People buy insurance for their health, life, car, home, and a number of other items and possibilities. The insurer provides them with a policy that has about 100 pages of information on 8 or 10 pages of paper. The print is small, and the wording is convoluted. Often, the terminology is unfamiliar to the insured. Terms like “actual cash value” can be misleading to the uninformed buyer.
Exclusions and restrictions can render your insurance worthless just when you most need the coverage. It is important that you understand every word of the policy. You have an agent, part of whose job is to interpret your policy to you. It is up to you to insist that he or she do so. If this isn’t done, you should have your policy reviewed by another agent who would like to get you to switch to a different company. This agent will shoot holes in the policy.
You probably won’t want to switch companies, but you will know what you have. It might be a good idea to go back to your agent to see what it will cost to get those needed gaps filled in.
Some of the more common gaps in coverage have to do with special circumstances. I once knew of a man who had his tractor and barn insured on separate policies by the same company. He had an accident with his tractor and damaged his tractor and barn. His insurance wouldn’t pay because his policies had exclusions about damaged caused by him or his equipment. The insurance company maintained that he could not prove that he had not done it on purpose. Ouch!
Floods and natural disasters can be excluded from your insurance. If you don’t purchase it specifically, earthquakes are not usually covered. On cars if you don’t by comprehensive coverage, glass breakage and natural disasters aren’t covered. If your car gets damaged by hail or a tornado, without comprehensive, you are out of luck. Things like towing, loss of wages, and roadside assistance are all add ons to policies. It you didn’t ask for them, you don’t have them.
If the policy specifies that you will receive “actual cash value” for your loss, it means that the company will figure out what your used item is worth now and pay you that amount. Since you have to almost always replace it with new items, you are out the difference. Most of the time the value is paid after the deductible. You get hit with a double cost to replace the items. Insurance companies operate on the premise that you should not profit from a loss. They do their part to make sure that doesn’t happen.
If you have private health insurance instead of a group policy, any pre-existing health conditions and things caused by them are normally excluded permanently from your policy. Your policy may have limits on how much coverage they will pay per day or per illness regardless of your cost. Again, this often comes after you’ve paid a deductible. These policies don’t normally cover self-inflicted or self-caused health problems or injuries.
Life insurance policies have two problems in some states. The policies will have a period of time that’s usually about 3 to 6 months that they will not cover suicide. Some just won’t cover it at all. During this time on some policies, the insurance won’t pay full benefit or any benefit for death for any reason. You need to check before writing the check to buy it.
Learn to read the fine print. If you have to, don’t sign the acceptance of the policy until you have had time to read it and have it explained completely and satisfactorily to you. Your agent might try to rush you because he or she feels that time is money. It is. Their lack of time can cost you a lot of money.