The most common mistakes in car, property and life insurance

The most common mistakes in car, property and life insurance

Insurance mistakes are often the reason that a person receives an amount much less than he expected, or even remains without compensation for damage. That, you see, is at least insulting. How to avoid such risks, read in our article.

5 main mistakes in life and health insurance

1.To think that the meaning of insurance is a profitable investment of money, and the only protection against accidents that can take away health or life.

In its meaning, endowment insurance is the capitalization of funds for a certain time. Income from this is possible, but the main purpose of the accumulated funds is not to increase welfare. The family will need them in the event that trouble happens to the insured person.

2. The amount of the insurance premium is important, but when concluding a contract, you should be guided not by it, but by the program that you are offered.

This can be insurance against an accident or loss of condition. In order not to make mistakes in insurance, you must determine what situations are possible, for how long they are insured against, and only then choose the type of insurance, taking into account the number of monthly premiums.

3. Sign a contract for the minimum number of insured events.

Many clients believe that it is enough to ensure their lives or provide for payments upon reaching a certain age. However, this is only a small part of the possibilities that can help an insured who has become disabled as a result of an accident or serious illness. Do not limit yourself to one or two options, but take a closer look at other types of possible insurance claims.

4. Do not reread or update your insurance.

The contract with the insurance company is concluded for a certain period of life. Over time, the underlying conditions that prompted this may change. Registration of marriage or, conversely, a divorce will take place, children will appear, the place of work and the level of income will change. The sum insured may not be enough to cover the costs in the current situation. Therefore, every two years it is necessary to revise the policy, if necessary, supplement it with new options or increase the amount of regular payments.

5. Do not adjust the policy for the person receiving insurance.

The person who will be issued monetary compensation in case of your death is entered into the policy that insures your life and health. This is the person closest and dearest to you. But the situation may change, so do not forget to adjust the policy so that the reimbursement goes not to random people, but to those who love and appreciate you.

5 common mistakes when insuring property

1.“Underinsured” and “reinsured”.

In an attempt to save on payments, the owner insures the property for an amount much less than its real value. With this approach, with the onset of an insured event, compensation will cover only part of the losses incurred, since the calculation is made in proportion to the ratio of the sum insured to the insured value.

The desire to make money on insurance push the owner to another extreme step, “reinsurance” when in the contract he indicates an overvalued property. Payments, in this case, will also be high, but upon the occurrence of an insured event, he will receive only compensation for real damage determined by an independent expert

Don’t look for the lowest insurance rates in the hope that the reimbursement will more than offset the payments. There may be a very limited number of situations covered by coverage that your case does not. Or the company has just entered the market and in this way is trying to attract more customers.

As a result, problems may arise with the assessment and reimbursement of the insured event due to the incompetence of the company’s employees who have not previously been involved in property insurance. And the payment of compensation for damage can be delayed due to an elementary shortage of funds from the insurer.

2. To think that you will be paid the entire amount at once upon the occurrence of an insured event.

Such situations are rare and occur only if the house is destroyed to the ground. That happens only in case of man-made or natural disasters and terrorist attacks with explosives.

But terrorism is rarely included in an insurance policy. This is an additional risk, in 50% of insurance companies this risk is included in the standard package. But most often in a complete package. And in the event of a fire or explosion of natural gas, victims can expect to receive only 15-20% of the insured amount specified in the contract, if it is spelt out in the contract. This can be found in the so-called “boxed products”, where the insurers’ property is insured as a percentage, e.g. roof 10% of the sum insured, walls 8% of the sum insured, etc. In fact, when calculating in the future, insurance payments are often not enough for the complete restoration of damaged parts of the property.

3. Take out home insurance without inspecting it.

Firstly, a standard insurance contract will cost you twice as much as an individual one (if you compare conditions and rates).

Secondly, insurance without inspection has a very narrow coverage. The contract includes only insured events with minimal risk.

Thirdly, do not forget that the amount of compensation when applying for a policy without inspection will be quite small.

4. Throw away receipts, receipts and other documents confirming the cost of repairs and the purchase of furnishings.

If you decide to insure the finishing of the house and movable property, to begin with, conclude an official contract and approve the repair estimate with the construction team, and when purchasing materials, furniture, household appliances and other furnishings, keep all receipts and coupons with the cost of the purchased goods. To underestimate the amount of payment is in the order of things for insurers. Your documents should be an exception to the rule for them.

5. Leave housing without reliable protection.

Connecting a burglar alarm will save on the cost of the policy, only a few people remember this. If your home is protected by a sophisticated alarm system around the clock, then the insurer is simply obliged to provide you with a discount.

5 common mistakes when insuring a car

1. Leave “assigned” services in the policy.

In an insurance policy for a car, the company includes a number of simple services that will be provided to the client throughout the entire term of the contract. This can be the evacuation of a vehicle that has got into an accident, or the registration of certificates in the traffic police. But often no one uses such services, so they should be abandoned even at the stage of drawing up an insurance contract.

2. Pay attention only to the tariff.

Many car owners, in search of a cheap rate, refuse insurance. Although it is worth considering why the insurance company offers its product at a lower price. Try to find out how this tariff differs from the standard one: what kind of deductible it has, what methodology is used to calculate the insurance payment, etc. Pay attention to the financial condition of the insurer: information regularly appears in the media that some insurance company has stopped paying. Experience shows that these insurers have the cheapest policies.

3. Don’t understand the differences between franchises.

When contacting the insurance company, many car owners sincerely do not understand how the franchise provided for in the contract affects the number of payments, therefore they are 

4. Not be interested in the methodology for calculating insurance compensation.

Many people believe that the calculation of insurance compensation is the business of the company itself. This misconception can be costly because the amount received will be half what you expected.

unhappy with the amount of compensation, hoping to get more. The insurance broker believes that this misunderstanding is tantamount to jumping into a body of water without knowing its depth.

5. Do not ask what the aggregate sum insured is.

In general, very few people know about this, thereby making a serious mistake when insuring. The insurance company may include in the contract a condition according to which the insured amount is reduced by the value of the previously paid compensation. This applies to those car owners who get into an accident more than once a year. Simply put, if you have suffered in an accident and the Insurance Company has paid for the damage caused, then after the next accident, the insured amount of your car will be less than the amount of compensation for the previous repair.

5 main mistakes when concluding an insurance contract

1.Incorrect data on the insurance object.

It is important for the insurer to conclude an agreement with the client as soon as possible, so he will not waste his time on a meticulous description of the insurance object. This section may be inaccurate, include data that do not have an unambiguous interpretation and may become the subject of a dispute in the future. The policyholder must remember that the description of the subject of insurance must be complete, taking into account all its constituent details and exact characteristics.

Otherwise, the insurer may refuse to pay out upon the occurrence of an insured event, explaining its decision by the fact that this element was not specified in the contract, which means that the insurance does not apply to it.

Refusal of compensation or a clear underestimation of its amount may also occur in the case when, due to inaccurate characteristics of the object, it is impossible to correctly assess the amount of damage caused.

An error in the insurance policy due to an incomplete or inaccurate description of the insurance subject in the contract always leads to financial disputes with the insurer, which will have to be resolved in court. Sometimes the policyholder wins, but more often the court rises in favour of the insurance company.

Therefore, drawing up an insurance contract should be treated with full responsibility. The policyholder must carefully check the text of the entire document and insist on entering the full information about the object by the insurer.

2. Incorrect interpretation of the insured event.

The contract has a section in which the characteristics of those situations that relate to insured events are described in detail. It is necessary to register all the nuances and details of specific circumstances, taking into account all the features of the insurance object, so that there is no possibility of their ambiguous interpretation.

Loans are often the objects of insurance. In the contract, as an insured event, a person describes a situation of non-repayment of a loan. The question arises: does the insurance with such a description of the object cover non-refund of interest under the same loan agreement? Only the court can answer this.

The policyholder, for his part, is obliged to notify the insurer of the current state of the insurance object at the time of the conclusion of the contract. He must collect and provide information about all situations that can lead to an insured event, and determine the number of possible losses from the damage caused.

Moreover, this information must be drawn up in writing, as an official document, so that the insurer does not have the opportunity to declare that the client has not informed him. Otherwise, according to the law, the insurance company has the right to demand compensation for material damage from its client.

3. Incorrectly specified the term of the agreement.

In any contract, the date plays an important role, because it determines the duration of its validity. An insurance contract is no exception. The date from which the insurance coverage begins is especially important here. If the event happened earlier, then no compensation will be paid, since there was actually no insurance at that time.

If the start date of the contract was set later than 30 days after the payment of the insurance premium, then this is considered a violation of the law, and the policyholder may go to court. But determining which day is the beginning of insurance coverage will not be easy for him. In order not to bring the situation to a conflict, it is better to immediately follow the parameters of the agreement set by the insurer.

4. Lack of information on insurance premiums.

If the information on the procedure for paying the insurance premium is not spelt out in full or in part in the contract, then this may allow the IC to refuse the client to pay compensation. The basis for such a decision will be the suspension of insurance coverage due to an incorrect or late payment.

In order to prevent insurance mistakes, all conditions must be spelt out in the contract, including the payment schedule and the amount of each payment. An unauthorized decrease in the amount of payment is equivalent to its absence and may cause termination of the contractual relationship or refusal of insurance compensation. Therefore, you should carefully study the document in this particular part.

5. Errors in the contract.

Without an agreement on the rules for conducting financial transactions, enshrined in the insurance contract, the client can deposit a sum of money that does not comply with the unspoken rules of the insurance company. It will not be considered an insurance premium, since the contractual relationship is established the next day after the payment of the premium in full. Or tax is paid from the payment received, the amount of the contribution is reduced, which does not comply with the contractual regulations. If an insured event occurs at this time, the policyholder will prove the right to compensation for damage in court.

In the end, we will summarize our reasoning: before concluding an insurance contract, the parties must come to an agreement on all its sections and provisions. Information is entered into the document based on the application of the policyholder. If some data was inaccurate, or the error crept in as a result of the inattention of the company employee who introduced them, and the client did not check his work, then all this can cause all sorts of conflict situations in the future. Therefore, the policyholder has the right to clarify the information for each section, make amendments and changes at the stage of drawing up the contract, so that later he would not be denied compensation.

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