Straight Talk about Insurance
How many people purchase insurance based on the trust factor? You go into any agency or speak with someone on the phone, telling them you need insurance. How many times does it happen that it is a quote based on some cookie cutter formula? They supply a quote but how much of the public understands what they are really buying when it comes to any type of insurance? Do you ask the right questions? Let’s discuss the various points that you as a buyer must be aware of. Remember, buyer beware.
Understand the concept of insurance. Many large companies have a specific department called Risk Management. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment.In other words, you trade off a possible unknown future event for a premium payable in the present. Risk Management departments analyze these events or risks and then plan accordingly. You as a consumer need to be able to be your own risk manager to work in conjunction with your agent or broker.
Recognize your needs. If you have a car, you need auto insurance. Do you have a home, an apartment, own anything of value, you need some type of property insurance. If you have income, you need disability insurance. Do you have a family, loans, and obligations? Life insurance is necessary. Simply have any idea of your needs to start.
Research. When I say research, this is the age of google and the internet. There are many articles and pdf’s available from State Insurance Departments and reputable sites to gain an understanding. Take a look at my website www.financialalternativesinc.com , it is constantly being updated with articles for your education.
Understand what you are buying. Know what the limits of coverage are. Know what is covered and more importantly not covered. Do not assume coverage. Just because you have homeowners insurance does not mean you are covered for Earthquake or Flood (these are almost always excluded unless separate coverage is purchased). Understand the perils insured against. More importantly, understand the EXCLUSIONS. Most policies today are written in a “plain language format”. When you get your policy, look through it for errors and read it. Find the coverage page, and let me reiterate, find the EXCLUSIONS. The best surprise is no surprise, especially in the event that you need to make a claim.
Ask questions. Nobody expects you to be an expert when it comes to insurance. No question is a stupid question. I deal with virtually every line of insurance, and a universe of different insurance companies. Every form, every application, every coverage… almost none are the same. When I have questions I go straight to the individual insurer to clarify the answer. You as a consumer should feel the same way. Don’t let insurance overwhelm you. Find a good agent or broker you can trust, ask questions and get answers.