Question 1

What happens if my insurance company goes bust?

Accepted Answer

In the UK, the **Financial Services Compensation Scheme (FSCS)** exists for exactly this, and insurance is among the better-protected products — but the level of protection depends on the type of cover.

**What the FSCS is.** A statutory compensation scheme, funded by levies on the financial services industry, that steps in when an authorised firm fails and cannot meet its obligations. It is free to consumers and does not need to be claimed in advance.

**How insurance protection works.** The general structure is:

**Compulsory insurance** — principally **motor third-party** and **employers' liability** — is protected at **100% of the claim**, with no upper limit. These are compulsory by law, so the protection is absolute.

**Most other general insurance** — home, travel, pet, and similar — is protected at **90% of the claim**, with no upper limit.

**Long-term insurance**, including life assurance and annuities, is protected at **100%**.

**Check the current FSCS position** before relying on any figure, since limits and categories are reviewed.

**What is and is not covered:**

**The insurer must be UK-authorised.** This is the critical check. Cover bought from a firm regulated elsewhere may not be protected, which is one practical reason to be careful with unusually cheap policies bought online.

**Both claims and unexpired premium** can be covered — if the insurer fails mid-policy, you may recover the unused portion as well as pending claims.

**Brokers** are covered separately for advice and arranging failures.

**What actually happens in practice.** Insurer failures in the UK are uncommon, because the regulatory regime requires firms to hold capital against their liabilities and the PRA supervises solvency. When a failure does occur, the usual outcome is an orderly run-off or a transfer of the book to another insurer, with the FSCS covering shortfalls.

**What you should do:** check the firm is on the **Financial Services Register**, keep your policy documents and claim correspondence, and if you learn your insurer has failed, contact the FSCS or the appointed administrator rather than cancelling and assuming you have lost everything.

General information, not financial advice.

Question 2

What happens if an uninsured driver hits you?

Accepted Answer

You are not left with nothing, but which route you use depends on your own cover, and the consequences differ. If you have comprehensive insurance. Your own insurer will handle the repair or

Question 3

What is employers' liability insurance, and is it compulsory?

Accepted Answer

Employers' liability (EL) insurance covers an employer's legal liability for injury or illness suffered by employees arising out of their work — and in the UK it is compulsory by law for almost every

Question 4

Is legal expenses cover on my insurance worth having?

Accepted Answer

Legal expenses insurance (LEI), usually sold as a modest add-on to motor or home policies, funds legal costs for pursuing or defending certain disputes. Whether it is worth the money depends on what

Question 5

How do I complain about an insurance company?

Accepted Answer

Through a two-stage process, and the second stage is free, independent and has real power — which many people do not realise. Stage one: the insurer's own complaints procedure. You must exhaust this

Question 6

What is the difference between third-party and comprehensive car insurance?

Accepted Answer

The difference is whose losses are covered, and the names describe it fairly literally. Third-party only (TPO) is the legal minimum in the UK. It covers injury and damage you cause to other people —

Question 7

What is a no claims discount and is it worth protecting?

Accepted Answer

A no claims discount (NCD), sometimes called a no claims bonus, is a reduction applied to your premium for each consecutive year you insure without making a claim. It builds up — commonly around 30%

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