The one blunder you don’t want to make when you invest in insurance for your car or your home or anything else is to presume that insurance companies are in your favor. They are interested in one thing which definitely has nothing to do with you or your financial wellness.
Insurance companies aren’t charities and they will do everything they can to ensure their own profits are as high as possible, including denying important information. What exactly are some of the items insurance providers would rather you not to be aware of?
Read on to find out.
A Good Insurance Policy
The particular query you should ask yourself when an agent lets you know that the policy they’re offering you is an excellent one is whom it is actually great for: you or the agent. You need to keep in mind that brokers market insurance for a profit plus they often get additional profits from insurers to focus on selling their insurance plans over other competing ones.
Additionally, they’re supplied greater commissions for putting your signature on on customers that are low risk, meaning that the rates they pay out are bigger than their claims. As long as you understand that the agent will take their own pursuits before yours, then you will find it easier to invest in insurance that will work for you rather than the broker.
How Rates Are Calculated
Despite the fact that all insurers use the simple risk factors when they calculate your rates, such as where you live, your age, driving record, credit rating and home ownership, there are many other variables added to the mix which are not disclosed. Additionally, every insurance company makes use of different formulas to calculate these risks and you are left in the dark. A study from the National Association of Insurance Commissioners shows that premiums can differ from $600 to $1,300 for a similar policy, depending on the State you reside in.
Diminished Value
Once you’ve been involved in an accident, the value of your car drops considerably, even if it has been repaired and runs like new, irrespective of the quality of components used. However, what most insurance companies do not tell you is that you could actually collect the difference, which is called the diminished value, a key factor you have to remember when you invest in insurance.
Bear in mind that not all insurers will allow you to collect this amount, especially if they covered the cost of fixes. However, you can still benefit by writing it off against your taxes and that’s why it may be beneficial to use an inspector to verify whether the work was done appropriately and to evaluate the loss.
Your Mechanic?
If you believe that the repair service is working for you then you may be laboring under a severe misconception that can cost you quite a penny and perhaps even your safety. A growing quantity of insurance companies have established partnerships with repair centers which are on their list of “approved” mechanics. As this is quite a lucrative package for the repair center they are quite ready to cut corners to keep the repair costs down to keep the insurance company pleased. There isn’t any clear cut proof that this does happen but the risk is too great to disregard.
These are only some of the things that insurers keep from you which can affect the carrier you choose to buy insurance from.
Unfortunately, there is little you can do about some of them but since knowledge is power you can at least ask the correct queries and never follow what the agent tells you blindly.
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