Have you got any idea how much you pay out on different types of insurance every year. Chances are if you sat down and worked it out you’d be shocked at the amount. It’s not just the amount, but also the contents of the cover that we are discussing in this article. Some elements of insurance are covered in other areas too, which means that you may well be paying for the same type of cover more than once.

Loss of income, legal expenses, theft and death are generally the most common areas that are easy to duplicate. It’s easy enough to make the mistake as some elements of cover are latched on without you really noticing. In other cases, perhaps a financial advisor arranged the cover and you never took the time to read the details properly. Hopefully, this article will help.

This issue recently came to light when the Financial Services Authority (FSA) released survey results showing that extras like breakdown recovery and legal expense cover are often tied to car insurance policies, and rather than being an optional extra, it actually takes the customer to make the phone call to remove the ‘option’. Another common crossover is permanent medical insurance (PMI) and payment protection insurance (PPI). People take out PPI with a loan or credit card, not realising that they are already covered by their PMI. So they end up for the same thing twice, which is pointless as there are no extra benefits to be had.

The Financial Ombudsman knows that this is going on, recognising the fact with the statement: “People… often do not realise until they make a claim that they have been paying for a policy that provides very little, if any, benefit”.

A case in point is Amanda Lariviere from West Yorkshire. Aged 42, she developed ovarian cancer and, following a bad reaction to chemotherapy, she was unable to work. She got a large tax bill in the post a few months later and decided to free up some money to pay the bill by re-mortgaging the house. The building society asked her to bring along her life insurance papers to help with the re-mortgage application, and then found that her life insurance policy was actually critical illness insurance instead. Amanda had been paying £80 a month for two policies with Scottish Provident and Norwich Union and hadn’t even realised that it was in fact critical illness cover. As Amanda had recently been through her ordeal with ovarian cancer, she was able to claim on both policies, and consequently received a £100,000 lump sum. That covered a lot more than just the tax bill, she managed to pay most of her mortgage off!

The policies listed below are all example of areas which could potentially cause duplication in your cover, so have a look to see if any of these cold apply to you.

Critical Illness insurance is sometimes included in cover provided by your employer. It’s well worth finding out before you purchase this sometimes expensive form of insurance.

If you have a company pension scheme then you may not need extra Life Insurance. Most company pension schemes have a death-in-service benefit that means if you die while you are still with the company, then a tax free lump sum will be paid out. This could be three or four times your annual salary at the time you died, possibly more, so it’s worth considering whether you really need that extra life insurance policy.

Two types of insurance overlap quite significantly and that’s Permanent Medical Insurance (PMI) and Payment Protection Insurance (PPI). PMI is a coverall insurance that means if you have an accident or become ill then you receive a monthly income that you can use to cover bills, rent, mortgage etc. However, many financial products sell PPI policies as an extra on their product only, and often we end up buying these add-ons without really noticing. If you already have PMI then this is a total waste of money as you are already covered. The only extra benefit with PPI is that you can be covered against redundancy.

Be sure not to make the mistake of letting these types of insurance overlap – if you are unsure about what is and isn’t included, read your PMI policy in full.

We don’t think that Mobile phone insurance is worth bothering with. If you have home insurance you may well be covered by that. Also, seeing as you will usually have to pay the first £50 of the claim, is it really worth it? We think going pay-as-you-go is the best thing to do if your phone gets broken or stolen.

You may notice on your car insurance and home and contents insurance an extra mention of Legal expense cover. It’s in these areas that a dispute over who is responsible for the damage is most likely to occur, so a number of these policies include it for no extra cost. However, it may be an optional extra, and if you’re a member of a trade union or a professional association, then you may already have some legal cover set up as a member’s incentive. Check this out first and you could save some money.

Some companies are trying to convince people to take out ID Theft insurance. There’s no need. If it does happen to you then you will only be responsible for the first £50 according to ‘Which?’ magazine, so the insurance is pretty pointless. You may also find that your bank will be prepared to waive all charges.

Ever bought a new watch and then accidentally dropped and broken it the next day? If you bought it on credit card then you’re in luck. Purchases are insured against accidental damage and theft for a set period of time, for example up to 60 days with Barclaycard. Before you got and buy another one, remember that the purchase may actually be insured.

Kings offer you access to life insurance, Car insurance and loans all online.