IS PURCHASING INSURANCE ONLINE REALLY A WISE DECISION?
Online shopping has become an American pastime, and can be an exciting adventure. For nearly everyone, it is enjoyable to receive surprising new packages and offers in the mail. But would you want your insurance coverage to be a surprise? You might want to ask yourself some essential questions before making the decision to buy insurance online:
What questions should I be asking before making the purchase?
Am I certain about exactly what coverages I need?
Have I researched the insurance company, and are they legitimate?
Will the personal information I provide online be secure?
Will there be real savings in both time and money by making an online purchase?
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When buying insurance, it is important to be confident about exactly what coverages you need. Since insurance varies widely from state to state, it is necessary to have a knowledgeable resource that understands your individual needs. If you need to file a claim, you want to be certain that the insurance you purchase will protect you. If you make the decision to use an online company that does not involve themselves personally with your insurance needs, you run the risk of being left without coverage. Take the time to ask questions. Additionally, an online insurance company should be asking questions of you, to ensure they are recommending the proper coverage.
Buying insurance online could endanger your personal security. You will be required to fill out long forms providing personal information about you and your family, including social security numbers and personal property information. The forms are sent over the Internet where there is a risk that they might fall into the wrong hands, especially if the online company does not take proper security precautions. Furthermore, how will you verify that the insurance company you select is legitimate? Despite the fact that one must have a license to sell insurance, there is no license required to establish a Web site that is designed to sell insurance online.
After studying insurance information such as your state insurance regulations, coverages you will require, and the security and legitimacy of an online company, you obviously will not be saving much time in making an online purchase. And, there is no guarantee that you will save money either. It might be convenient for the insurance company since they will not have to meet with you, but they will still need to provide you with the proper coverage for the dollar amount of protection you need.
An insurance purchase should take place only after careful consideration, and should not include surprises. The decision to shop online could result in uncertainty about what you really get. Selecting a professional agent to prepare a personal insurance policy is a more reasonable choice. When you work with an independent insurance agency such as ours, you receive the benefit of our expertise and industry knowledge. We can help you get the protection you need based on your individual requirements, rather than taking a one-size-fits-all approach.
SPEAK WITH AN INSURANCE PROFESSIONAL TO UNDERSTAND YOUR COVERAGE
Every insurance policy has a section popularly known as “the fine print,” though its actual title is “Exclusions.” Exclusions are provisions in an insurance policy describing losses that the policy will not cover. For example, a Homeowners policy does not cover losses caused by the use of cars, and a Business Auto policy does not cover injuries caused by a bulldozer on a construction site. Although it might appear at first glance that the insurance company includes these provisions to get out of paying claims, the reasons are more complex and less insidious than that. There are very sensible reasons why no insurance policy covers everything.
First, not every person or business has the same exposures to loss. Most homeowners do not own a dump truck used in a business; the owner of the dump truck might not have employees to insure for jobsite injuries; the employer with a dozen employees might not own the building it occupies. Imagine if there were one insurance policy that covered all of these exposures -- it would be hundreds of pages long and very complex. Therefore, over time insurance companies have developed different policies for different exposures -- Auto, Home, Business Liability, and so on. The Homeowners policy excludes losses that the Auto policy should cover, personal policies exclude losses that business policies should cover, and vice versa.
Related to this are the issues of cost and choice. Standard insurance policies contain coverages that apply to large groups of households and businesses, but they do not cover every possibility. Those with additional needs have coverage options to choose from. For example, Homeowners policies do not cover damage caused by water backing up from an overflowing sump or drain, but households that have basements with sumps or drains have the option of buying this coverage. Households without a basement do not have to buy it. This affords the buyer choices but does not force coverage on those who do not need or want it.
Furthermore, exclusions reduce the cost of the insurance policy. Every coverage comes with an associated cost -- the company must factor in the costs of potential claims, expenses and profit for that coverage. The more coverages a policy provides, the higher its premium will be. Without exclusions, people and businesses would be forced to pay for coverages they do not need. Exclusions help keep the premium affordable.
Finally, certain types of losses are uninsurable. Insurance companies cannot accurately predict when certain types of losses will happen, and the potential loss amounts are too large for them to absorb. For example, almost all policies exclude losses suffered as the result of a war or a nuclear accident. These events would cause massive losses beyond the abilities of insurance companies to pay. Other losses are not insurable as a matter of common sense. Because the purpose of insurance is to pay for losses from accidents, it will not cover most losses that a person causes intentionally.
Because every household or business’s circumstances are different, standard policies might not provide all the coverage necessary for proper protection. Properties in flood-prone areas, businesses that have a lot of contracts with other businesses, and individuals who post to online message boards could all lack important coverage. Consultation with one of our professional insurance agents will help determine whether more coverage is needed, whether it is available, and how much it will cost. The time to find out the availability and cost of coverage is before the loss occurs.
DON’T MAKE THESE COSTLY INSURANCE MISTAKES
Fear is an important motivator when it comes to buying insurance. We worry about what will happen to assets like cars or homes if they are involved in a disaster, so we buy insurance to help us maintain their financial integrity if something should happen.
But in spite of the fact that insurance is designed for this purpose, sometimes it can’t give us the outcome we expect. That’s not because of something inherently wrong with the policy, but rather it is the result of human failure. When you bought your policy, you might have failed to take into consideration the level of coverage you really needed, and what you have isn’t sufficient to restore your assets to pre-disaster condition.
That’s just one of the most common insurance mistakes that could end up costing you. Here are some others:
Thinking you’re saving money because you bought the cheapest policy you could find - Initially those low premiums will seem like a savings; but if the cost of an accident ends up being more than your policy coverage limits, the rest of the expense will be out-of-pocket. In addition, the other parties involved could sue you, and if you don’t have any coverage, you could end up losing a large part of your assets.
Failing to pay your premiums on time, or not at all - There could be a legitimate instance in which you don’t pay on time. However, when you don’t pay, your insurance company isn’t required to cover you. To avoid a disruption in coverage, set up automatic payments through your bank or insurer.
Making assumptions about what is covered - There are limitations to the coverage a Homeowners or Auto policy will provide for high-ticket items. You should never assume that all of your possessions are covered. What you can do is add extra coverage to your policy with an endorsement, which gives you higher limits on these types of items.
Overlooking the importance of Umbrella Liability policies - These policies got their name because they protect you from a financial downpour. They can be purchased separately or you can obtain one from the same company that insures your car or home. Buying from the insurer you already have usually entitles you to a premium discount on the liability coverage. Umbrella policies are usually sold in increments of a million dollars. Generally you would pay between $100 to $300 a year for the first million dollars worth of coverage and another $50 to $100 for each additional million. Keep in mind that when determining your premium, your insurer may take into consideration such factors as the number of traffic tickets you’ve received during the past few years, and your credit report.
Failing to inform your insurance agent about changes that could affect your coverage needs - If you’ve added on to your home, or purchased an expensive sound system, you need to contact your agent to see if the policy you have still meets your needs. Your agent can also find ways to help you save money on premiums that won’t affect the quality of your coverage such as enrolling in a driver safety class, installing a home security system, increasing your deductible, or taking advantage of multi-policy or good student discounts.
