Assess risks before you buy insurance

INSURANCE — it's something that we all have to take out for motor vehicles.

We're also persuaded we ought to pay the premiums, just in case the worst happens in a host of other worst-case scenarios.

David Beckham's legs and feet are understood to be insured for a cool US$70m while supermodel Heidi Klum's pins were way down at US$2.2m. Bruce Springsteen insured his voice, Keith Richards his middle finger, and Dolly Parton, her top assets.

Most of us have more mundane needs such as house and contents, travel and medical insurance and cover for that time in the future when an appliance might break.

Before you decide which insurer to use, assess the risks very carefully and then consider the alternative options.

There is no legal requirement to insure your house and contents but, since a house is usually most people's largest asset, insurance does make sense.

Houses should be insured for the cost of rebuilding, not the market value. And use anything that you can think of to potentially reduce the premium.

Insurance companies will often give discounts for houses that have approved locks fitted to doors and windows, an alarm system and are located in a neighbourhood watch area. Insurers also believe that you become less of a risk as you get older. And the higher the excess you're prepared to pay, the lower the premium.

You have a dog, a safe, a bomb-proof barricade erected? If you've got it, sell it to the companies as a lever that might cut the cost.

Armed with all those persuasive weapons, use comparison sites such as www.confused.com, www.moneysupermarket.com and www.tescocompare.com to get the best quotes.

A combined insurance policy covering both home and contents is not always cheaper. Getting individual quotes may prove less expensive in the long run.

Comparison sites work well for a whole range of insurances but think about what you need, what you don't and the level of risk you're prepared to take.

Do you really need to have cover for a bicycle or laptop? What are the chances of someone stealing the family silver and would you replace it if they did?

If you're visiting Europe, get a European health insurance card which is a safety net for medical purposes.

Insurance is all about risk assessment on both sides. Think before you buy.