Packaged current accounts are designed to take the hassle out of insuring yourself and your possessions, but if you don’t check the small print, you could end up paying over the odds for a service you don’t use.
Insuring yourself up to the eyeballs can be a bit of a pain especially with so many policies on offer. There’s travel, home, car, mobile phone, pet and many more
Britain’s banks are now also in on the act offering to take the hassle out of having separate insurance policies by offering to insure you and your belongings alongside a current account for a monthly fee, usually between £5 and £25.
But does it really pay to have all your insurance needs grouped together?
Take this, for instance. A friend of mine recently lost a shiny new iPhone. Careless yes; but ‘fear not’, he thought, I’ve got mobile phone insurance with my bank. However, it transpired that he wasn’t covered, because the hefty price tag of an iPhone – about £500 – was above the maximum cover limit under his account’s terms and conditions.
All banks’ mobile phone cover limits vary, Lloyds will cover you up to £2,000 while some sit between £500 and £800. Only recently has it become standard for banks to cover some of the more expensive phones, like Blackberry’s and iPhone’s. Sadly, for my friend, he missed the boat with this one. But he should have been told this when he took it out.
It’s not just phones that could result in a mis-sold insurance package. There’s no point spending £20 a month on an account that includes travel insurance, home insurance and breakdown cover, if you live with your mum, never travel abroad and don’t drive, for example.
Some account holders could be wasting hundreds of pounds a year and could be far better off cancelling the packaged account and buying one or two services they will use from other insurers.
The Financial Services Authority recently expressed concern about mis-selling of packaged current accounts by banks in its Financial Risk Outlook for 2010, which said: “Packaged accounts may offer value for money for some consumers, but they may not benefit all. Consumers could be better off purchasing products individually or not at all. And some may find that where the add-ons are insurance products, they do not provide the expected level of cover.”
It goes on to say that customer’s should be aware of this and check the terms and conditions.
Read the small print
It might sound obvious but your policy document will outline what is and isn’t covered. So if you have a laptop worth £2,000 but the cover stops at £750, it’s probably not worth it. The same goes for mobile phones, travel, etc.
Banks do give a hard sell when it comes to these insurance packages and they’re often labelled as premium accounts, premier, or reward accounts so you think you’re getting something special. But remember, you’re the one paying for it so make sure it suits your needs.
Have you been mis-sold an insurance package? Or do you think they're great? Drop a comment below or email me your thoughts: lois.avery@confused.com
My own experience of this is yes! I took my home insurance policy out when I took my mortgage with the same provider. It seemed easier to do it like that. 4 years passed and I thought I would have a shop around. I found a near identical deal for £25 cheaper a month. £1200 extra I'd paid over 4 years. Stunning amount - it definitely pays to shop around.
Posted by: Kurt Jackson | 07/15/2011 at 10:28 PM