Common Insurance Mistakes

The world of insurance can be a bit complicated and even overwhelming at times. The variety of policies, mandatory coverage, optional coverage, and exclusions can make it seem impossible to understand.

Here are some of the most common insurance mistakes that people make:

  1. Failure to Shop Around.

Insurance premium costs can vary considerably from one company to another. The best thing you can do when buying insurance coverage is to shop around for car insurance quotes and try to get the best deal possible. Keep in mind, though, that higher price may not be an indicator of better coverage.  It is important to consider the whole package.

  1. Not knowing the details of your insurance policy.

With all of the information readily available to you, there's really no excuse for not knowing the details of your insurance policy. If you're ever in doubt, ask your insurance broker or agent to explain all of the relevant particulars. It's important to know which of your belongings are insured, what perils your policy covers and what, if any, perils are excluded from the policy. Make sure you know these details before you sign any policy, and if you have any questions, no matter how small, don't be afraid to ask.

  1. Being under insured or over insured.

It's important to know how much insurance you need to protect yourself against financial losses. Often, people are unsure whether they should insure their home for market value or replacement cost, or whether they need collision insurance on their aging vehicle, for example.

Many people also fail to prepare adequately for life changing events such as buying life insurance. If you're in doubt about any of this, give your insurance professional a call and make sure that you have the appropriate amount of insurance for your situation. You may be able to save money by discontinuing coverage that's no longer needed or you may be under insured and vulnerable to certain unexpected events.

  1. Not knowing how to file a claim.

In most cases, the process of filing a claim is reasonably straight forward, but there is some variability among companies when it comes to making a claim. In extreme cases for example, if the proper procedures are not followed and you wait too long before filing, the claim may be denied. It's best to find out all the details before you sign your policy.

If your claim is denied, make sure you fully understand the reasons for the denial and the steps you can take to get the claim resolved. In Ontario, you can contact the Financial Services Commission of Ontario to find out about the dispute resolution process.

  1. Failing to keep your policy up to date.

Times change and so do your insurance needs. Many people become over or under insured due to changes in their life that render their current policy unnecessary or insufficient. It's worthwhile to sit down with your agent or broker on an annual basis to find out if your insurance coverage needs to be changed.

In addition to your coverage levels, you may also want to review the deductibles you're currently paying. Generally speaking, the more financially secure you are the higher you can afford to set your deductibles and the more money you can save on your car insurance rates.

Avoiding insurance mistakes is all about asking questions and making sure that you don't agree to any policy that you don't understand. Knowledge is power and your insurance professionals are there to answer your questions and explain anything you don't understand. Taking the time to do your homework could save you money and save you from drastic financial losses in the event of an emergency.