Ditch These Rip-Offs And Save Money

The credit crunch means that many people could be tempted to ditch some insurance policies to save money. So which insurance policies do you really need and which could you live without?

Travel insurance

According to Sainsbury's Bank one in four people travel abroad without travel insurance so would not be fully covered in the event of any cancellation, medical emergency or theft of personal belongings. Although Brits get free basic medical treatment in the EU, it could cost you more than you think if you have to be flown home early because you're ill.

Do you need it? It's a good idea - I wouldn't travel without it.

Home insurance

Home insurance is divided into buildings insurance and contents insurance.

Buildings insurance is compulsory if you have a mortgage, although you are not obliged to buy it from your mortgage lender. As always, if you shop around, you should be able to get it cheaper. If you're renting, you don't need to worry about it.

Contents insurance will cover you if you get burgled or your possessions are damaged in a fire or flood. There's no legal obligation to have it but it's a good idea if you couldn't afford to replace everything.

Do you need it? Mortgage borrowers definitely need buildings insurance. And personally, I think getting contents insurance too is a wise move.

Heating cover

Heating and boiler insurance policies cover you in the event of your heating system and hot water packing up and are explained in more detail here. Some policies also cover plumbing and annual inspections and cost anything from £99 a year upwards. The average boiler repair bill is about £500 so having it insured can be a good decision.

Do you need it? Maybe - if your boiler's old you probably do. If it's new it will be covered by the manufacturer's guarantee for the first year and is unlikely to break down in the first couple of years anyway.

Car Insurance

Driving uninsured is illegal but if you just have an old banger it will be cheaper to get third party, fire and theft car insurance rather than comprehensive cover, as you car may not be worth repairing.

Do you need it? Yes, definitely. You'll get points and a fine if you're caught driving uninsured.

Breakdown cover

Car breakdown firms such as the AA and RAC will come and rescue you if you fall victim to anything from a flat tyre to blown gasket while out on the road and, if you have home start cover, at your home too. Policies vary on what they offer with some covering the person rather than the car and others stipulating how far they will transport you and your car in the event that it can't be fixed at the roadside.

Do you need it? Yes, probably. Unless you reckon you have the knowledge and tools to fix your car yourself.

Mobile phone

Around two million mobile phones are stolen each year, so when you buy a phone most providers will try to sell you insurance. This can add £5 to £10 a month to your bill and should cover you if your phone is lost or stolen and reimburse you for any fraudulent calls made.

However, a replacement handset can normally be bought from as little as £40 and mobile-phone insurance policies tend to come with a lot of exclusions.

Do you need it? No. If you have a very expensive all-singing all-dancing handset the best option is to get it covered on your home insurance.

Extended warranties

Extended warranties for electrical items are often sold at the point of sale and are intended to pay for repairs to, or replacement of, an appliance after the manufacturer's guarantee finishes.

This kind of insurance can be expensive compared to the price of the actual product. For example at Comet a Tom Tom One sat-nav system is on sale for £119.99 but a three-year extended warranty for it will set you back £39.99; a massive 33% of the price.

Do you need it? Probably not. This kind of insurance is rarely worth having but if you decide you do need it cheaper cover can usually be found by shopping around or buying a multi-appliance policy.

ID theft protection

Having your identity stolen is a stressful experience and fraud prevention group Cifas says there are about 350,000 victims each year. Once they have stolen your ID, fraudsters might use your personal details to apply for credit cards or loans.

Do you need it? No. Although a number of companies including Halifax and the Royal Bank of Scotland, offer ID-theft protection, it's generally a waste of money. You'd be better off just taking more care of your documents and personal details and keeping an eye on your bank statements and credit file for anything dodgy.

Compare all sorts of insurance at Fool.co.uk