As we grow older and more responsible, it becomes clear that insurance is a wise choice. In early adulthood, most people have a false sense of invincibility but that can quickly fade after an accident, serious illness or just seeing someone who is struggling to pay medical bills that stacked up because they didn’t have insurance.
Fortunately, many people learn the value of insurance from afar and do not have to suffer through the difficulty themselves. But what that lesson does not teach is that there are many different types of insurance and just as many variations on each type of policy.
And sadly, the fine print of an insurance policy might as well be written in hieroglyphics. The complex nature of a policy and the legal wording make it next to impossible for most consumers to fully understand.
So you will want to be sure to cover all of your questions with an agent before you purchase a policy or you could be very upset with what appears to be insurance tricks when you go to file a claim.
Life Insurance Is Not That Simple
When you think of life insurance it seems like it should be a very basic and easy to understand policy. If you die then it pays off, there can’t be much more to it than that. But you would be mistaken. Most people get their life insurance policy as part of their benefits package through their employer. They purchase it because it is affordable and that makes it seem like an even better idea. But what most people don’t know is that the group life insurance policies are much smaller than a policy that you would purchase on your own. Group life is normally marketed at one or two times your annual salary which sounds good but is really not that much money. It would not take care of any long term bills that your family would incur if you were deceased. In addition, the policy ends if you leave the company. Group life insurance is a good idea, because of its affordability, if you use it as a secondary policy or supplemental policy to individual life insurance.
Your Car Insurance
Everyone knows that it’s very expensive to get your car fixed after you have been in an accident. So you buy car insurance and feel comfortable knowing that if you are in an accident then you will have coverage and it will be ok. You know that you have coverage to get your car fix, coverage that will pay any medical bills and coverage that would pay for any damage that you do to another person’s car or property. So it would be an inconvenience but life would go on. What you are assuming is that your insurance will also cover the cost of a rental car for you while your car is being fixed. It only makes sense that the rental car is covered since it is needed due to the accident. But that is not the case on many policies and the ones that do offer coverage for transportation expenses or car rental fees offer only a small amount. Most policies offer much less than the actual car rental cost and some offer as little as $20.00 a day! So plan on paying your deductible and the cost of a rental car unless you are willing to ride the bus while your car is being repaired.
Holes in Your Homeowners Policy
Homeowners insurance is a fairly broad policy which is designed to cover your actual property in case it is damaged as well as covering you if certain events occur on your property. Dog bites are a fairly common occurrence and account for over 1/3 of all homeowners insurance payouts. In 2016 that came to 18,123 claims in the US. But what many homeowners don’t know is that the insurance companies won’t insure your property if you own what they consider to be a dangerous breed of dog. The category differs from one company to the next but most include Pit Bulls, Rottweilers, Doberman Pinschers and German Shepard’s. If you own any of these breeds you must have that noted on your policy and pay extra to have homeowner’s insurance coverage. Wind and hurricane damage are other issues that can have some very odd verbiage around the coverage. Most policies have a home damage deductible of $500 or maybe $1,000 but wind and hurricane damage can have its own deductible hidden in the fine print. In some cases it states the deductible to be a percentage but not of the damage, it is a percentage of the value of your home. So you can easily end up with a deductible that is in excess of $10,000. Also be aware that most policies do not cover flooding. This is a separate policy that you need to purchase and then it will only cover damage done to the structure of your home but it does not cover any belongings that are damaged.
Insurance tricks, loopholes and fine print are just a part of every policy. So it is up to each insured to be sure that they completely understand what they are purchasing before they sign a contract. It can be a good idea to read the proposed policy and make notes about any section that is unclear or simply too vague. You might also want to do a quick search online to read about some other people’s experiences with issues that were not covered under their policy. You can add any items to your list that you can’t figure out from reading the policy. Then email your list of questions to your agent so that you will have a written record of their answers to all of your questions. You might not think of every possible odd occurrence, but you will get a good idea of how much is covered under the policy you are considering or if you should begin to search for another company to purchase your insurance policy from.