Short-term insurance exists to offer peace of mind and, hopefully, adequate compensation when things go wrong. But as insurance company balance sheets — and anyone who has had to claim for a stolen cellphone or water-damaged laptop — will tell you, the odds are generally stacked well in the insurers’ favour.

The most obvious of these — increased premiums, particularly in the year following a large claim, revaluing overinsured items before paying out, and the inevitable excess payment — are somewhat understandable and fairly clear to consumers from the outset...

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