Preparing for possible redundancy

Availability of state help

If you are made redundant you are entitled to

statutory redundancy pay from your employer if you have been employed for more than two years. There is no help for the self-employed.

This is based on age, length of service and your pay. The maximum eligible pay at the time of going to press is £220 per week and the maximum number of weeks 30, so the most anyone can get is £6,600.

Job-seekers’ Allowance is paid for the first six months of unemployment, the current (2001) amount being £50.35 (£79 for a couple) if you are aged at least 25. It is not available to the self-employed. Thereafter Income Support takes over.*

Help with housing costs is also available to people out of work due to redundancy.

Taking out insurance

Sickness insurance and credit insurance (see above under incapacity) both extend to redundancy but there is currently no separate insurance available for the provision of income during unemployment.

Insuring your home...

When taking out a policy, think about the level of excess (i.e. self-insurance) you are prepared to bear, compared with premium saved. Have you got security arrangements (an alarm system and outside lights) which can achieve a reduced premium?

Are you covered for subsidence? If not, is there any risk of it?

Read the general conditions carefully. Do you know for how long the house can remain unoccupied before cover ceases? Does the policy include property-owner’s liability to third parties (e.g. if a tile falls on the postman’s head) and does it extend to workmen such as decorators?*

...and contents

There are two types of contents insurance:

• ˜ indemnity (the cheaper), which pays out current value only
• ˜ new-for-old, which pays replacement costs.

If you can afford the latter, it is much better.

Have you ever been round your home, room by room, to assess the replacement cost of everything? If not, you are likely to find it is more than you thought. Don’t forget things in your garage and garden shed.

Does the policy require special declarations for high-risk items like TV and video? Is there a requirement for special locks and security devices?

Optional extras

These include:

• ˜ all-risks cover for things you take out of the home – cameras, clothing (does it cover theft from your car?)
• ˜ money and credit cards
• ˜ legal expenses

There is an advantage in having the same insurer for house and contents – it saves arguments over things like TV aerials – but not if it is cheaper to go elsewhere.

Car insurance

There are three levels of car insurance:

• ˜ third party only – the basic legal requirement
• ˜ third party, fire and theft (TPFT)
• ˜ comprehensive, which adds accidental damage to TPFT.

The following factors affect the premium:

• ˜ level of excess – usually there is a minimum
• ˜ no-claims bonus, which can be protected by paying extra
• ˜ car age, value and annual usage
• ˜ whether the car is used for work
• ˜ number of drivers and their ages
• ˜ whether you have a garage
• ˜ whether you have an alarm and/or immobiliser.

Check these points in the policy wording:

• ˜ Does the insurer reserve the right to cancel the policy in the event of total loss?
• ˜ Is a replacement provided if your car is under repair?
• ˜ Do you lose your no-claims bonus even if an accident is not your fault?
• ˜ Are windscreens excluded from no-claims bonus?
• ˜ How much cover is there for personal items stolen from the car?
• ˜ Are the insured drivers covered when driving another vehicle? (If so, it will be third party only.)

The possible loss of your no-claims bonus means you should consider carefully whether to make a claim for a relatively small loss, but any accident must be reported.*

Summary points

• * Do you have cover for loss of income due to death or permanent incapacity of the

• breadwinner in your family?
• * Do you know how much statutory sick pay you are entitled to and for how long? Is it enough, or do you need insurance?
• * What about redundancy pay? Do you know your current entitlement? Do you need more cover?
• * It is dangerous to be under-insured. Have you checked your buildings cover recently? Have you included additions?
• * Have you been round your home to check the replacement value of the contents?
• * Are you aware of the provisions in your car insurance for no-claims bonus?