The Association of British Insurers recently reported an increase in the volume of fraudulent insurance claims that its members were receiving. It is generally assumed that in the wake of the credit crunch people are making claims on policies where they have misreported their personal circumstances in order to deliberately reduce their premiums. Unfortunately, when it comes to making a claim the insurance policy is deemed to be invalid as it was calculated on innaccurate information.
At the same time research has suggested that people consistently underestimate the value of their possessions. One recent survey even went so far as to suggest that the average British home is under-insured by as much as ?8,000.
This could, of course, be accidental and due to people not keeping abreast with changes in the value of their possessions. Fluctuations in the price of gold and other precious metals has meant jewelry is now more expensive than ever, and inflation (until recently) could also have played a part.
All well and good but it's unlikely that the value of people's possessions could have gone up by ?8,000 whilst they weren't looking. It is likely that, as the ABI suggests, people are deliberately underestimating the value of their possessions to save money on their insurance.
Now, this isn't even one of those ideas that seems sensible on the surface. Whilst they might save money on their monthly bills, if they ever have to make a claim it's more than likely that the insurance company will declare the policy invalid and refuse to pay out. Of course the gamble is that they won't have to make a claim, but when you're talking about potentially hundreds of thousands pounds of damage, it surely is better just to pay for the right policy?
Whilst Britain as a whole under-insures itself another report has suggested that some people are accidentally doubling their insurance. Many expensive items these days are sold with their own insurance involved, but these items are already covered on the general home insurance policy and therefore the extra insurance is a waste of money.
The best insurance policy is the one that is most closely tailored to your specific circumstances. The more accurate you are the better value deal you will get and there is little point paying for a policy that doesn't protect you properly, if at all.
Home insurance is a vital product as it offers you financial protection to a degree that you couldn't get any other way. It's possible to get really good deals, even in the current economic climate, and one company that is worth a look is Co-Operative Insurance.
However, the best investors in the world can make huge profits no matter which direction stock prices take! When Enron Corporation's stock price plunged from US$90 to US$0.30 in 2001, after it was found to have hidden billions of dollars in losses through accounting fraud, and people had their entire life savings wiped put, there were also many smart investors who made millions in the process!
When the Dot Com bubble burst in 2001 and stock markets plunged by over 50%, smart investors made huge fortunes at the same time! Wouldn't you like to learn how to do this? Wouldn't you like to make huge profits no matter what the market does? While most people have to wait for a bull run in the stock markets to make money, you will be able to make money in a bear market and even in a prolonged period of consolidation (i.e. stock prices move sideways). chapter.
What many people do not know is how they can make money when they expect a stock's price to FALL. Traditionally, when stock traders expect a stock to fall from its current price of say, $50 to $35, they would SHORT SELL the stock. What this means is that they will SELL the stock NOW at $50 (without owning the stock) and they will then BUY it back later at the lower price of $35. So, by selling HIGH ($50) and buying LOW ($35), they make a profit of $15 per share.
One question that confuses most beginners is, "how do you sell stock you do not own?" Well, your broker will LEND YOU the shares to sell at the high price. You must then go and buy the shares at the lower market price (within a certain period of time) and return it to the broker. This entire transaction is done automatically when you short sell stock (also known as "sell to open" and "buy to close").
Short Selling Leads To Unlimited Risk of Loss
However, I do not encourage you to engage in short-selling of stocks unless you are extremely experienced. This is because if the stock does not fall as expected, you can suffer unlimited loss.
For example, let's say Osim's stock price is $1.60 and after posting disappointing financial results, you expect the stock to fall to $1.40. You short sell 10,000 shares at $1.60 and collect $16,000. However, you must buy back the shares within two days to return it to your broker. What if Osim's share price suddenly surges to $2? Then you will have to buy 10,000 shares at $2 and fork out $20,000. You suffer a loss of $4,000!
Talk to most people and the majority of them would only understand the concept of making money only when stock prices rise in value. In fact, many people only understand the concept of buying something at a low price and selling it at a high price.
As a result, the masses tend to panic and fear recessions, downturns and bear markets as it could wipe out their hard earned savings. They tend to sit on the sidelines until the time comes when the economy and market sentiment improves and prices start rising again.
Both Chris Kouton & Adam Khoo are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Chris Kouton has sinced written about articles on various topics from Insurance, Auto Insurance and Insurance. The Co-Operative Insurance. Let us help your needs.. Chris Kouton's top article generates over 6600 views. to your Favourites.
Adam Khoo has sinced written about articles on various topics from Recreation and Sports, Web Development and Computers and The Internet. Adam Khoo is an entrepreneur, best-selling author and a self-made millionaire by the age of 26. Discover his millionaire investing secrets and claim your FREE bonus chapter of his latest bestselling book 'Secrets Of Millionaire Investors' at. Adam Khoo's top article generates over 90500 views. to your Favourites.