How to buy insurance
Purchasing insurance can be one of the more nerve wracking experiences that you may have as it involves so many factors “risks” are so difficult to assess because we have no idea what will happen in the future.
However some of the guidelines given below can ease the process of buying insurance and give you more confidence.
The type of insurance includes life, automobile, home, medical, business, marine, consequential loss, negligence insurance etc
These are some of the general guidelines for any type of insurance that you intend to purchase:
- Ask multiple agents to provide competitive quotes from different insurance companies – this is important to get the best deals
- Use internet forums to identify which insurance companies give the best terms
- Make sure that you take only the required covers – purchasing a lot of unnecessary covers could cost you a lot more – you can do this by asking your insurance agent what are the regular covers are if you need any other special covers
- Industry regulations – certain regulators require mandatory insurance covers for certain types of businesses – therefore it is essential that you consult the regulations of your State or contact the Chamber of Commerce for more assistance
- Professional Liability Insurance – if you are providing a service it is better to have this type of insurance to ensure that risk of loss is minimized. Also the insurance company will represent your interests if there is litigation
- Indemnity Insurance – due to the nature and number of businesses being sued it is wise to invest in indemnity insurance – this will protect your businesses in case of risk of litigation due to omission.
- Some insurance companies have very poor claim payment records its best to identify and avoid them – some other insurance companies have inadequate funds to meet claims – they might even go bankrupt. Insurance associations and the Better Business Bureau also make announcements regarding poorly managed insurance companies.
- Insurance policies should not lapse – ensure that you renew on time – many millions of dollars are not paid out due to lapsed insurance policies. Keep a clear record of the renewal date of your insurance policies in a spreadsheet or folder that you regularly access
- Separate your business and personal assets using a corporate entity – corporate entity usually get lower insurance quotes. Also the risk of losing personal assets during litigation or due to tax or State penalties is minimized to assets owned by the corporation.
- Carefully read the exclusion clauses on all insurance clauses – in a recent medical insurance contract that I read almost all major illnesses had been excluded! Especially if the insurance quote low read the exclusion clauses carefully.
- Remember to pay your insurance policy on time (if you have been allowed a grace or credit period) – unpaid policies costs billions in unpaid claim according to recent statistics.
- Clearly read and understand the claims procedure to ensure its fair and acceptable to you before you purchase the insurance product – (some policies require that you pay first and claim later). Many thousands of claims are not honored as the claim are not made within the allowed time and in accordance with the claims procedure.
- Most insurance companies are notorious for both including and excluding important clauses from the fine print – so for a large insurance contract that may cost thousand of dollars it may be prudent to ask a lawyer to assess the insurance policy before accepting the policy to avoid the risk of unpaid claims.
So now you know some of the pitfalls to be avoided in how to buy insurance.
If you have any doubts about the above please ask us. We also intend to write more detailed articles on each type of insurance that we have mentioned above.