Common Mistakes to Avoid When Buying Insurance

Image Source

No matter whether you are looking to buy car insurance or a life insurance policy, there is no denying that the process can be somewhat overwhelming. After all, there are so many different options to choose from, and there is the industry jargon to contend with too. Irrespective of the type of insurance you are interested in, it is vital to approach the process with care. This involves avoiding the common mistakes made by others, which are explained in further detail.

Choosing the wrong type of insurance policy – Nowadays, there are so many different types of insurance policies to choose from. This can lead people to be confused when determining what type of policy is right for them. One good example of this is choosing between critical illness cover and income protection policies. A lot of people assume that these are the same thing, but that is not the case. Critical illness cover will only cover you for a number of serious conditions, which will be outlined in your policy. Every plan is different, though, so you need to read your contract to determine the exact list of illnesses that are covered. With income protection, you will be covered if you are out of work for a valid reason for a set period of time. For example, your policy may pay out after four weeks of being out of work if you have broken your leg while scaffolding. A broken leg is likely to be something that isn’t covered in a critical insurance plan.

Setting your excess too low – The excess is the amount of money you will need to put towards something before your insurance company pays out. If you set your excess too low, this will drive your premiums up. This means you could end up paying more money every month than is required.

Setting your excess too high – While a lot of people make the error of setting their excess too low, there are those who do the opposite. They set their excess at a high figure so that their monthly payments are as low as possible. However, if you cannot afford the excess payment, you are going to find yourself in an awful position when the time comes to make a claim. Setting a ridiculously high excess defeats the whole purpose of having insurance in place, as you are essentially going to be paying for the damage in any case.

Skimming over the details – This is one of the biggest mistakes made when it comes to all types of insurance policies, from content insurance for the home to travel insurance policies. Yes, it can be incredibly boring to read over a contract in full, but this is a necessity. You will often find that there are a lot of hidden terms in the contract, for example, information on certain fines and things that will make the policy invalid. If you are not aware of what you are letting yourself into, you could experience an issue whereby you feel you are entitled to make a claim, however, you find that there is something stipulated in the terms and conditions that means you are not. This could have all been avoided if you had read the terms and conditions properly in the first place.

Shopping based on price alone – This is another error that most people make when they are searching for insurance. Yes, you want to find a good deal, and there is nothing wrong with that. However, the cheapest policy can actually end up costing you a lot more money in the long run if the coverage is not substantial. The most important factor should always be ensuring that the policy covers you for all of the things you need. Travel insurance is a good example of this. A lot of policies will be cheaper because they exclude certain countries. This is something you need to look into. You will find that you need to spend a little bit more money if you are looking for an insurance plan that covers the United States, for instance.

Failing to choose a reputable insurance firm – We often spend so much time making sure that the insurance policy is right for us; we fail to look into the insurance provider. This is just as important. A lot of people tend to assume that all insurance companies try to avoid paying out at any opportunity. This is not the case. Unfortunately, there have been a few unscrupulous providers that have given the industry a bad name. This is why you need to do your research before to ensure that the provider you choose has a good reputation. You can easily find this information on the Internet today. Take the time to read reviews that have been left by previous customers. Make sure you read reviews on independent review websites; not only the insurance provider’s website. By doing this, you can be sure that the feedback you are reading is genuine.

Not taking advantages of discounts that are available – Insurance companies are just like any other business in the sense that they are all competing to get your business. Because of this, you will often find that there are some great deals available on insurance, yet a lot of people do not realise that this is the case. So, when shopping for your insurance plan, make sure you look for any ongoing promotions and offers. If you shop during sale periods, you are bound to notice some great discounts. Nonetheless, if it’s March, this does not mean you should hold out until the Black Friday sales to find a policy for you. After all, can you really afford to take the risk of being uninsured for the best part of the year? Look for offers available now, and reassess the situation in November. After all, there are a lot of companies that offer incentives for switching policies, and they will handle the process of getting you out of your existing contract so you do not have to suffer the hassle or expense that comes with this.

Not updating your insurance coverage – A lot of people take out an insurance policy and then they simply forget about it. This is not the right thing to do. You need to ensure you get in touch with your insurance provider whenever your life changes. For example, if you are having a child, buying a new property, getting married, or getting divorced, this is something you will need to tell your insurance provider about, as it could impact your policy. This does not necessarily mean it is going to have a negative impact on your insurance plan. You could find that your change in circumstances entitles you to a discount on your monthly premiums.

Choosing an insurance plan because your friend has said that they have it and it is good – While it is always good to listen to recommendations from your friends and family, this does not mean that you should take out a policy purely because your loved one has raved about how good it is. Remember, everyone’s circumstances are different, and so while one insurance plan may be good for someone, it may not necessarily be right for you. It is all about finding something that caters to your needs and fits within your price range.

Paying for more insurance than you need – Earlier, the importance of choosing an insurance policy based on coverage, rather than price, was stressed. However, this certainly does not mean that you should go for the most expensive and comprehensive insurance plan you can find. A lot of people make the mistake of over insuring themselves because they worry that they are not going to have all of the coverage they need. If you do this, you are going to be spending way more money than is necessary. This is why it is a good idea to sit down and think about what you want from your insurance plan. Make a list of all of the things you need, and then shop for insurance based on this list. You shouldn’t buy a policy because it includes some things that would be nice to have, but that you are incredibly unlikely to ever need.

If you can avoid the mistakes that have been mentioned above, you can give yourself the best chance of choosing the right insurance policy for you. Remember, it is vital to read the terms and conditions carefully. Never agree to something that you don’t fully understand. Yes, it can be a lengthy process to compare all options and read all contracts in full, but it is vital that you do so if you want to achieve insurance success.

You may also like