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to have or not to have: that's the question

In the days well before digital photography we had the box Brownie camera and it was sensible practice to take at least one extra shot of the same subject, just in case the first one didn't come out. This simple precaution obviously came at a cost because there would be duplicate photos that might not be needed and the film would only last half as long; but the odd time when a head had been cut off or a finger had got in the way of the lens, the take-two routine paid off. That's what insurance is all about, the contingency plan to take care of the unexpected. At least it should be; but as with many aspects of this life, we don't always serve our own best interests.

Insurance is one of those things that tends to be shunted onto the back-burner because it is an option. Some may consider it entirely necessary and wouldn't be without it; but for many, this convenient safety-net comes at a price which is often dismissed as beyond the limitations of the budget. Also, paying out good money in case of a mere possibility is pretty much like a Lottery, except that any benefit is a recovery rather than a bonus. In other words, all you are likely to get back from an insurance claim only compensates for the value of something lost that has already been paid for, minus the cost to date of the premiums. So, do you or don't you? The following may help you decide:

Motor Vehicles
I've put this at the top of the list because automobiles are something most of us can't be without. They can also be very costly for vehicle owners who, for whatever reason, have chosen not to insure. On occasions, there is no choice. Loan companies insist on it as part of the deal, so too car-hire firms. In Australia, third-party insurance is compulsory and is included in the vehicle registration fee to protect persons injured as a result of an accident. That, however, is as far as it goes. Damage to other vehicles or property isn't covered and, as many discover after the fact, the cost can be financially crippling. Sure, a driver may have enough cash on hand to repair their own vehicle plus another, should they be at fault; but what if they are involved in more than a simple fender-bender? Consider an incident on a major road where one car clips another which veers onto the wrong side, ploughing into on-coming traffic. The damage may run into the hundreds of thousands, certainly much more than the price of an insurance premium. Having a relatively cheap third-party property-damage cover passes this responsibility over to the insurance company. Admittedly, repairs to the owner's vehicle wouldn't be included but, depending on its value, it might be cheaper to replace than the actual premium on a fully-comprehensive policy. If it isn't an old bomb, a fire-and-theft addition, albeit not totally adequate, might bring a certain peace of mind. Any which way, having no insurance at all could well be a recipe for disaster.

Before going out there completely unprotected, it would be worthwhile to check what's on offer, paying special attention to the level of cover. Aside from the vehicle itself, are you likely to be carrying anything of value which may not be covered on the basic policy? Then, there could be limitations relating to travel beyond designated boundaries such as Country or State borders, even lines of latitude - in Western Australia, special cover is needed when going North of the 26th parallel. Towing a separate unit such as a trailer or boat can also make a difference. Needless to say, anything being towed must be insured separately. Ask the pertinent questions, read the fine-print and never assume - insurance companies are far less accommodating after they've got your money!

Home and Contents
As far as repairs and replacements are concerned, most expenses involving the family home will come out of the owner's pocket. Paying the insurance on it should be one of those periodic household costs along with utilities and taxes; but that's not always the case. The cost of purchasing or building it in the first place could have stretched the budget to its limit, leaving very little spare cash, certainly none for non-essentials. Is this extra expense really worth it? Well, imagine a month or six later when the roof gets damaged in a storm. There's this to repair, plus whatever else is ruined by water leaks. Once again, a call to the insurance company should sort it out, assuming there is a current policy which is paid up to date. If not... And what about fire? Then there's the hoon who loses control and drives his car through the fence, across the yard and demolishes the front wall of the house. He's at fault, of course, and should be paying for any damage, which he may well do, if he's a rich boy, or has his own insurance!

Owning a property carries certain responsibilities. Having home and contents insurance should cover you for most eventualities. Damage as a result of fire, accident or negligence will usually be recompensed; but deliberate acts of destruction, particularly by members of the household, may be a bone of contention. Cover for losses from natural causes such as storm, lightning and flood will depend on the locality and the likelihood of such occurrences. For example, in an area subject to frequent high winds, the policy may exclude replacement of fencing. Which brings me to another consideration - the out-buildings. Sheds, gazebos and separate garages, plus whatever they contain, could need their own insurance, or at least a separate clause inserted into the agreement.

When renting, the landlord should take care of the actual building, but the contents are down to the tenant. Contents insurance is less expensive than a comprehensive package and is definitely advisable. It will guard against accidental breakages, loss from burglary or fire and other damage. Some possessions, however, may need separate cover. Such items can include works of art, antiques, jewellery above a certain value and expensive equipment like musical instruments. Hopefully, included in the contents insurance will be a public-liability cover. This protects against injury to persons other than the policy holder or damage to property. You may think this unnecessary, being the kind, considerate soul that you are; but you may be glad of it if a passer-by gets hit by a flying stone when you are mowing the front verge. And if a visitor, be they trespassing or not, falls into a hole you've dug in the garden and breaks a leg, you are legally up for it! As an afterthought, should your dog get out and bite someone, the insurer will want to know if it happened outside the boundaries of the property; if so, they will remind you that this is no longer their problem.

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