7 Things Your Insurance Company or Agent Won’t Tell You

February 5, 2009

Here’s a list of things your insurance company and agent may fail to explain to you unless you probe them for information.  

1) When they say everything is covered, everything isn’t covered.  What they mean is everything is covered unless specifically excluded or limited in the policy.

2) If you have any type of large claim loss or a frequency of claims in a short period of time, they may try and drop your policy. 

3) A lot of people think a claim only counts aginst your history if they have to pay you for it. However, filing a claim that ends with a value less than your deductible still gets counted as a claim against your claim history.  Remember that when considering #2. 

4) Many claims adjusters look for ways to reduce the amount of the overall value of the claim.

5) Many insurance agents and their customer service representatives do not fully understand policy coverages.  I used to get many phone calls from agents asking me questions about policy coverage, because their client was in their office asking a question they couldn’t answer. 

6) You can file a claim directly with the insurance company instead of filing it through your agent. 

7) They will cancel your policy for things like trampolines, certain dog breeds, pool slides, and unrepaired damage on your home.  When you buy a new policy the insurance company’s inspector will come out and take a look around your house.  They won’t come inside, but they will take take exterior photos.  They are looking for things like vicious dogs, pool slides, trampolines, and tree branches touching or hanging over your roof line.

The Dark Side of Insurance

I am not trying to say that every claims adjuster and agent are out to get their customers.  There are definitely many agents and adjusters that truly help their customers and look out for their best interest, but I was once in the industry, and I know how some of the companies work. 

The insurance companies I worked for put a lot of pressure on you to save them money, and their company policies always favored the best interest of the company rather than the customer.  I was put in numerous positions where the coverage in the policy was a gray area and it could be interpreted either way.  But, the insurance company forced me to deny coverage. 

Many customers did not fight back.  They backed down and paid for the damages out of their pockets.  A lot of the time, insurance companies get it right, but I think their lack of commitment to putting their customer’s interests ahead of their own in the cases where they don’t is what gets them bad publicity in the media.  

Be an informed consumer; do research and ask questions to your agent and adjuster.  Do not let them call the shots.  You are the one paying for their salary and commission. 

If you have any questions about your policy or a current claim open, feel free to contact Erik or check out some of the other questions in the recent insurance series like insurance tips for filing an insurance claim, understanding insurance policies, lowering insurance rates, all about insurance policy riders.

Last updated by .

Ben

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Ben
Ben Edwards, the founder of Money Smart Life, saved up enough to buy a Nintendo back when he was 12 years old. When he used the money to buy shares of Wal-Mart stock instead, he knew he wasn't like the other kids... His addiction to personal finance has paid off for his family and now he's helping you to afford the life that you want. Check him out on the web at Google Plus, Twitter and Facebook.

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19 Responses to 7 Things Your Insurance Company or Agent Won’t Tell You

  • CC

    can an insurance company mail your claims check to the irs???? mine did and I filed an extention

  • ckeong

    one thing for sure, insurance agent earn a big commision for each contract, and where’s the money come from ? of course from our pocket. Why can’t we just go straight to the insurance company and buy it direct, and get the rebat for ourself instead of going into the agent pocket ?

    • Steve

      IF you buy direct, you still pay the same price, the company does not give the “rebat” to you. First that is the price they charge and dont have to lower it, Second – it is illegal to pay anyone a commission which you call a rebate, unless that person has a license for the type of product and has complied with all the state requiremets.

  • Michael Massey

    Why would anyone sign a legal binding contract without reading and understanding what it contains? An insurance policy is no different. Read and understand exactly what is and is not covered before signing and paying the down payment. I am a property claims adjuster and I read my policy to know what is and is not covered. I am so tired of all this propaganda! No doubt someone will say that I am for the insurance company and not think that I too am a homeowner covered by specific perils. I do not speak for insurance agents because there are some who are not familiar with the products they sell. But I also do not enter into a contract without reading the “fine print.”

  • Wendy Barkan

    Yes, I recently found out that I had been eligible for two discounts of
    which I was not informed. AAA and homeowner’s, which would have
    saved me sixty or more dollars a month, because my agent failed to
    mention any of these. I am guessing the damages over the years
    is about $7,000. The insurance company directly has offered me a
    retroactive discount of about two years at $1500. to compensate for financial
    loss.

    Should I pursue this further with my agent or let it go?

    Wendy

  • Landen

    They also won’t tell you how cheap renters insurance coverage is and that by combining it with your auto policy, you can qualify for a multi-discount policy.

  • Bonny Smith

    My husband and I are trying to drop our flood insurance as we recently found out that we are no longer in a flood zone, zone x. Anyway, Our insurance company will not let us drop them until we show proof from our lender that one, we are not required to have it and two, that our insurance company does not require us to have it. While we wait for this, we are still paying for it. I don’t understand, can’t they look it up and see for themselves that we are not required to have it? Is this just another way to keep our money? We already sent them one letter from our insurance company stating that we are not required to have it and that wasn’t good enough.

  • Helene

    Thanks for your contribution to Take Charge of Your Health Care Carnival. You make an important point that Insurance companies are primarily looking out for their interests and not the consumers.

  • LG

    Also look out for the trick we fell for — notice for an exterior inspection, the inspector arrives and tells you it was supposed to be an interior inspection as well. Of course, he’s a nice guy, working for you . . . not. The report made our house sound like a place that had been abandoned for months and should be condemned. Needless to say, the company found reason to drop us.

  • Everyday Finance

    Great Article.

    I have an extra one – they will also routinely attempt to get you to insure for much higher than you need. For instance, I know someone who just bought a new house and they tried to insure them for cedar closets, sinkhole insurance, all these ridiculous things that weren’t even relevant (they claimed there was a misunderstanding based on what was on the mls paperwork). Anyway, as a company, if you can insure for things you’ll never have to pay claims for; or even just increase your premiums for a given account at appropriate actuarial assumptions, you’re inflating your profit margin that much more.

    Advice – make sure you inspect every piece of paperwork outlining what your premium and coverage assumptions are. Chances are, you’re paying for more than you need at this moment!

    • liz

      Excellent adivice, but the average layman does not understand how much they need until it is too late and they already have a loss.

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