Every penny that we spend on a daily, weekly and monthly basis needs to be accounted for these days. Making sure that we get value for money is not the same as buying the cheapest you can find, and we need to be careful that in the hunt for good value we don’t actually end up getting poor value because we’re trying to spend as little as possible.
So many comparison sites are all about the ‘cheapest’. Cheap car insurance, cheap credit cards, cheap electricity. Page after page of comparisons show how little you need to spend, without necessarily giving you a true comparison of what you are actually buying by looking at what you get for your money.
Let’s take a really simple example. Third Party Fire and Theft car insurance is cheaper than Comprehensive cover, there’s no doubt about that. And Third Party Only is cheaper still. Why? Because if you have an accident only the car you hit is covered, you have to pay for any damage to your own car yourself. Does that make it better? Well in a small number of cases where you have a car that is worth very little you might take the risk, but in most cases Comprehensive cover will represent better value for money.
Here’s another. House insurance that doesn’t cover your personal belongings outside the house will cost you less than house insurance that covers your phone if you leave it on a bus. It costs less but is it as good for you? And all-risk cover will be more expensive than a house insurance policy that only covers your goods against fire and theft. But what happens if you spill a glass of red wine on a white carpet, or one of your children drives their new bike into your flat-screen TV?
What you really need to do is think about the cover that you really want to have and then make sure that you are comparing like for like when you go on-line, or speak to an insurance broker. Only if the cover you need is too expensive should you think about what parts you can do without.