A new study by Fool.co.uk has revealed that one in three people have no idea of how much insurance cover they have, but they fork out over GBP1,500 on six insurance products per year.
One in 25 people have over a dozen different types of insurance policies, and one in seven people say they try to insure everything they can. But even they turn up their noses at twins insurance, which only pays out if an expectant mother has multiple births.
The research findings also show that one in 10 think insurance is a waste of money. Over half dislike insurance, but think it is a price worth paying. One in four tries to self-insure if possible. They put aside money that they can use if anything unfortunate happens.
The average consumer takes out six different types of insurances at a cost of GBP1,550 a year. This protects them for around GBP280,000 of unforeseen events. In other words, for every GBP1 consumers pay in premiums every year, they expect to get back GBP180 if anything untoward happens.
According to the study, insuring the contents of homes is by far the most popular. It is taken out by nine out of 10 people. It overtakes motor and pips building insurance, which are compulsory requirements if one owns a car or has a mortgage, respectively.
Pet insurance is taken out by one in seven people. It is almost as popular as mobile phone insurance that is taken out by one in eight phone users. However, the more expensive laptop appears to be less valued. Only one in 15 people have cover for the computer they lug around.
David Kuo, head of personal finance at Fool.co.uk, said: The key to buying insurance is only to insure against risk that you cannot afford to bear. So, if you buy insurance you don’t need then you are wasting money. But if you don’t buy insurance that you do need, then eventually your decision will come back to haunt you.
Not knowing how much insurance cover you have is just as bad. It’s tantamount to playing a card game where everyone can see your cards except you.