Is exotic insurance worth the cost?

[chahlley]

(Singapore/business Today Monday 13 March 2017)

On the Money

Is exotic insurance worth the cost?

Pet insurance launched in Singapore about three years ago.

PetCare from Liberty provides up to S$10,000 for medical expenses for dogs or cats,

while AIA’s Paw Safe reimburses dog owners up to S$1,000. Photo: ReuteRs

RichaRd haRtung today@mediacorp.com.sg

While life and health insurance policies are commonplace, insurance companies now offer coverage for risks you might not even have thought about. You can get insurance to protect your pets, artwork, golf game, cyber security risks or even your wedding. The real question, though, is whether these exotic insurance policies are worthwhile.

TYPES OF INSURANCE POLICIES
As our lives have become more complex and potential liabilities have increased, so too has the range of available insurance policies continued to grow.

Admittedly, some relatively exotic types of insurance, such as coverage for golf games, have been around for some time. NTUC Golf Insurance, for instance, pays for injuries while playing golf, third-party cover, equipment repair and even for drinks if you sink a hole-in-one.

Upscale art collectors have also been able to cover their collections. AXA, for instance, provides insurance for fine art as well as expert advice on how to manage a collection, from loss prevention to restoration.

The reason for such policies, Chubb explained, is that homeowner policies rarely cover the full value of artworks. “If a loss occurs, they may find that they receive less than what it is really worth.”

Over the past years, even more exotic types of insurance have emerged.

Pet insurance, for example, was launched here about three years ago. The reason, Pawrus co-founder Kevin Yeo explained, is that “for most pet owners, having a pet is the same as having a child. We want to provide them with the best care, and keep them safe from sickness and accidents”.

PetCare from Liberty provides up to S$10,000 for medical expenses for dogs or cats, for instance, while AIA’s Paw Safe provides a cheaper option that reimburses dog owners up to S$1,000.

Insurance is also available to cover the costs of weddings as well. “No matter how carefully you plan your wedding day,” Pacific Insurance Brokers said, “you may suffer a financial loss if a mishap occurs beyond your control and you are forced to cancel or postpone your wedding.”

Insurance can also cover damage to your wedding attire or photos. However, last-minute jitters leading to cancellation by the bride or groom may not always be covered.

Changing risks in society are changing insurance as well. As people spend more time online, cyber attacks are increasing and can hurt your ereputation or result in data theft.

AXA says its Cyber Protector is the first-ever online insurance plan here and protects consumers from an online breach by third parties. It even provides IT specialist support to remove content that damages your e-reputation and consultations with a psychologist for post-traumatic stress.

Along with policies such as these, in some places you can even insure against even more exotic events such as encounters with ghosts or abductions by aliens.

ASSESSING THE COST
A key question is whether these or other types of exotic insurance are worth the cost. While cost-benefit analysis in Singapore is limited, insights from other markets can be helpful.

Consumer Reports in the United States, for instance, reviewed whether pet insurance is worthwhile and advised pet owners to “consider skipping wellness coverage if possible and paying for it out of pocket”. It may be better to put money into an emergency fund to pay for pet medical costs rather than paying for pet insurance.

For weddings, the International Risk Management Institute concluded that insurance “may not be for every prospective bride and groom. If a small or inexpensive wedding is planned, the cost of the insurance may outweigh the benefits. For large and expensive weddings in which the bride and groom want everything perfect,” however, “this insurance may be a wise investment”.

The way to look at these types of insurance, then, may be to consider how much you would spend on veterinarians or a cancelled wedding or something else and how risk-averse you are. In many cases, the cost may far exceed the benefit. If you want peace of mind in case the unexpected does happen, though, an insurance policy could be prudent.

DO YOUR RESEARCH
If you decide to buy an exotic insurance policy, it is important to select the right one at the right price. Since policies for risks such as pet emergencies can be complex, United Kingdom consumer research organisation Which? advises consumers to do their research, and not get more insurance than they need, and to speak to experts about how much insurance they need.

One way to compare policies is to go online. As comparison site GoBear explains, besides telling you about the many insurance policies available, these sites condense big chunks of information into bite-sized portions and allow you to compare policies so that selecting a policy is easier. Insurance Market compares pet insurance, for instance, and can recommend policies based on your personal preferences.

Regardless of how you find the insurance, Consumer Reports advises consumers to download sample policies from insurance websites and read them thoroughly for limitations, exceptions, and co-payments.

BUYING INSURANCE
While the cost of exotic insurance may exceed the benefit, a policy can still provide peace of mind. If you do feel you need such a policy, it is essential to do your research and select the one that meets your needs best rather than simply choosing the first one you find.