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Page 20: Financial: Insurance.

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Strictly, that means only if it's illegal not to but we recommend that everyone has their belongings covered by home contents insurance. We know that some people REQUIRE insurance because people's personal circumstances are so varied but, for most of us there's no need. Now don't write to us saying that your video has just broken down and you didn't have an extended warranty. Insurance is a very personal thing: Only you know how often you lose your credit cards, for example, or whether very cheap and very good quality insurance makes peace-of-mind worthwhile.

Please read on.

Our theory is that, over time, if we collected the amount saved by NOT buying optional insurances we can afford to pay for the items that actually break down. Insurance is so similar to gambling and investment. They are all games of chance but insurance and gambling are weighted so that the insurer or bookmaker always makes a profit in the long run. Some things may be worth covering because they are so expensive to replace, like home contents. If you have an expensive car, comprehensive cover may be preferable. A lot depends on the actual cost of comparative insurance quotations and their perceived value. The cheapest comprehensive car cover may only be a few pounds more expensive than the cheapest third-party cover. Life insurance may only be necessary if you have dependants. Get professional advice.

Whatever insurance you go for, ALWAYS SHOP AROUND because quotations vary widely but keep an eye on the extent of the cover, in case something is compromised, enabling the lower price.

Please read on.

Put It Down (The Pet Insurance Brochure)

(20:00 Wednesday 4th May 2005 news story)

Enter a bank... go on, I dare you... and amongst the dazzling product bombardment that permeate right through the retina will be one for Pet Insurance. "Pet Insurance?", we hear you ask, "But my dog can't drive." No, it's to cover the cost of illness or accidents, but is it worth it?

Latest figures show that pet insurance sales are booming, in an effort to cover similarly burgeoning vets bills. The number of policies on the market has increased by 56% since 2003 but cover might not be as comprehensive as you think.

One in three policyholders make a claim within 12 months but most policyholders have inadequate cover for vet's fees. For example, about half of pet policies have a limit for medical assistance payments of 12 months max., even if the owner is still paying premiums, and six of the top ten dog afflictions require medical care for longer than 12 months. The average restriction on vet's fees is £3,500 but again treating half of the main dog problems, like skin disease, may cost more than this. And apparently the pet claims customer service is nowhere near as good as for car insurance.

Imagine this: You're in debt. You've put on your shades and read all the bank's product literature and signed up for a few and now you're a fully loaded, properly functioning Joe or Joanne Public. Up to the neck in debt, you feel normal. But a little scared. Let's ...get a pet. No, no, no.

Pets cost a fortune to run. They have to be fed, need grooming, need exercise, need special clothing/leads, require medical care, need neutering, damage furniture/clothing, need cages/enclosures/tanks/housing/horse boxes, cost money to buy and cost money to die. So if you're in debt, don't buy a pet, or pet insurance: Dogs can't drive, even if they're called Rover.

So why do people have pets? A guaranteed welcome home, even if it's from Dave the goldfish, or maybe it's the companionship, or the love of animals, or the lack of human company substituted for by the artificial love and loyalty of a caged ex-savage that naturally greets the food source/prison guard with gusto? The word pets is one step from being pest. Pets are a Pest, to debt recovery.

Doctors Health Warning: Extended Warranties

(Wednesday 3rd July 2002 news story)

There are still serious questions over the value to consumers of extended warranties for electrical goods, the consumer watchdog has said. After a 10 month investigation, the Office of Fair Trading said consumers were not adequately informed or protected, and competition was not effective. Its report also said self-regulation of the £500m market had failed. It said it was referring the matter to the Competition Commission.

Extended warranties usually add about 50% to the cost of electrical goods, and the OFT thinks sales tactics of retailers appear to exploit limited consumer information of the market. Dixons, Britain's largest electrical retailer, with 32% of the extended warranties market, was a little annoyed at the decision. In a statement, it said: "There is no justification for this expensive and disproportionate action. It is inappropriate and unjustified and we have provided material to the OFT to demonstrate this."

The study included an example of a five-year extended warranty costing £199 on a £430 washing machine. However, the average repair cost is just £51. It also found a mini-disc player priced £180 on which the warranty was £130. Helen Parker, editor of Which?, said: "Heavily pushed warranties have been a pain in the neck and the back pocket for consumers for far too long. However, up until now, the OFT has failed to do much about it. Hopefully, the referral to the Competition Commission will finally remedy the situation. The report said that sales staff often emphasised scare stories about the risk of product failure and the difficulty and expense of obtaining independent repairs.

Our Doctors, here at the Surgery, have long since been appalled at the chronic effect that long-term exposure to Extended Warranties can have on personal finances. Peddled quite legally, often by apparently deaf salesmen, Extended Warranties are offered with persistence to customers who make it quite plain that they don't want an extended warranty. A patient has just reminded us of an encounter at Comet, where he bought a VCR with the express understanding that he was not interested in such a warranty, even before he agreed to buy the thing. Despite this, the salesman asked a further three times "If he was sure he didn't want to protect his new purchase". Each time a polite refusal was given. While the salesman went away, another salesman siddled up to our patient to offer… you've guessed it, an Extended Warranty.

Our philosophy, like some electrical retail staff, is quite simple: Pile up the money saved from NOT buying extended warranties to cover actual repairs, and count the interest.

Insurance Fraud is Rife

(Sunday 21st October 2001 news story)

Two thirds of people in Britain would make a dishonest insurance claim if they thought they could get away with it, according to a survey by the Association of British Insurers. Some 69% said they would make a dishonest claim while 76% agree or strongly agree that fraud is common when making an insurance claim. Out of 2,000 people surveyed, 46% agreed that most people inflate the value of a claim by at least one third. The ABI estimates that around 10% of motor claims and 15% of household claims are fraudulent.

...Lie Detectors to be used on Claimants!

(Sunday 21st October 2001 news story)

Insurance companies are to use lie detectors in an attempt to clamp down on the high number of fraudulent claims, totalling £2BN per year. Speech analysis machines will be used on telephone claim lines to monitor the tone of callers' voices. Any exaggeration or excitement caused by the stress of lying will cause a warning light to flash on the operator's desk. If the claimant is deemed to be a high risk, they will then face further investigation. Highway Insurance, the country's eighth largest motor insurer, will be the first to install the technology. However, David Cresswell, a spokesman for the Office of the Financial Ombudsman, said, "We are extremely unlikely to accept the findings of such a test in determining whether a claim was turned down for valid reasons or not".

At the Surgery we were amused by this odd method to crack down on dodgy insurance claims and wonder whether the heart of industry is behind telephone lie detection as its cutting-edge vanguard against fraud. One thing is for certain: This year's excess fraud or losses will be recovered through next year's higher premiums.

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