There was once a time when the only insurance you could buy was for your car, home, life and maybe a holiday.
Policies were supposed to be a lifeline in the event that disaster struck and an unforeseen circumstance left you drastically out of pocket.
But after squeezing as much money as possible out of these customers, insurers have started to look at other ways they can cash in on the way we live our lives.
These days firms are flogging cover for anything and everything — from the risk that your suitcase might bump someone on the head during a coach journey to payouts for damaged parcels. You can even buy cover for your Sky TV box.
Drama: Ticket insurance for shows such as Charlie And The Chocolate Factory might be unnecessary
These policies may cost only a few pounds each, but they make a mint for firms — up to £4 billion a year.
Shop staff are under huge pressure to sell these deals in a process known in industry jargon as cross-selling.
Shoppers online are tempted into taking them out by accidentally clicking on screen tick boxes.
But a Money Mail investigation has uncovered that many policies are riddled with sneaky exclusions. Some are virtually worthless because customers have the same protection for free under consumer law.
The Financial Ombudsman says it is getting a steady stream of complaints from customers duped by misleading and complex terms and conditions — or frustrated by harsh exclusions.
James Daley, founder of consumer website Fairer Finance, says: ‘Firms are trying to sell insurance wherever they see an opportunity.
‘In most of these cases, the claims rates are incredibly low and the margin is incredibly high, which is why everyone is tripping over themselves to sell these policies.’
TRAVELLING BY TRAIN OR COACH
It can often work out cheaper to buy coach and train tickets online before you travel.
But popular websites such as National Express and Trainline are seizing the opportunity to offer passengers insurance policies — with levels of protection that can be unnecessary.
National Express Coach Travel Insurance costs £1.50 per person per journey and covers you for personal accident costs of up to £20,000, personal possessions up to £750 and personal liability up to £1 million.
But when you drill down into the detail there are a number of caveats.
For example, you have to pay a £30 excess if you claim for lost or damaged personal possessions.
And if you can’t provide the receipt for the original purchase, the maximum it will pay out is £50 for one item — or £200 in total.
Dubious: Popular websites such as National Express and Trainline are seizing the opportunity to offer passengers insurance policies — with levels of protection that can be unnecessary
You can also claim for only £200 of valuables — which isn’t enough to cover today’s typical £500 smartphone. And if you break your phone while you’re using it, the cover is void.
Only £50 of lost cash is covered — after you’ve paid the £30 excess.
But under National Express’s conditions of travel, if the firm’s at fault for damage to your luggage it pays out up to £500, regardless of whether you buy insurance.
A National Express spokesman says: ‘As outlined by the policy itself — which explicitly advises people to check it provides the cover they need — in certain circumstances an excess fee and some exclusions apply.’
Trainline’s policy costs £1 per journey, so £2 for a return trip.
Underwritten by Columbus Direct, it covers customers if they miss their trains as a result of sickness or other specified reasons. It also includes compensation for delayed journeys.
Yet passengers are automatically entitled to compensation for delays from rail companies.
In fact, you’re more likely to get a refund that way. For delays over an hour you’re entitled to at least 50 per cent of the price you paid for single journeys and 25 per cent for a return. If the trip is cancelled and you decide not to travel, you can claim a full refund.
By comparison, to claim on Trainline’s policy you need to be delayed for at least four hours.
James MacColl, of the Campaign for Better Transport, says: ‘It’s a poor state of affairs that so many passengers are not getting the compensation they should by law for delays and disruption. Passengers should not have to pay extra for insurance on top of the already high cost of a ticket.’
A Columbus Direct, spokesman on behalf of the Trainline, says: ‘If customers are entitled to compensation they can claim £50 in addition to any compensation being paid by the train operator for the delay.’
BOOKING TICKETS IN THE WEST END
Most theatre ticket booking websites urge customers to take out insurance policies. Ticket Factory and ATG Tickets offer policies that will pay out if you miss a concert or if it is rescheduled.
The Ticket Factory — which sells passes to music and theatre shows — urges customers to pay an extra £2.25 per ticket for a ‘worry-free purchase’. But customers without insurance can usually get their money back if an event is postponed.
You are entitled to a refund of the ticket price, though not booking fees.
See Tickets pushes its Ticket Plan Cancellation Protection policy to customers when they book.
Ticket protection: Most theatre ticket booking websites encourage customers to buy ticket insurance
This says it will refund you if you miss a show because you have an accident, fall ill or suffer a ‘specified unforeseen circumstance’.
But there are several glaring exclusions. It will not cover you if you miss a show due to an existing illness or what it considers ‘normal’ pregnancy symptoms.
And you must be able to provide a doctor’s report as proof you were ill. Hazel and Stephen Barker are £92 out of pocket after falling foul of this catch. The couple, from Kettering in Northamptonshire, had hoped to mark Hazel’s 60th birthday with a trip to London to see The Mousetrap.
They booked through See Tickets and paid £4 for the cover.
Four days before the show, Hazel’s 90-year-old father, Frederick, lost his two-year battle against cancer.
They cancelled and Hazel tried to claim back the cost of the ticket under the plan.
But a brief letter from Ticket Plan refused her claim, saying that cancellations caused by the death of someone suffering from a pre-existing illness were not covered.
‘I thought it was so insensitive that they could not even allow us to rebook our tickets,’ says Hazel.
‘My father had many ups and downs while he was ill, so we had no idea that he would pass away imminently.’
A Ticket Plan spokesman says: ‘The terms and conditions of the refund protection facility are always presented clearly at the point of purchase.’
He adds that the Barkers’ case was ‘extremely unfortunate’ and that it tried to deal with refunds ‘as sympathetically and sensitively as possible’.
SENDING PRESENTS IN THE POST
For an extra charge, delivery firms offer insurance that pays out if your parcel is lost or damaged
You can get parcels delivered by a host of courier firms, not just Royal Mail. How much you pay will typically depend on how much your package weighs.
For an extra charge, firms including CollectPlus, myHermes and ParcelHero offer insurance that pays out if your parcel is lost or damaged while in its depot or out with a driver.
Parcel giant myHermes, for example, charges £5.80 for cover worth up to £250. Customers who refuse this are eligible for compensation of only up to £25, even if the contents are worth much more.
CollectPlus will insure items up to £50 for free. It then charges £1 if you want the package signed for, £3 for deliveries worth between £50 and £150 and £5 for those between £150 and £300.
But some firms have a long list of exclusions that can catch you out.
In myHermes’ terms and conditions 40 items are exempt, including electrical goods, antiques, jewellery, food and anything made from metals, ceramics or glass.
It means barely any items will be insured under the policy.
Its website does ask for details of what will be included in the parcel, but it won’t stop the customer buying a policy if they list an item that’s excluded.
A myHermes spokesman says: ‘Customers are presented with several clearly visible prompts to check whether the contents of the parcel are prohibited or excluded from compensation.’
By contrast, other parcel firms’ websites warn you if you’re sending an item that’s not covered.
Critics say these policies may not be necessary as you are typically covered by the law.
If you are using a courier company to send a present to someone and it arrives broken, complain to the company. The firm has a legal duty to deliver the item and should compensate you for any loss. Complain to the retailer if you bought the item through a shop’s website.
Marc Gander, of campaigners Consumer Action Group, says: ‘Surely it should be a parcel firm’s responsibility to ensure a parcel is delivered without being damaged?
‘It seems completely wrong that you must pay for insurance to cover against them not doing the job that you are paying then to carry out.’
WATCHING SPORT ON TELEVISION
When you take out a Sky TV deal, you’re sent a box to connect to your television. Like any gadget, these can break down, so Sky urges customers to take out insurance to cover the equipment.
The policy — called Sky Protect Plus — will cover customers for ‘unexpected breakdowns and faults’, as well as accidents.
But it costs up to a whopping £192 a year. And what is not made crystal clear is that customers are covered by a Sky warranty for a year after the box is installed.
Argos sells a replacement care policy to cover electrical goods and gadgets if they break or need repairing
Many customers complain they are bombarded with calls from salesmen at Domestic & General — which provides the insurance — pushing the cover as soon as they receive their box.
If you don’t take out the insurance and have to pay for a callout after the 12-month guarantee is up, you will have to pay £65.
A spokesman for Domestic & General says: ‘We would like to make it very clear that we do not ‘push’ customers into buying policies and take our responsibility to treat customers fairly very seriously.
‘We always ensure that we only speak to customers who have consented to be contacted.’
A Sky spokesman says that customers are charged for only one year of cover, even though the policy runs for two years.
‘The policy covers accidental damage and mechanical breakdowns, as well as offering priority engineer visits and unlimited repairs.’
SHOPPING FOR THE LATEST GADGETS
Stores selling electrical items and gadgets are on a massive sales drive to flog insurance.
The policies are huge money- spinners — but not necessarily for you. They’re frequently riddled with exclusions or double up on your legal rights as a consumer.
In some cases, policies cost almost as much as the item they protect, such as bike lights or torches.
Argos’ Replacement Care policy is supposed to pay out if your item is faulty or breaks down.
It costs 99p to cover an item that costs between £3 and £4.99 — that’s up to a third of the cost.
There are also a huge range of exclusions, including vague terms such as refusing to cover ‘failure to follow manufacturers’ instructions’.
In any case, under the Consumer Rights Act 2015, you are entitled to a refund if an item is faulty and you return it within 30 days. After 30 days you can ask for a repair or replacement for up to six months.
Once you’ve had the item for six months you still have a right to ask for a repair or replacement, but the retailer can deduct money for the use you’ve had from it.
You are not entitled to a refund or exchange just because you’ve changed your mind.
If you shop online, you benefit from extra protection because you can’t see and check the goods before you buy. In this case, you have a 14-day cooling-off period to inform the retailer you want to return the item and get a full refund — regardless of the reason. You then have another 14 days to post it back.
The seller must also refund the cost of a standard delivery. If you paid extra for a fast delivery, you won’t get this back.
An Argos spokesman says: ‘We endeavour to ensure our Replacement Product Care represents good value for money.
‘We make our terms and conditions available to customers prior to and after the sale takes place.’
A spokeswoman for the Association of British Insurers says: ‘The insurance sector is constantly innovating to suit the needs of customers, and products will develop in response to new trends.’