With all the news about PPI or referred to as Payment Protection Insurance being mis-sold around the world, there can be some confusion as to what insurances we are required by law to have; and that number is very small.
PPI was not required in most instances, if not all instances, for a loan to be approved. Yet people were told this and subsequently felt they had to have the insurance in order to be approved for the loan.
And the mis-selling began.
But what insurance policies are required by law and which ones just make good sense.
Car insurance is required by law if you wish to drive a car or other motor vehicle in the UK. This is stated under the Road Traffic Act of 1930. Who knew it went that far back? All drivers are required to have an insurance policy in place to cover their liability for bodily injury or property damage which stems from the use of a motor vehicle.
And we have seen a dramatic increase in the cost of car insurance over the past few years, in part due to the compensation claims being put forward for many auto accidents.
These claims cause all of us to pay more for our car insurance premiums.
Employer’s Liability Insurance:
Another form of insurance that is legally required is Employer’s Liability Insurance or commonly referred to as Workers Compensation, which is required by law if you run a business. The insurance is in the event one of the employees you have hired becomes injured or ill as a result from working for you. In the UK, this is stated in the Compulsory Insurance Act 1969.
Makes you want to inquire with your employer if they have met this legality. But what about other insurance policies?
Life insurance is not required by law, but makes good sense to have in place. If you have a family or are buying a property, it is vital to protect these assets, and that is what life insurance can and will do.
Contents insurance and building insurance, again are not required by law but make good sense. Although, most mortgage companies may require building insurance to protect the property/house if it is heavily mortgaged. Also, there are special policies designed for flood and storms, if a natural disaster where to destroy your home, or even do just a small amount of damage, building insurance would cover the repairs, minus any deductibles the policy may have.
If you are a tenant, either with a private landlord or housing association, if your home is broken into, or there is a fire or other damaging event and you lose your personal possessions, your landlord in most instances is not liable. They do not carry insurance on your possessions, nor are they required to do so. So contents insurance or referred to as renters coverage make great sense.
So insurance is a good thing to consider depending on what you are looking to protect, but rarely required by law.
Richard Plews is the CEO and founder of the UK’s leading life insurance quotation provider www.lifequotes4u.co.uk. He is very passionate about the Lifequotes4u Blog which has a growing number of regular readers. In his spare time he enjoys cricket, golf and white collar boxing.
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