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Financial Emergency

A financial emergency is an unexpected requirement for urgent additional funds which is not covered by an insurance policy, or an event which may lead to a substantial claim on an insurance policy which will take several months to process.

Typical financial emergencies may include:

  • Your old boiler breaking down outside its warranty period, and needing replacement (if you have no service contract).
  • A family bereavement requiring a long distance journey, hotel expenses and high-priced short-notice airfares.
  • Being unable to work due to illness, accident, or being made redundant. This can be covered by income protection or payment protection insurance policies, although these do not suit everyone.
  • A major mechanical fault on your car which is not covered by warranty or insurance.
  • Sudden failure of your business, or of your employer due to an en event such as the foot and mouth crisis, or a major fall in demand for your product or service. You can lower this risk by taking out income protection or ASU (accident, sickness & unemployment) insurance, although be careful to pick a policy which covers your needs without insuring yourself unecessarily for any cover you do not need.
  • Another dependant family member, such as a student at university, demanding additional cash from you.
  • A major fire at your house, which requires hotel and food bills which will take months to reclaim through your household policy.
  • The replacement of stolen items which are either not covered by your insurance policy, or for which only limited cover is available (e.g. £300 limit on camera equipment worth £1000).
  • Wrongful arrest in the UK or abroad, which requires a substantial bail payment.
  • A major delay in a flight or other journey due to bad weather or other circumstances, for which you are not offered adequate compensation. You should be particularly aware of the low levels of refunds offered by some of the new budget airlines.
  • Making a claim on an insurance policy with a high excess charge, or damage to a rental car which is not claimable on the insurance policy. Even surface scratches can end up costing several hundred pounds to repair, and many car rental firms will charge you up to £500 before you are able to claim on their insurance policies.


Our advice section has tips on dealing with financial emergencies.