10 Things to Know When Buying Insurance Policies

If you have ever had to make an insurance claim, you know that your premium dollars pay for very important protection. Hopefully, you enjoyed a hassle free claims process. If you did have problems getting your claim paid, you probably considered finding another insurer. Either way, you learned the importance of having an insurance company on your side!

Photo by Andrew via Flickr

10 Insurance Buying Tips

Consider these insurance buying tips before making any decisions. These tips are general enough that they could be applied to almost any type of insurance you can think of — i.e., home insurance, life insurance, auto insurance, etc.

1. Be wary of sacrificing coverage to save money

Sometimes it makes sense to raise your yearly deductible or forgo an option because the premiums are too high, but make sure you understand what you are signing up for.

2. Look at an insurance company’s financial ratings

The internet makes it very easy to research an insurer’s financial ratings to make sure your company will be around when you need them!

For example, Insure.com provides a very good insurance company ratings lookup tool.

3. Find out if other covered people have complaints

Every U.S. state has an insurance department, and they will have complaint records. You can probably even find them online at your state insurance department website.

For example, here is the New York State Insurance Department web site.

4. Insurers use different underwriting guidelines

A decline by one company does not mean that your application will be declined by all companies. Agents should have a good idea about who will get accepted before they submit an application, but they cannot always predict underwriter actions. Comparison shop for insurance just like any other major purchase.

5. Make sure that your agent is duly licensed

This may sound obvious, but many stories have circulated about unlicensed agents selling fake policies. They collect an upfront coverage and disappear, and then the consumer has no coverage without even knowing it.

6. Make sure the company is licensed to do business in your state

Again, make sure you do not get fooled. This is very rare, but even licensed agents have been fooled into selling products from “fake” insurance companies. It is so simple to check on a company with your state insurance department that it should never happen, but it has happened.

7. Clear up any concerns before you need to use your policy

For instance, if you travel a lot, find out how your health insurance covers overseas medical services. If you absolutely have to have transportation every day, will your car insurance policy provide a rental car?

8. Find out how your insurer will service your claims

Do you have toll free number to call if you have a car accident out of town, and can you check your claims status online? You certainly want to know how claims get handled before you need to file one, and a more convenient and consumer oriented company may be worth a few dollars more a month.

9. You have a 30 day “free look”

Your policy should come with a 30 day free look. You should be able to cancel during that time with a full refund. Of course, you can also cancel most policies at any time without having to pay more premiums.

10. Shop around before you buy insurance

You will find that different insurers in your area will offer different rating scales, discounts, and premiums. Be sure and compare 3 to 5 different policies before you commit to an important, long term contract like insurance.

Andy Tenton

Andy is a 30-something New Yorker who turned his financial life around. He took charge of his finances, got out of debt, and is now working his way toward financial success. He is the owner and publisher of WorkSaveLive.com.