Insurance

The idea behind insurance is simple. Many share the risk for something that may not happen. The customer/client pays a fee to an insurance company to receive compensation if such things do happen e.g. for things lost, damage to yourself or others or accidents when travelling.

Insurance protects persons and belongings from economic losses

What is insurance?

The idea behind insurance is quite simple. You share with others the risk for something serious that seldom happens.

An insurance policy with an Insurance Company covers all or part of the economic consequences of something unpleasant and unexpected happening to you, your relatives, your house or your belongings.
For a more detailed discussion on risk see Dolceta Fact Sheet on Risk.

Remember, when you thinking of taking out an insurance policy, that social insurance already covers your basic needs when you are sick, unemployed or old.

In all EU countries public health systems, usually financed from tax, cover all or most of the cost for your medical treatments and part of your income losses if you are sick.
When showing their European Health Insurance Card (EHIC)nationals of a Member State, an EEA country or Switzerland have access to health care in all these countries in accordance with the legislation of the individual’s country. The national health insurance institution has to issue an EHIC card on request.
Public unemployment benefits offer income compensation when unemployed.
Most Europeans are entitled to public pensions when they reach a certain age.
Employers often contribute to complementary insurances, e.g. supplementary pensions or a work accident insurance.
Pupils are often covered by an accident insurance provided by the school.
If you find yourself insufficiently covered by social insurance and employers contributions you can take a complementary insurance with an insurance company.

There are many other risks, however that you need to cover yourself by taking out an insurance policy.

House owners need to insure their house against fire, burglary and other serious damages.
It is very expensive to replace lost furniture, clothing, electronics and household equipment. A household contents insurance covers such risks.
You may need travel insurance to cover costs for lost items and other accidents that may happen when travelling.
Your motor vehicles, pets, sports and leisure equipment and musical instruments also need to be insured, if they represent a significant value to you.
A liability insurance covers the cost of damage that you may cause to other people.
Having some insurances may be mandatory by law, i.e. liability insurance for car owners.

What needs to be insured, what can’t be insured and are there insurances you do not need?

Insurance is based on an agreement with an insurance company – called an insurance policy.

It is important to take the time and effort needed to understand what the policy covers and what it requires from you before deciding to sign it. The agreement describes in detail what the insurance policy covers and often also what it does not cover. Read ‘the small print’.
It is equally important to contact several insurances companies to compare their offers. Coverage and fees differ substantially between companies.
Make sure that it meets your needs and does not include items that are already covered by the State or another policy.
Do not hesitate to ask a consumer counsellor for advice. It is not easy to find the offer that best suits your needs.

The cost of the insurance policy depends on what the policy covers. Insurances against risks that often happen are more expensive than insurances against risks that seldom happen.

You can reduce the fee by choosing an ‘excess risk’ insurance, that only covers economic consequences of a loss over a certain limit, if you are able and willing to pay the costs below that limit from your own pocket.

Can insurance cover all risks? Do you need every insurance offered?

Everything cannot be insured.

The consequences of some accidents are too unforeseeable to be covered by an insurance policy, e.g. extensive natural disasters.

Some accidents might be excluded from a standard policy to reduce the fee. For example, certain sports are often excluded or very expensive if included because they carry a high risk of injury.

There is always a lot of text in an insurance agreement, describing what is covered and not covered, in what circumstances. It is necessary to study the text very carefully to find out if the policy really covers what you want.
It is often possible to cover risks excluded in the standard policy by paying a supplementary contribution.

Insurance policies often demand that you treat your belongings in a careful and responsible way.

You may for example get heavily reduced compensation for things stolen, if you forget to lock the entrance door when leaving the house.
Compensation for accidents resulting from drunkenness may also be reduced.

A household usually has a number of insurances covering different risks.

It may happen that you pay several times to cover the same risk to your house or your belongings. Such over insurance should be avoided because being insured twice does not mean that you will be compensated twice.
You can often do without the insurance offered by shops when buying durables (like electrical goods). Injuries to such items may be covered by the guarantee or by your family’s household insurance. Study the policy!

You may have complaints

How to complain is discussed in Fact Sheet 8 “Making a complaint”
Start by asking the insurance company for redress
If still having complaints contact: Financial Services Ombudsman
You can also approach FIN-NET, a financial dispute resolution network of national out-of-court complaint schemes in the EEA countries.

European cross border issues

EHIC and FIN NET are the only relevant cross-border functions. Insurance is still very national. There are of course some cross-border aspects, but these are probably not relevant at school, e.g. the need to further improve transportability of second pillar pensions rights and the need for common rules for third party liability traffic insurance. The European Commission is working on both these topics. At present, decisions on the right to compensation are taken by domestic insurance companies even if the damage has happened abroad.