How-to Guides » OLD GUIDE Slash your insurance costs

Avoid these insurance rip-offs

1 tip on this task  |  Tweet

All sorts of insurance policies are littered with nasty catches. Here are some you should always try to avoid:

1.Dodge mobile phone insurance: When you buy a mobile phone, most providers will try to sell you insurance. You should steer clear at all costs because these stand-alone policies are usually bad value - typically costing £5 to £10 a month - and tend to come with a lot of exclusions.

A cheaper option is to get your mobile covered on your home insurance. Read Mobile phone insurance is a rip-off! to find out more.

2. Avoid extended warranties - Extended warranties for electrical items are often sold at the point of sale and are intended to pay for repairs to, or replacement of, an appliance after the manufacturer's guarantee finishes - steer clear of these too!

This kind of insurance can be expensive compared to the price of the actual product - with insurance often costing a third of the price of the item, or even more. Extended warranties are rarely worth having. If you decide you do need them, cheaper cover can usually be found by buying a multi-appliance policy.

3. Ditch ID fraud protection - This is rarely worth the money, as banks and credit card providers will refund any fraudulent activity on your card or current account. To stop anyone else from applying for credit in your name, you simply need to take out a cheap protective registration policy. Read Don’t fall victim to this massive scam to find out more. And buy CIFAS Protective Registration here.

4. Reclaim rip-off premiums - This particularly applies if you think you’ve been mis-sold payment protection insurance (PPI). Payment protection insurance provides cover against accident, sickness and unemployment, and is sold alongside credit agreements such as credit cards, personal loans, mortgages and so on.

Although PPI can provide valuable cover, the market has been tarnished by anti-competitive behaviour, profiteering and widespread mis-selling by lenders. Read Rip-off insurance: Get your share of £200m compensation.

Take a look at Avoid rip-off redundancy insurance too which is another type of costly PPI you shouldn’t touch.