As everybody is probably already well aware by
now, there is a severe worldwide recession which has touched every aspect of our
lives no matter whether we are a student,
a pensioner or lucky enough to be in full time employment. So in these tough times we are naturally
all looking to cut back on unnecessary expenditure and save some money and
insurance must rank amongst the top ten items on most people’s list as one of
those things that we can cut back on.
But can you?
Insurance generally is not a very well
understood product, in the way it operates, the obligations it imposes on you as
a policy holder and also the obligations of the Insurance company. I think most of us would agree that we
often feel we are not getting anything in return for the premiums we pay (, but
this is because we have been lucky enough not to have to claim for anything.) So
is insurance unnecessary and what if disaster does strike, what would be the
consequences if you are not insured.
These are some of the general questions that have been raised and which I
will cover in this week’s column.
Is insurance necessary? Yes, by law, if you
own a car or you run a business. Car insurance most people are familiar with and
understand that if you have an accident, then personal injuries, damage to the
car and/or damage to property involved in the accident will be covered depending
on whether you have a Fully Comprehensive or a Third Party Only insurance.
Whenever you drive a car it is your responsibility by law to check that the
owner has some valid insurance and that you have these papers in the vehicle
otherwise if you are stopped by the Guardia (Traffic Police) you can face a fine
of up to 3,000€. With a business
you must have Public Liability insurance to get your license to start trading
and this is usually built into a standard commercial policy to cover the
buildings and contents of the business as well. Insurance is also necessary if you take
out a mortgage. Not by law, but as part of your mortgage contract with the bank,
in which case the bank will insist that you have a policy for buildings
insurance and some life insurance for at least the value of the mortgage. Likewise, if you want an NIE number and
register as self employed, you need to show that you have private medical
insurance.
Apart from these examples it then becomes a
matter of firstly if you have any dependants and secondly if you want to protect
yourself and/or family members against financial hardship as to whether you
should have any other type of insurance. So you should ask yourself can I
afford NOT to insure myself and family.
Whilst other policies are not required by law, as we get older we usually
acquire more and more material goods, like a house or jewellery and have people
who become financially dependent upon us, be that a wife, son, daughter etc. and
we naturally want to protect our nearest and dearest and our possessions. Statistically we will all suffer one or
more forms of injury, accident or major disaster in our lives and there are
certain things that are irreplaceable because of their sentimental value to us
and are therefore priceless. For
these situations there are a number of different products available to at least
minimise the financial impact of any problem and help us get our lives back on
track.
For instance, Life Insurance. Something we often mean to get around to
doing and often make it a New Year’s resolution to do it, but as time flies by
we forget again. Then we are jolted
into action by the news of the bereavement of a friend or their partner and the
financial hardship they face from not having a policy in place. The funds from this sort of policy can
be used to pay off a mortgage, to cover funeral costs or to provide a regular
income for those we leave behind.
It can be extended to payout a lump sum if you become seriously ill or
are partially or permanently disabled.
Buildings and contents insurance – for
protection in the home against fires, water damage, structural damage, and
natural disasters, such as the torrential rain we sometimes get here in
Tenerife. Public liability is
normally automatically included in these policies which is especially important
if you are renting your property out.
Accidental damage and All Risks for your valuable items when away
from the house can also be done with many companies now.
Travel Insurance – this is a
perfect example of the sort of cover that is often difficult to get if you are
over 65 yrs old and which you are obliged by law in the UK to have, but here in
Tenerife because it is not a legal requirement many people forget about it or
make the mistake that they can do this with any UK based company. Sometimes this is possible, but be sure
to double check the small print as it is usually a requirement that you are not
only registered with a UK doctor but are resident in the UK! Also, as a resident of Tenerife, you are
no longer eligible for cover under the NHS and that the Tarjeta Sanitaria ( the
Spanish equivalent to the EHIC card) only covers you for emergency care whilst
abroad in Europe and not at all in the rest of the world.
Private Medical insurance – one of the most
popular forms of insurance largely because whilst the Social Security is
extremely good here in Tenerife, sometimes the wait to see a specialist can be
many months and if you have been advised to see a specialist we normally all
fear the worst and want to see them a.s.a.p., which is often only possible with
private insurance. Don’t forget
that some of the companies like DKV automatically include dental insurance in
their medical policy and that children up to 8 are included free on the Dental
policy which can be done separately for as little as 68€ a year! The medical policies are very flexible
and can cover you for just seeing the general doctor or just seeing specialists,
for just Spain and the Canary Islands or with Worldwide cover. Be sure to discuss with your agent or
broker these options and how to set up a group scheme for your family or your
place of work and thereby benefit from discounts and save you money whilst
getting exactly the same service and cover.
Naturally there are many more types of
policies available to cover you like golf and boat policies, accidents and loss
of income policies, funeral plans, fleet truck insurance. pet insurance
etc. Like most things in life, to
get your insurance requirements matched to your personal circumstances you need
to set aside some time. Arrange to
see your agent or broker so you can discuss these things in detail and without
feeling that you have to hurry up because they have somebody else waiting in
their office. Talk to them, talk to
more than one agent. Weigh up their
advice and think about which one you feel most comfortable discussing all the
issues with, do they understand you or are they trying to push just the products
they want to sell and do they understand their products because when you really
need them, when you need to make a claim these will all suddenly be very
important issues.
Do also remember that nearly all
insurance contracts in Spain are annual contracts and irrespective of whether
you pay the premium monthly or qtrly
etc. you are contracted to pay for the full year and if you want to
cancel the contract you will normally need to give notice in writing to the
insurance company, often 2 mths before the renewal date. Likewise, the insurance company
should be advising you in writing of the renewal amount or if they want to
change the terms and conditions or to cancel the policy.
A major advantage of having insurance is peace
of mind, knowing that you are covered in the event of a disaster. The loss
of treasured items or a loved one will be traumatic, but with insurance it will
be easier to pick up the pieces and get your life or that of the family back on
track as quickly as possible. It is important to purchase insurance before
something bad happens, as insurance is protection from these events and will do
no good when purchased after the event has already occurred.
In conclusion, a final piece of
advice that works across the whole spectrum of insurance is to not buy on price
alone. Obviously you want to save as much money as possible, but as with most
purchases in life, buying something cheap can end up costing you much more. Ask
yourself, how are they able to provide insurance for so little? Usually there is
something missing or certain restrictions that could prove costly in the event
of a claim. And of course, we at
Tenerife Insurance Services S L would welcome the opportunity to discuss these
issues with you either at our office or for your convenience at your place of
work or your home at a time to suit you.
