Insurance plans are not a “one-size-fits-all,” with many factors determining coverage and premiums. Setting up your plan in a rush or being referred by a close friend or family member rather than sourcing your own trusted insurance services provider can lead to you paying more than what you should, or not having enough coverage when you need it the most.
Being over-insured leads to exorbitant premiums without an evaluation of your needs, lifestyle, and financials. You may find that you are paying for different plans which cover the same item. And being underinsured is none the better. You are paying a smaller premium than most, assuming that you have the best deal on the market, only to find that your claims will be rejected in the future because your cover is inadequate.
Here are three gaps that can cause you more financial burden in the months to come with poorly sourced plans or insufficient insurance.
No Correlation to Higher Premiums
Insurance coverage is almost a necessity these days, from adding protection to your home, personal belongings, and vehicles to giving yourself peace of mind. Theft, unexpected damage, structural issues, and even natural disasters can cause havoc in our lives.
And when disaster strikes, we rely on our insurance provider to alleviate the financial strain. But when setting up plans based on referrals, you may not have accounted for specific factors which will influence your premiums.
You may have haphazardly signed documentation without informing your provider that you do, in fact, have security systems and video surveillance installed at home; your vehicles are fitted with tracking systems and are mainly parked in your garage and occasionally used because you work remotely, or that a maintenance company recently repaired your roofing and slabbing.
Failing to inform a provider of the steps you have taken to protect yourself further can result in higher premiums with no correlation to your actual lifestyle.
Poor Understanding Of Policies
Setting up plans with providers because of a referral may give you a false sense of security and you forgo reading through the insurance terms. While these documents can be extremely difficult to understand for most people, it is important to try and have a good grasp of what you are signing.
Before signing away, feeling happy with the promise of low premiums, ensure you speak to an insurance broker who can explain these terms properly to you. You may find yourself paying higher excesses when you put through claims or may even have rejected ones returned to you because you did not meet a provider’s contractual obligations.
Overlapping Cover
Most of us forgo reading the fine print of our plans. It is a common insurance mistake that can affect us in the long term. We may hurriedly rush to take out new insurance because of referrals but fail to evaluate our current cover. Multiple policies, building insurance, employee benefits, and even credit cards cover are some of the areas that overlap.
Despite thinking that additional cover ensures you will never have rejected claims, it can cost more than you anticipated with expensive monthly premiums. You may already have sufficient coverage, and adding more insurance plans will be a waste of money. Without assessing your current plans, you are setting yourself up with more expenses and excessive insurance, which you may not even need.
There are no benefits to overlapping cover, and when setting up a new plan, you should inform your provider that you may already have insurance policies for specific items. This can lower your premiums and ensure you are not paying for more than what you actually need.
Conclusion
These are insurance mistakes that you are more likely to make when following the advice of your friends or family without evaluating providers and their offerings. Comparing benefits, coverage, and cost are all crucial to having adequate coverage. Unfortunately, the common misconception is that your insurance is too expensive and cheaper premiums are a bargain.
This is inaccurate. While there some providers may be on the higher end of costs, there are reasonable insurance companies who will provide you with feasible cover options like us at Prosperity QB.
You can use referrals to learn more about a provider, its offering, and client experiences. But it is also important to compare providers by evaluating their different benefits, cover, and monthly premiums. While these mistakes are more common than you may realize, they can have a detrimental effect on your long-term finances and the protection of your home and belongings.
Contact us to learn more about our insurance services and wealth management solutions.
