Todaya??s society is increasingly risk adverse, as health and safety regulations restrict all kinds of activities, such as pruning the village flower patch and using a ladder in a bookshop. Lawyers take on cases where people trip over paving slabs or hurt their thumb typing at a work computer. The message seems to be that although life can be dangerous, you can at least ensure that you dona??t suffer financially. Insurance companies have taken this message to heart and companies in Britain offer all kinds of deals. The UK insurance market is the third largest in the world, measured by total premiums paid.
It is easy to get caught up in this brand of risk management, but is insurance really a worthwhile investment? If you are not a high-flying model then leg insurance is probably not going to represent value for money. Hurricane investment may be worth considering in certain parts of America, but is hardly necessity in a quiet Cotswold village. Acts of God can and will happen, but they are rare catastrophes, which no one can prevent. The recent floods in Britain were momentous, but unusual. They also served as a timely warning against building on land liable to flooding.
Although some types of insurance are a modern innovation, the basic concept has a long and illustrious history. Insurance-type schemes existed in Ancient Greek and Roman societies and it is the repetitive nature of certain undesirable events, like fire and theft, which continues to make some types of insurance so popular.
Home insurance in the uk is a common and often necessary purchase. Some letting agencies will not let a property unless a tenant takes out home content insurance. Mortgage borrowers are required by lenders to have building insurance. In 2004, 77% of households purchased home contents insurance and 64% purchased home structure insurance (figures adapted from ABI).
There is a wide range of home insurance policies on the market, offering either content insurance, building cover or both. Many insure against crime, fire and accidental damage. The cost of home insurance depends on a number of factors, for example location, particularly if flooding seems a possibility, and the rate of burglary in the area. It is also possible to reduce premiums by taking out only a small amount of cover. This may be sensible if you are setting up home and do not have many valuable possessions.
However, insurers also recognize the problem of a??moral hazarda??, which means that if you are insured then you may behave in a more careless manner. In terms of home insurance this may mean that people invest less money in alarm systems and strong locks. To protect itself from this risk, the industry may include clauses designed to combat this a?? perhaps rewarding homeowners who fit an alarm or higher than standard locks.
The proverbial saying that a??home is a mana??s castlea?? suggests you should have at least a respectable defence system.
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Elisha Burberry is an online, freelance journalist and keen movie-goer from Scotland. Her interests include travelling, cooking and photography.
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