Boiler, plumbing, drainage insurance

[John L]

Howdy all

I've been bombarded with heavyweight letters from Glow-worm trying to persuade me to buy insurance for the boiler that was installed in 2008, and also to buy Homeserve Plumbing and Drainage insurance.

I've been receiving them since the boiler was first installed: "Charming," I thought. "I pay 'x'hundred pounds for a new boiler from you, and you immediately start telling me it's going to fail sooner or later, and it'll cost me hundreds unless I subscribe to your insurance scheme."

Ditto the Homeserve letters (also from Glow-worm), which invite me to pay nearly £100p.a. to guard against failures that "can easily cost hundreds" (the scenarios are nicely illustrated of course).

I object strongly to these kinds of schemes, which seem to be basically a form of blackmail, and must certainly be successful on less wary, and/or more helpless people.

HOWEVER: I'm now concerned that the whole industry of plumbing and CH has gone the way that the motor bodies industry went some years ago: they're all in bed with each other, and the "cost" of jobs is tied not to what it really costs, but what the insurance companies are willing to pay out (which in turn drives up insurance premiums for "the punters").

So cutting the long story short: should I start forking out 200 quid a year to guard against disasters (100 for plumbing + 100 for the boiler), or should I continue on my sceptical path, and take a (genuine) punt against the odds?

Cheers John

[dom]

The purpose of insurance is to help you pay for stuff that you otherwise couldn't afford - like your house burning down.

If you can afford the bill, it will always be cheaper just to pay it when it arrives.

And you have your choice of who supplies the product/service - and don't have to deal with "But we already have your money (sir), so you'll get whatever we think you should get (if anything at all)".

[Usenet Nutter]

And the Homeserve Policy I looked at when my Alpha Boiler 3 year Warranty ended a few weeks ago which cost about £8 a month only allowed 2 callouts in any year of the policy .

[Phil L]

Don't pay it.

Save the money and get a new boiler if and when it shuffles off this mortal coil....probably 10+ years down the line from now. In the meantime, you might need a plumber, but ring a reputable, local one-man-band type chappy and he'll fix anything that needs fixing at a reasonable rate, and the chances of needing him anually, *and* him charging you £200 a time are slim to zero, meaning you are quids in.

[js.b1]

1 - Homeserve covers emergency temporary repairs ONLY. Those repairs may themselves necessitate higher costs when properly repaired. You may already have such cover under your house insurance.

2 - Boiler insurance comes down to odds. Probably not worth it whilst the boiler is 1-3yrs old, perhaps worth it year 4+ if your own diagonstic ability is limited and you can't get hold of a proper factory flowchart.

Car Warranty are a dangerous area. Certain car types are extraordinarily expensive to repair - any recent Common Rail Turbo Diesel can leave you with a bill for a new engine by a) design b) error c) mad diagnostics. Other "simpler" cars still leave you with the blown headgasket, damaged gearbox, top/bottom-end repair. Avoid automatics from anyone who doesn't know them well - they can be =A31500 repair plus fail again in short order. Many car supermarkets have hilarious terms & conditions like Carcraft; the warranty excludes normal wear & tear. Avoid particularly fancy cars from non-mainstream makes. Avoid popular small cars as they can be ridiculously overpriced compared to off-beat but reliable larger cars, where rust protection & components can be higher quality. Likewise the cost saving of super- whizzo engines can be negated by 1) servicing costs 2) failure costs

3) catastrophic cost.

There is a reason many companies lease vehicles 1) they get a deep discount because the private buyer subsidises the scale 2) if it really goes down the pan they have a means of exit 3) when they sell in 3 years the car has depreciated little compared to the price they pay. The private motorist bends over with a sign "Park Here" on their ass.

Honest John should be your first stop re car ownership re a) what to buy b) if you bought it what the risks are.

Boilers, well uk.d-i-y is as good a place as any. Drains, check your household insurance covers them - if not change to one that does.

Insurance is good for things like houses and things with single point of failure that is close to cost of new (TV panel, Laptop panel or mainboard/planar). Warranty is good for things like washing machines, hunt around for the free 3yr or 5yr deal. I'm astonished at what Argos/ Dixons/Comet get away with charging for warranty - but that's their business model.

Self insurance can be very effective, even 20/month or 30/month - you could have picked a commodities fund (broad, not just gold or oil), or emerging markets fund. After 3yrs you've enough for "Quite A Tooth Sucking Bill" :-) and since you accumulate monthly you even out the

+50% & -50% swings, ie, pick something very volatile that is not secular (Gold can be for example when the asset bubble does eventually pop). Alternatively pick things decorrelated such as a global equities fund at 20/month and global commodities fund at 20/month. Far better than paying =A35+8+12+20+18+42/month on various appliance, product, service insurance policies. Just keep it separate from everything else re "dip in" :-)