Understanding junk insurance add-ons When buying or renewing a car insurance policy, insurers usually offer a list of add-ons that promise additional cover. While some, like zero depreciation cover or roadside assistance, prove to be useful, others have little or minimal value for the cost. These high-cost, low-value add-ons are referred to as "junk" insurance add-ons. They may be added to your policy without proper explanation, increasing the cost of your premium without significantly enhancing your cover.
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Common examples of junk add-ons Some of the most widely criticized add-ons include coverage for very rare and unlikely events, such as key replacement insurance, low-claim limit personal effects cover, or engine cover for vehicles still under guarantee. Others will duplicate benefits already provided by manufacturer guarantees, credit cards, or separate travel and medical insurance policies. The problem isn't that these add-ons are evil per se, but that their cost typically outweighs the actual risk and probable pay-out.
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Why junk add-ons persist in car insurance These add-ons are offered by the agents and insurers since they are easy to sell and have high profit margins. Consumers, in haste to finalize the policy, might silently purchase these without going through the terms and conditions. Some add-ons are also retailed using a fear pitch, highlighting unusual circumstances to charge extra for "peace of mind." Over time, such unwanted additions can inflate your insurance premium tremendously without offering related value.
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How to find and remain clear of excess extras To identify the probable junk add-ons, start by reviewing each voluntary coverage component on your policy and considering how much it applies to your driving habit, vehicle age, and existing coverages. Divide the cost of the add-on annually by the maximum amount you could possibly get back. If the cost is excessively high compared to the benefit, consider dropping it. Lastly, find out whether you're already covered elsewhere for such things under your manufacturer's warranty or free-standing personal insurance policies.
Taking smarter insurance decisions Don't buy any add-on until you ask the insurer for a clear statement of what it covers, what it does not cover, and how you make a claim. Attempt to retain must-haves like zero depreciation cover for new cars, roadside assistance for long-distance driving, or return-to-invoice cover for expensive cars. Avoiding unwanted add-ons of small values will assist you in keeping your premium expense and making sure your car insurance policy provides immense protection when you actually need it. Some limited scrutiny at the beginning can lead to huge savings along the course of your policy.
