One of the greatest errors people make when buying insurance is not comprehensively evaluating their coverage needs. Whether it is health, life, auto, home or business insurance, gaps can be left within coverage types that may result in financial risks. Some people buy unnecessary excessive coverage while some others did not assess their risks accurately and ended up being underinsured. Before purchasing a policy, check your financial standing, assets and possible liabilities to ensure that you will have sufficient protection.
Majority of people make the mistake of getting the least quote policy available. While price point may be an essential factor to consider, any policies priced cheaper will likely come with higher deductibles, limited coverage and numerous exclusions that will inevitably end up being more expensive in the future. Instead of fixating solely on the premium, spend some time comparing coverage limits, exclusions, reputation of customer service, and the claims process used by different providers to make sure you are receiving the best value.
Not Reading the Fine Print
Many insurance policies have stipulations and requirements in the terms and conditions that could drastically affect your coverage. Not reading the fine details can lead to issues when making a claim. Waiting periods for certain types of coverage, specific risk exclusions, or insufficient payout caps are all common in some policies. Always double check your policy, ensure to clear up any vague details, and confirm with your insurance company any uncertainties before signing.
Underinsuring or Overinsuring Your Assets
Underinsuring your assets is risky as it may expose you to financial consequences from theft, disater, or a lawsuit. A classic example are homeowners who do not file an updated claim and end up receiving insufficient compensation post a rebuilding after a natural disaster. On the contrary, overinsuring equates to paying higher premiums with no perks. Regularly check the value of your assets, and ensure your coverage is adjusted when necessary.
Not Bundling Policies for Discount Purposes
Insurance companies provide a discount if different policies are put together, for example, combining home and auto insurance or general liability and business property insurance coverage. Not taking advantage of these bundles will cost you higher premiums. Speak to your insurer regarding eligibility for multiline discounts and consider consolidating providers to save on costs.
Setting Your Deductible Too High or Low
A deductible is a stipulated amount the insured pays out-of-pocket before the insurance company pays for anything covered in the policy, which means before the insurance coverage begins. Some people set themselves with a high deductible to lower their monthly premiums where this comes back to bite them when a claim needs to be made. Some people set themselves with a low deductible only to accept higher consumption of premiums over time. Striking the right mix of low premium and high deductible makes certain claims manageable without putting too much strain on finances.
Ignoring Your Policy for Over a Year
With the passage of time, a person’s insurance requirements change due to increased income, new assets, business expansion, or even lifestyle changes. One of the common mistakes made by a majority of policyholders is that they get insurance, and then forget about it completely. This oversight may result in paying unnecessarily for protection, or being underinsured. Conducting a policy review helps in addressing such issues, and completing such reviews at least every year will help ensure your needs are met and that your coverage is still updated throughout the duration of the policy.
Leaving Out Crucial Information
There are people who, while applying for insurance, make omissions or inaccuracies in an attempt to get a lower premium rate. This could result in denied claims, and in some cases, cancelling the policy altogether. Most insurers carry out very detailed reviews, and should they find discrepancies in the application you submitted, they would probably refuse to pay for damages or losses that you may incur. Therefore, it is important to provide truthful information when purchasing any kind of insurance policy so that you receive the coverage you expect.
Postponing the Buying of Insurance
Numerous individuals postpone purchasing insurance because they feel as though they do not need it at the moment or are looking to cut costs. Nevertheless, unplanned incidents such as accidents, health-related issues, and other forms of misfortune can arise at any given moment. Taking too long to get insurance may prove to be financially draining in the event that something negative does take place. At times, postponing insurance can result in additional premiums, which can be start contributing to paying for life or health insurance due to rate hikes with age or diabetes and other medical conditions.
Ignoring the Customer Reviews and Reputation of the Insurers
Using the services of an insurance company whose reputation you don’t know can be very frustrating when you have to claim because of the poor customer service reputation those companies have. Some of them are known to have poor customer service, slow claims payment, or even a notorious reputation for denying claims that should be paid. Take time to confirm what other people say about the policy you intend to purchase, read customer reviews, check ratings on other platforms, and try to get word of mouth referrals so that you can get the best insurance providers.
Not Knowing the Claims Process
Most individuals who have taken out policies fail to appreciate that there is possibility of having to claim on the policy at some time in the future. This can bring some frustration for you if you do not understand the required steps to complete the documentation to assist the claims payment or issues step of leaving the claim behind you open to abuse by fraudsters. Knowing the requirements to the fundamental documentation, known submission deadlines to claims, and all the processes motivated can make life easier in case you do have to access the insurance.
Cancelling Insurance Without a Replacement Policy
To save money, some individuals remove their policy without having a replacement policy which puts them at risk during the coverage gap. For instance, driving with no automobile insurance or running a business without liability coverage can financially cripple an individual if lawsuits or accidents occur. Always put a new policy in place before canceling an old one to ensure that the individual does not go uninsured.
