Three Key Insurance Advices to Help You Choose Insurance
Which types of insurance are sensible, and which should you avoid like the plague? If you start thinking about insurance from the insurance company’s point of view, the picture will become a lot clearer.
Insurance companies want you to see them as your protectors. TV commercials depict insurance agents racing to the rescue after someone has been rushed to the hospital or suffered an automobile accident. The insurance company is trying to send you a message: “Don’t worry. Just buy our insurance, and we’ll take care of you.”
But as we have seen, insurance companies aren’t in business to take care of you they’re trying to make money. They want to sell you as much insurance as they possibly can, whether or not you need it. In fact, the less likely it is that you’ll collect that insurance, the better it is for them, because then they get to hold on to your money. So don’t let insurance companies play on your worst fears. Instead, carefully evaluate the pros and cons of each kind of insurance. There are definitely risks worth insuring but there are also some types of insurance which you should avoid. These three key insurance advices should help you choose insurance and beat the insurance companies at their own game:
Insurance Advice No 1
Don’t insure small, unusual risks. Policies like auto earthquake insurance (especially if you live in Idaho) or rainy day vacation insurance are generally a waste of money. It’s very unlikely that your car is going to be wiped out by an earthquake. But even if you’re incredibly unlucky and this does happen, it won’t bankrupt you. It’s a risk that’s not worth covering by insurance. Unless of course you have a very expensive or rare car. Then you actually might want to consider insuring it against everything. Same goes for vacation insurance. Why waste money on a premium for a small inconvenience that might or might not occur? If it really does rain on your trip to Arizona, then you can use the money that you would have spent on the premium to pay for indoor activities, like seeing movies.
Insurance Advice No 2
Avoid “convenient” ways of buying insurance, like purchasing travel insurance overseas from that box in the airport, or signing up for the rental car insurance policy offered to you at the rental car counter. Insurance companies know that impulses strike consumers when they are the most vulnerable and that it’s an easy, almost irresistible way for you to buy car insurance. As a result, they know that even if they charge more, you’ll still be likely to buy it. Don’t fall into this trap. First of all, these types of insurance are almost always unnecessary. The possibility that your plane will crash is slim, and the auto insurance you already have on your car at home will most likely cover you for the few days you use the rental car. But if you really do feel the need to buy extra insurance for these kinds of risks, do your homework in advance. Purchase flight insurance or car rental insurance from your regular insurance agent before you leave for your trip. You’ll pay much less and will make a more informed decision. Insurance should never be an impulse buy.
Insurance Advice No 3
The fewer claims an insurance company pays, the higher its profits. Face it. When looking at an expensive claim, most insurance companies are going to spend extra time to make sure the claim is valid. So take the time to understand the fine print of any policy you’re considering. If it seems too good to be true, it probably is.
The most important thing you can do, though, is to make it very difficult for your insurance company to weasel out of paying your claim. Stacy, a 24-year-old journalist, recently purchased a deluxe, 64-inch colour TV. A week later, her apartment was burglarized, and the TV was taken. Unfortunately, when she filed her insurance claim, she had no proof that she’d ever owned this expensive TV. She couldn’t find the receipt, and didn’t have any photos showing the TV sitting in her living room. The result? The insurance company refused to cover it and gave her $250, their standard payout on a stolen television set.
The best way to protect you against unfair denials is to document everything. Take photos or make videotapes of your belongings, and save all of your receipts. Once you have auto insurance, make sure that you take a picture of your car and document any incident or problem on the road. And for your health insurance coverage & policy, you should save all of your medical receipts, bills, and other records of expenses. Throughout this article, there will be lists for you to inventory your possessions. Use them! This way, you’re laying the necessary groundwork to collect if your insurance company unfairly denies a claim. To protect your records (or copies of them), keep them in a safe place a fireproof, locked box, in a safe, or with a friend or relative.