Where Does It Go? - UK Money Blog £

A contract (policy) in which an individual or entity receives financial protection or reimbursement against losses from an insurance company. The company pools clients’ risks to make payments more affordable for the insured.

There are many insurance options available to the average UK citizen, some are compulsory (such as car insurance), some almost regarded as mandatory (contents insurance) whilst others regarded as a more a personal choice (mobile phone insurance)

All are designed to cover you in a scenario where you have an accident or loss that normally would be expensive for you to replace. The assessment of risk by individuals means some will be more cautious than others.

It is worth shopping around for insurance since it is a competitive market, and worth fully understanding your policies since you may accidentally cover yourself twice (for instance, some bank accounts give mobile phone insurance so you would probably not want the same service paid for twice)

Many loan companies also offer insurance on your repayments, to protect the loan from defaulting.

Should you wish to claim on your insurance, you often need to pay an “Excess” which is an amount you pay upfront before the insurer pays the rest. This is typically in the region of £50-£100 and can be sometimes be increased to give you lower premiums. This also discourages the insured to make claims for minor items.

Insurance companies often offer No Claims Discount discounts on your premiums if you have not claimed for some time. This can further discourage people from claiming unless there is a real need, in order to keep their discount.

Insurance companies can also offer to protect your No Claims Discount which would keep the discount if you do ever make a claim, although this comes at a higher premium.

Policies often have exceptions they will not cover, or require special conditions - for instance in a post code that is considered risky, you may need to install a burglar alarm to get even an offer of insurance from some companies.

Insurance premiums are worked out on the assessment of risk, and rely on most people not needing to claim. If you move into riskier circumstances, your claim will usually go up - this can result in some bizarre situations.

If say you get hit whilst in your car by another vehicle, statistically you are more likely to be hit again than the other driver is to hit another car - so even if the accident wasn’t your fault your insurance premiums may go up more than the premiums of the driver who hit you!

I recently got my insurance from the Halifax, and it was a pretty good deal so try there first.