One of the most popular search terms on the Internet is 'no deposit insurance'. Most of the people searching for this are looking for insurance for either a house or a car, and they either can't, or don't wish to, pay for a full year's premium in advance. Does it actually exist, though?
The answer is no, it doesn't, and never has. There are several reasons for that, beginning with:-
An insurance policy is a contract between yourself and the insurer. The terms of this contract are that you pay a premium, and in return the insurer guarantees to indemnify you against certain risks. These can include accidental or malicious damage to your house or car, sickness of yourself or someone who you are financially reliant upon, death, disease, or all manner of mishaps that can befall we human beings. Even though these policies can be many and varied they are all subject to one thing; contract law.
No insurance contract is legally binding unless the person who is being insured hands over what is known as a consideration. This is a price which is given in exchange for the promise of the insurer to carry out it's part of the bargain. This cannot just be a nominal sum either; it has to be sufficient to make it worth everyone's while, but whilst this is very difficult to define, a pound or two certainly wouldn't be considered to be enough by a British court. What about a ten percent or twenty percent deposit plus a promise to pay the balance of the premium over a reasonable time? Yes, that sounds more like it.
We all want to be sure that, if we need to make a valid claim against an insurer, that claim will be met. It is therefore imperative that the contract is absolutely watertight, and fully compliant with the law, which means that we all have to hand over at least a reasonable deposit before the cover begins.
Believe it or not, many insurance companies pay out more in claims and overheads and they collect in premiums! Much of their profit comes from investing the money they get from their customers in advance. This is one of the reasons why premiums are so high at the moment; low interest rates over the last few years have cost many insurance companies a small fortune which they've had to make up for by increasing premiums.
This is one of the insurance industry's main problems. Let us imagine a situation in which an insurance company offered to pay out for claims before it had even received a penny in premiums. In an era of 'cash for a crash' it is easy to imagine just how many people will take out insurance policies without having to put any money down whatsoever, stage an accident or set fire to a house and then fail to pay any premiums. It would be commercial suicide for the insurers.
Insurers are aware that many people in Britain find it difficult to pay their premiums in full in advance. Many of them have produced low deposit, monthly paid schemes; but they are all watching this method carefully and gradually getting more and more choosy about which customers they will, or will not, offer a scheme like this to.
We have checked out the real facts about policies of this kind by carrying out hundreds of price comparisons on the most popular UK comparison sites. You can find out the truth by clicking the links below.
Or for just the main facts go to
This site is owned and managed by No Deposit Ltd of Kemp House, 152 -
160 City Road, London, EC1V 2NX. Telephone: 0330 311 2615. Registered in
England no. 11788202. Registered office: 20-22 Wenlock Road, London,
England, N1 7GU.
This site does not offer any financial advice. Before entering into any contractual agreements you should read all documentation carefully and seek professional advice if necessary.