Published On: Sun, Oct 28th, 2018

Insurance Traps That Could See You Paying A Bundle

The insurance market can be a hard one to understand. Speaking practically, most people do not know the ins and outs of every policy they are on. The majority of us simply aren’t specialists. This means that it’s easy to agree to policies that might not be as useful or as beneficial as you might believe. Here, we’re going to look at some of the most common insurance traps that you should be aware of when on the market.

Insurance Traps

The risk of too-low premiums

The premiums are often considered the most important factor when choosing a policy. The lower your premiums, the less you have to spend on your insurance in your day-to-day. However, buyers should beware of any policies where the premiums seem too good to be true. There could be a nasty surprise waiting when they actually need to claim in the form of much higher deductibles. For instance, if you have a deductible of a grand, then you will end up paying much more out of pocket when you actually need to make a claim.

When your insurance doesn’t cover all the costs

One of the biggest risks in the modern insurance market is finding that your insurance doesn’t cover all of your costs. This might be because you have a higher deductible, or it might be because you are underinsured, as https://www.investopedia.com/terms/u/underinsurance.asp shows. This is when the overall insurance pay-out doesn’t meet the total amount of the costs. Make sure you know how much your insurance policies cover and try to get them as close to, or matching, the value of the asset that you want to protect.

Automatic renewals don’t always offer the better deal

Very rarely are you going to get the best deal twice in a row. Besides the fact that prices shift and down across the market, there are often more incentives to join a new insurance policy provider than there are for being loyal. Sites like https://cheapautoinsurance.co/ can help you quickly scan the market for the most appropriate deals. When it comes time that your policy is about to renew, consider taking another look at what the competition will be offering. In most cases, it could mean real savings for you.

Being sold insurance you don’t need

Just as you can be underinsured, you can end up over-insured. The insurance companies play off our ideas of perceived risk, which makes it easier to sell us coverage we’re not very likely to use. Guides on insurance policies that you do need can make sure that you stay focused on the coverage you’re most likely to make a claim on. For instance, if you have a much older, used car, then you are not very likely to need comprehensive insurance that covers against theft simply because your car isn’t very likely to be stolen.

When in doubt, it’s a good idea to use a broker to ensure you’re getting the best deal for your money. If you’re not an expert, it’s handy to at least have one on your side.