed ๐Ÿฆนโ€โ™‚๏ธ
  • You or your family getting ill ๐Ÿค’
  • Natural disasters e.g. flooding ๐Ÿ’ฆ
  • Your belongings breaking ๐Ÿฉน
  • People passing away ๐Ÿฅ€
  • Your home getting damaged ๐Ÿ˜๏ธ
  • Cars breaking down ๐Ÿš—
  • Holidays cancellingโœˆ๏ธ

can have a huge impact on your money.

So how do you protect yourself from all of these financial struggles?

Today we’re explaining what insurance is for!

Disclaimer: This website provides information for guidance and educational purposes only. The Grown-Up School does not provide regulated financial advice. You can seek independent financial advice from a suitably qualified and regulated professional advisor. Check out our disclaimer policy for more information.

What is insurance? ๐Ÿš‘

Getting insurance is where you pay money to “protect yourself” from different emergencies.

If you find yourself in the emergency, you can be given emergency money to help you.

Types of insurance โ˜”

There are lots of different situations you can get insurance for – here are some of the most common!

1. Mobile Phone Insurance๐Ÿ“ฑ

Mobile phone insurance can cover the cost of repairing or replacing your phone if something happens like:

  • You lose your phone ๐Ÿคทโ€โ™€๏ธ
  • Your phone gets damaged ๐Ÿ”จ
  • Someone steals your phone ๐Ÿฆนโ€โ™€๏ธ

2. Home Insurance ๐Ÿก

Buildings Insurance ๐Ÿš๏ธ

Buildings insurance can cover the cost of repairing damage to the structure of your home (e.g. walls, windows, roofs).

It can also cover things like:

  • Fences
  • Garages
  • Sheds
  • Pipes
  • Cables
  • Drains
  • Rebuilding your house if it is destroyed

Your home might be damaged by things like:

  • someone crashing a vehicle into your home ๐Ÿš—
  • things falling on your house e.g. trees or lampposts ๐ŸŒฒ
  • someone breaking into your house or vandalizing it ๐Ÿฆนโ€โ™‚๏ธ
  • fires ๐Ÿ”ฅ
  • explosions ๐Ÿ’ฅ
  • storms โ›ˆ๏ธ
  • floods ๐Ÿ’ฆ
  • earthquakes ๐ŸŒŽ
  • the ground sinking under your home (subsidence) โฌ‡๏ธ
  • frozen and burst pipes โ„๏ธ

If you’re renting a home, very often your landlord will pay to protect the building.

It’s important to check that this cover is in place when you rent! (How to rent a home: a step-by-step guide ๐Ÿ”‘)

Contents Insurance ๐Ÿ›‹๏ธ

Contents insurance can cover the cost of repairing or replacing your personal/home possessions when you experience things like:

  • fire ๐Ÿ”ฅ
  • theft ๐Ÿฆนโ€โ™‚๏ธ
  • storms โ›ˆ๏ธ
  • flooding ๐Ÿ’ฆ

It can also cover you if you take your belongings out of the home e.g. on holiday.

You might have to pay extra to cover you when you accidentally lose or damage your possessions. ๐Ÿค”

3. Car/vehicle Insurance ๐Ÿš—

Car/vehicle insurance can cover the costs of problems with your vehicle.

There are 3 main types of car/vehicle insurance:

1. Third party ๐Ÿฅ‰

This insurance covers you for :

  • damage to someone else’s vehicle ๐Ÿš—
  • damage to someone else’s belongings
  • injury to someone else in an accident ๐Ÿค•

In the UK there is a legal requirement to have at least “third party” insurance. Third party insurance doesn’t cover repairs to your vehicle. ๐Ÿ› ๏ธ

2. Third party, fire, and theft ๐Ÿฅ‰๐Ÿ”ฅ๐Ÿฆนโ€โ™‚๏ธ

This insurance gives you “third party” cover, but also covers:

  • damaging/losing your vehicle from fires ๐Ÿ”ฅ
  • damaging/losing your vehicle from theft ๐Ÿฆนโ€โ™‚๏ธ

3. Comprehensive cover

This insurance gives you “Third party, fire, and theft” cover, and repairs to your own car. ๐Ÿ› ๏ธ

It might also cover you for things like:

  • cover for legal/medical costs e.g. if someone injures you whilst driving and you take them to court ๐Ÿ‘ฉโ€โš–๏ธ
  • belongings that get stolen from your vehicle ๐Ÿฆนโ€โ™‚๏ธ
  • hiring a replacement vehicle when your vehicle has been involved in an accident ๐Ÿš—
  • injury/death for you or a family member in a vehicle accident ๐Ÿค•
  • repairing/replacing cracked windscreens ๐ŸชŸ
  • getting help if your vehicle breaks down (“break down cover”) ๐Ÿ› ๏ธ

Sometimes these cost extra so make sure to check what’s included when you get your insurance! ๐Ÿ•ต๏ธโ€โ™€๏ธ

4. Pet Insurance ๐Ÿถ

Pet insurance can cover the cost of vet treatment if your pet gets injured or becomes ill. ๐Ÿ˜ฟ

You might also be able to get paid from pet insurance if your pet:

  • dies ๐Ÿฅ€
  • gets stolen ๐Ÿฆนโ€โ™‚๏ธ
  • becomes lost ๐Ÿ”
  • harms someone ๐Ÿค•
  • damages someone’s belongings ๐Ÿ›‹๏ธ

5. Income Protection Insurance ๐Ÿ’ธ

Income protection insurance is also sometimes called “permanent health insurance”.

It can help make sure that you receive regular income (money) if you can’t work because you’ve gotten sick or become disabled. โ™ฟ

It can give you regular payments until you return to work or you stop working when you get old (retirement). ๐Ÿง“

6. Life Insurance ๐Ÿฅ€

Life insurance pays money to your loved ones if you die. ๐Ÿ‘ช

This could help them to pay for things like your funeral costs, bills, and debt payments.

7. Critical Illness Cover ๐Ÿค’

Critical illness insurance can pay you money if you become ill from one of the medical conditions listed in the “insurance policy”. e.g. having a stroke or getting cancer

This can help you to pay for things like bills and your family after you become ill.

8. Travel Insurance โœˆ๏ธ

Travel insurance can help to cover you from problems on holiday like:

  • losing your belongings ๐Ÿคทโ€โ™€๏ธ
  • damage to your belongings ๐Ÿ•ถ๏ธ
  • missing your transport or having it delayed ๐ŸšŒ
  • getting your belongings stolen ๐Ÿฆนโ€โ™‚๏ธ
  • needing medical treatment or having a health emergency ๐Ÿš‘
  • you accidentally damaging someone’s belongings or injuring someone ๐Ÿฉน
  • dying on holiday ๐Ÿฅ€
  • cancelling your trip or cutting it short unexpectedly ๐Ÿ“†

How insurance works โš™๏ธ

“Claims” ๐Ÿ™‹โ€โ™€๏ธ

To receive the emergency money from your insurance, you usually have to put forward a “claim” to request the money.

This usually involves either calling the insurance company to log a claim, or filling in a few forms. โœ๏ธ

For example, if your ยฃ500 phone breaks and you have phone insurance, you could put forward a claim to receive ยฃ500. ๐Ÿ“ฑ

“Excess”๐Ÿ’ฐ

To make your insurance payments cheaper, you can agree to pay a thing called “excess”.

Excess is where you agree to pay a chunk of money towards any insurance claims that might happen. ๐Ÿ’ท

For example, if your ยฃ500 phone breaks, you could agree to pay ยฃ50 towards a new phone, and the insurance would pay ยฃ450. In return, your insurance payments could be lower. ๐Ÿ“ฑ

Conclusion ๐Ÿ‘

So that’s it!

Insurance is where you pay money to “protect yourself” from different emergencies. ๐Ÿš‘

If you find yourself in the emergency, you can be given emergency money to help you.

There are lots of different types of insurance, to cover all sorts of emergencies.

If you know anyย friends or family membersย who might benefit from learning about insurance, share this post with them!

Finally, don’t forget to check out our similar articles below!

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