Insurance Policies – Are You Covered? Really Covered?

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Many people consider buying insurance a simple decision. This is because most people have limited ideas about the insurance they need. 98% of those who buy insurance choose the policy that is recommended by their agent or the policy seller.

A good 90% of these people don’t know if they have the right coverage. As an insurance purchasing society, we have become complacent in how we purchase insurance. Most people realize that they were not able to get the right policy to adequately cover their needs when disaster strikes.

Insurance companies exist to make money and not give it away. They believe that if you purchase insurance, you will continue to collect premiums and not have to pay any claims. That’s the ideal scenario, at least for the insurance company. Your insurance company is well aware of the reality that disasters can happen and they will pay you for it. They manipulate the game rules to their advantage, just like big Las Vegas casinos. You might be skeptical that this is true. Make sure you read the exclusions in any insurance policy you may have.

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By design, companies don’t make it easy to understand the terms of a policy. The policy language becomes legalistic when they make note of important points. Your policy won’t cover you if these situations or circumstances are met.

Some auto insurance policies cover hit-and-run damage, provided it was done in public areas like parking lots or streets. However, they won’t cover damage that occurred in private garages or parking lots.

This is a huge one that we encountered not too long ago. A homeowner started an internet business selling small-sized items from her basement. The computer she bought to track the business caught fire and caused moderate damage. The insurance company discovered that she was operating a small business (which is what they call a commercial enterprise). They refused to cover any claims related to the damages caused by the computer. It cost her thousands of dollars.

This is the real twist to this tale. Six months before the accident, the wife and her husband went to see an agent to increase their insurance coverage so that the furniture in the office and the computer equipment they purchased would be covered. To cover her laser printer and computer, they had to add a rider to the policy. The agent knew exactly what equipment was being used and was fully aware of it. The insurance company refused to pay the claim, despite the fact that the clause in the original policy exempted commercial use. This clause presided over any other rider that didn’t explicitly cover the property for commercial purposes.

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It is important that you know exactly what you are covered by the policies you buy. The truth is that we rarely get to see the policy after we purchase it. Sometimes, we don’t even get it until weeks later when the company mails us the policy. Unfortunately, few people take the time to fully read the policies they receive. Because the language is often too complex, we trust the company or agent who sold the policy to explain it.

A statement of policy understanding, which is legal and might be helpful, should be signed by the agent. This is where you, the buyer of the policy, outline your beliefs about the coverage as per the agent’s explanation. The addition of the statement does not limit or exclude an already agreed upon policy. It aims to cover specific areas that are supposedly covered by the policy. This statement is made by the insurance company or agent to confirm that you are aware of the coverage for these items.

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Okay, now let’s pretend you tell the agent you are going to start an internet-based business from home. That’s it. Tell him that your children have a trampoline in their back yard. You believe what you’ve been told, and that insurance covers these perils. Add any items that you think might be hidden in your insurance requirements to the list.

Add a statement acknowledging these items and areas to your agent’s policy. Then, have him sign it and date it. Attach it to your policy. Keep a copy for future reference. Be cautious if the agent says that the statement is not necessary and that all coverage is available. The agent should not refuse to sign the statement if everything on your list is covered. If your home company believes that the items you have listed are not covered under policy design or exclusion, they will either make a note of it and add riders to your policy (adding cost) or deny it when the policy is reviewed. Until you receive official notice about your coverage, however, you will still be legally bound for coverage. You will always know your position.

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These tactics are not liked by insurance companies, but it would be more difficult for them to conceal exclusions that protect them from having to pay any claims.

Although it is difficult to protect every risk in life, common sense can help us spot the things that may require special insurance attention.