We all need insurance of one kind or another, and as your family grows and changes, your insurance needs change too. But there are some common pitfalls to avoid when buying family insurance that could end up costing you — or leaving you underprotected — down the line.
Most families juggle more than one policy at a time. Life cover, mortgage protection, home insurance and motor insurance are the basics, and then there’s often travel insurance, pet insurance, school pupil insurance and more layered on top. Here are ten common mistakes to watch out for, so you can make sure your family’s cover is right for you.
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Common Mistakes When Buying Family Insurance
#1. Not Reading the Small Print
Always read the small print. You may need a more robust policy in some areas, or you may be able to reduce cover in others.
Check you’re not paying for extras you don’t really need. It’s easy to be talked into add-ons — car key insurance, gadget cover, and similar extras — that sound reassuring but may not suit your situation at all.
Go through the benefits on all your policies in detail, as you may not need the same level of cover for every family member.
#2. Over-Insuring
Being over-insured is something many of us are guilty of. When taking out cover, think about the actual value of what you’re insuring and match your cover to it. Only insure your assets for their payout value.
For example, if you insure the family car for more than it’s actually worth, you’ll likely pay a higher premium — but you’ll still only receive the car’s replacement value if you make a claim.
For health and life insurance, aim to get exactly the cover you need right now, rather than paying for more than necessary.
#3. Not Checking Across Policies
Don’t forget to cross-check with other policies you or your employer already hold. Your kids, for instance, may already be covered for some items through school insurance, so you might not need to duplicate that cover on your own health policy. Or your spouse’s workplace policy might already cover certain things.
Check what protection comes with your credit card too — many cards include purchase insurance for a set period after buying an item.
It’s also worth checking with your bank or other financial providers, as they sometimes offer add-on insurance — such as mobile phone cover — that can work out cheaper than buying a standalone policy.
#4. Not Matching Your Life Stage
Make sure you have the right policy for the stage you’re at now. It’s worth talking to an independent broker or financial advisor about your overall insurance picture, so you understand exactly what cover you and your family need at this point in your lives.
Life insurance is one to get right, since it needs to properly support your family if the worst happened. Many insurance providers offer online calculators that can help you work out roughly what cover you need now and in the years ahead.
Review your cover every year or so, to make sure you’re not paying for something you no longer need.
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#5. Under-Insuring
The most common example of under-insuring is home insurance. You need to insure for the rebuilding cost of your home, not its market value.
Contents insurance is another area where families are often under-insured, depending on what replacement would actually cost. Be careful about what is and isn’t covered — items like expensive flooring, high-end kitchens, tech and gadgets, artwork and jewellery usually need to be listed individually to be covered. Make sure your cover is enough to meet a real claim.
If you’re renting, take out your own contents insurance — a landlord’s policy generally won’t cover your belongings, and won’t cover your personal liability either.
#6. Not Shopping Around
Use comparison sites where you can, and shop around. Travel insurance, in particular, can often work out cheaper than expected with a bit of research. Most policy types can be quoted online, and a little due diligence can save real money over time.
When comparing quotes, make sure you’re comparing like with like. A big gap between quotes usually means the features and benefits aren’t actually the same — check the details of each plan before committing.
#7. Not Checking What Isn’t Covered
What isn’t covered is sometimes just as important as what is, so check the exclusions carefully.
Also check for any conditions attached to your cover. One mum, Cliona, found that her house insurance “only covers my wedding rings if I submit a valuation every 2 years” — the kind of detail that’s easy to miss until it matters.
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#8. Buying the Wrong Insurance
Read the benefits of any policy carefully before buying. Does it actually cover what you need?
Sometimes a slightly different policy will suit you better, or you may not need a particular type of cover yet, even though it might become relevant in later years.
#9. Not Checking What’s Sent Through
Make sure what you signed up for is exactly what you agreed to. Read your policy documents carefully when they arrive, and ask questions if anything is unclear.
Most policies come with a cooling-off period, allowing you to cancel without penalty shortly after signing up — so it’s worth reviewing the paperwork promptly.
#10. Not Availing of Discounts at Renewal
Don’t let renewals go on autopilot. Shopping around at renewal time can uncover savings or extra benefits you wouldn’t otherwise get. If you don’t have time to do this yourself, an independent broker can do the legwork for you.
For policies like life insurance, if you’re thinking about switching providers, check the penalties for surrendering your existing policy or changing your contract terms first — sometimes it’s better to stick with what you have until it matures.
For health, home and car insurance, check that nothing has quietly been dropped from your cover since the last renewal. And if you’re switching providers, ask your new insurer how they treat your claims history with your previous provider — this can affect your premium.
Insurance is there to give you peace of mind, and hopefully you’ll never need to make a claim. But if you do, following these basics should help make sure you’re properly covered when it counts.
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Frequently Asked Questions
How often should we review our family insurance?
It’s a good idea to review your policies at least once a year, ideally around renewal time. Life changes — a new baby, a house move, a new car, a change in income — are also good triggers to check your cover is still right for you.
Is it worth using an insurance broker instead of buying directly?
An independent broker can be helpful, especially for life insurance or if you have several policies to coordinate. They can compare options across providers and help you avoid paying for cover you don’t need, though it’s still worth doing your own research too.
What’s the biggest mistake families make with insurance?
Two of the most common issues are over-insuring (paying for more cover than an asset is worth) and under-insuring (not having enough cover to actually replace or rebuild what you’ve lost). Both are avoidable by taking the time to check values and read policy details properly.
Can we switch insurance providers if someone in the family has a pre-existing medical condition?
Generally, yes — having a pre-existing condition doesn’t automatically prevent you from switching providers, though terms can vary. It’s worth speaking directly with prospective insurers about how they handle your specific situation before you switch.
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- Tips on Financial Planning for Stay-at-Home Parents
Save This for Later
Insurance reviews are easy to keep putting off. Bookmark this article or save it to your favourite parenting folder so you can come back to it at renewal time.
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Have your say! Are there any other pitfalls for buying family insurance we’ve missed? Let us know in the comments below.
