A great author once wrote: “Assumptions are dangerous things to make, and like all dangerous things to make - bombs, for instance, or strawberry shortcake - if you make even the tiniest mistake you can find yourself in terrible trouble.”
Well, maybe not a great author, but a pretty damned good one – that’s Lemony Snicket in the children’s story The Austere Academy.
The point is particularly valid in the world of insurance; making even a small incorrect assumption risks invalidating your entire policy. And many people don’t realise their cover isn’t valid anymore until they come to make a claim – and can’t.
You’ll always leave the burglar alarm on. You’ve never had a conviction. Your car has no modifications. Does your insurer assume these are true? Are they? Here are some of the assumptions that could get expensive…
Assumption #1: No criminal convictions
It might not seem remotely relevant, but insurers often need to know if you have any unspent criminal convictions.
Failure to disclose could mean your insurance is invalid, even if you’re up to date with your premiums.
Some insurers and price comparison sites have been criticised in the past for assuming that applicants have no convictions, unless the customer makes an effort to state otherwise.
(MORE: Convicted driver insurance)
Assumption #2: You're fit and well
When you apply for life insurance or critical illness cover, you’ll usually be asked a string of medical questions.
The insurer, fairly understandably, assumes you’ll disclose everything that’s relevant, so don’t be tempted to keep quiet about any health issues, even minor ones.
For example, there’s a sad case in the papers just now of a man who died, only to have his life insurer refuse to pay on the grounds that he hadn’t disclosed he suffered pins and needles.
His cause of death was entirely unrelated to the pins and needles, and his family have launched a campaign to overturn the insurer’s decision. But it does illustrate how vital it is to be entirely open about any health issue, no matter how mundane it seems.
Assumption #3: If you have a driveway, alarm or a garage, you'll use it
Think very carefully about the information you provide an insurer with. If you reduce the cost of your home insurance by declaring that you have a burglar alarm, then the insurer will assume that you use it.
If you make a claim and it emerges that you didn’t bother switching it on, or didn’t turn all the locks, you could find yourself in difficulties.
Likewise, if you have a drive or garage then you may have reduced the cost of your policy by stating that the vehicle will be kept off road at night. If you’ve said you will then make sure you usually do – otherwise you’re not keeping your end of the bargain.
(MORE: Are burglar alarms worth it?)
Assumption #4: You'll buy enough cover
When it comes to contents cover, your insurer will assume that you’ve opted for the right amount of protection. But if you haven’t, you’re running a bigger risk than you may think.
Imagine a house where the possessions are worth £40,000, but the insurance is for £20,000-worth of stuff. That house is then gutted by a fire and all the contents are ruined.
An insurer will not necessarily pay out £20,000 just because that’s the limit of the cover. In fact, they may decide that the homeowner only had half the protection they needed, and so only pay out half of the policy - a maximum of £10,000.
Going underinsured can be even more expensive than you may realise.
Assumption #5: You'll follow the rules
Once you’ve bought your policy, your insurer continues to make assumptions – this time about how you’ll behave. These will all be in your small print and it’s essential to read them carefully.
If you don’t know what those policy restrictions and need to claim, you could find you’ve failed to keep to your side of the bargain.
For example, at least one ski insurance provider requires policyholders to wear a safety helmet on the slopes. If you fail to do so and have an accident, you could find the insurer refuses to pay out, even if your injury has nothing to do with your head!
Whatever insurance policy you’re buying, take a few moments to read the small print. Don’t assume you know what an insurer will deem acceptable – that’s one of the most dangerous assumptions you can make.
Of course, insurers make a fair number of assumptions when pricing your cover too.
For example, they will assume that a high-powered sports car is more likely to be involved in an expensive incident than a city car or micro-car.
You can protect yourself from nasty surprises by checking prices out before you buy a new car.
After all, it’s very depressing to pay £1,000 for a car only to discover it’s in a high risk insurance bracket and will cost £2,000 to insure. That’s especially true if you only work it out once you’ve already bought the vehicle.
Read the small print
Every insurer is different and each one is happy with different levels of risk. That means that assuming your new insurer will have the same rules as your last can be an expensive mistake.
Take the time to read through all your insurance paperwork, so that you know what you need to do in order to keep your cover valid.
Insurance is definitely an area where assumptions can make you feel like a bit of an ass.
Felicity is a freelance print and broadcast journalist, specialising in consumer affairs and personal finance. Her work appears regularly in the Independent, Mirror, Sunday Times and on the BBC News website. She is also the personal finance reporter for BBC Radio 5 Live’s Wake Up To Money show. On top of that, she is a frequent reporter and commentator for many other programmes and stations, including Radio 4’s Money Box, Sky News and BBC Radio Wales.
Filing a tax return for the first time? Don’t miss the 5 October deadline
Customers must register for self-assessment by 5 October or risk being fined
By Ruth Emery • Published
Is my pension safe? What does the market turmoil mean for your retirement savings
As the economy goes into turmoil, you may be wondering if your pension is safe. We explain what it means for your retirement pot
By Ruth Emery • Published
How to save on your home insurance and get the best deal
Home insurance is crucial protection but can be expensive. We highlight the ways to still enjoy the same level of cover but at a lower price
By John Fitzsimons • Published
8 mistakes that could invalidate your travel insurance
You don’t want to go to the effort of buying travel insurance and then find it doesn’t pay out when making a claim - we highlight some common mistakes to avoid
By Katie Binns • Published
Average home insurance premiums drop to record low - is now the time to switch?
Households get some “cost of living relief” as buildings and contents insurance prices fall
By Ruth Emery • Published
How to save hundreds of pounds a year looking after your puppy
Being a ‘pawrent’ undoubtedly costs money, but there are ways to keep those costs under control
By Emma Lunn • Published
How to claim for storm damage on your home insurance
With three storms hitting the UK in less than a week in February, we explain how to claim for damage to your property
By Ruth Emery • Published
Will a red weather warning void your car insurance?
Could driving in adverse weather, be it a heatwave or a storm, void your car insurance? We find out
By Alice Morgan • Published
Holiday refunds: how to get your money back if your holiday or flight is cancelled
Having a sound understanding of holiday refunds should give you peace of mind when you plan your next trip
By Hannah Nemeth • Published
New car and home insurance rules - what you need to know before 1 January 2022
Here's everything you need to know about the new car and home insurance rules, known as the General Insurance Pricing Practices
By Sue Hayward • Published