Types of insurance
We provide a brief outline of the types of insurance here, but if you'd like more information, see our Product news section or the Association of British Insurers' (ABI) Information zone website. The ABI represents the interests of the UK's insurance industry and provides information for consumers and firms.
We regulate most sales of pure protection and general insurance.
What are pure protection and general insurance?
Pure protection insurance includes:
- term assurance (life insurance);
- critical illness insurance;
- income protection insurance; and
- payment protection insurance – includes elements of pure protection and general insurance.
See Protecting income or borrowing
General insurance includes:
- motor insurance;
- household insurance;
- some travel insurance (see below for travel insurance we do not regulate);
- health cover; and
- pet insurance.
See Protecting your health and Protecting your possessions
We also regulate the sale of legal expenses insurance – see below.
What isn't covered by our rules?
We regulate sales of most insurance products. However, our selling rules don’t currently cover:
- travel insurance sold in connection with travel arrangements where the person selling the insurance is also arranging the travel (but they will from 1 January 2009); or
- the sale of extended warranties on non-motor goods (such as on electrical goods) where the person selling the insurance is also providing the goods.
Even where our rules don't cover the sale of a policy, they do cover the insurance company providing the policy, providing they are based in the UK and regulated by us – if so you will still receive a summary of the policy – see Getting help.
Buying insurance
You don't have to take out most insurance but for peace of mind, you may wish to consider some. You can try our Financial healthcheck to help you prioritise your goals.
Generally, firms selling insurance and those providing insurance cover (underwriting the risk) have to be regulated by us, or be the agent of a regulated firm. There are some exceptions, for example travel agents that sell travel insurance do not usually need to be regulated by us.
Regulated firms and their agents are put on our Register and have to meet certain standards. Always make sure that the firm you use is on our Register before handing over your money. If they aren't regulated by us and things go wrong, you won't have access to complaints and compensation procedures. To find out if a firm is on our Register, see Check our Register.
You can buy insurance directly from insurers over the phone, internet or by mail, but you can also buy insurance from other types of firms such as banks, building societies, insurance brokers, financial advisers, mortgage brokers, or supermarkets - see Getting help.
Get the facts
Insurance differs in what it covers and what it doesn't (the exclusions). Read the key policy information that the insurance company will give you to find out exactly what you're getting and use it to shop around and compare other policies – see Getting help.
Whatever type of insurance you decide to take out, always:
- ensure the firm is authorised by us to sell insurance using Check our Register.
- disclose the full facts when applying for insurance – if you don't, you could invalidate your policy and the insurance company will not pay out in the event of a claim;
- read the key policy information for exclusions – to ensure that you choose the right policy for you; and
- shop around using these documents to ensure you get the best deal for you. Some policies might be cheaper than others, but they may not offer the same level of protection.
Legal expenses insurance
This is a way of protecting yourself against some of the costs involved when funding a legal dispute, which can be very expensive. The cover often provides for legal advice helplines, as well as the costs of appointing solicitors, expert witnesses and representation if the claim goes to court.
It can be bought with some insurance policies. For example, some companies selling motor and household contents insurance may include this cover as a free add-on, while others give you the option to attach the cover for an additional premium.
If you've decided you want this type of cover, check your motor or household contents insurance policies – you may already have this cover written into your insurance.
You should also check your insurance policy documents carefully to make sure you understand what you are covered for, the level of cover and any limitations that apply. For example, in most circumstances you may not be able to choose which lawyer is instructed – the insurance company usually appoints a lawyer to act for you.
Also this type of cover normally allows the insurer to withhold or withdraw funding if there isn’t a 'reasonable prospect of success', which is usually interpreted to mean that you have a 51% or better chance of winning or defending your case.