The “most misunderstood industry”, that’s what two Wharton professors, Howard C. Kunreuther and Mark V. Pauly called the insurance industry in their book written in 2013.These two scientists and economists are spot on in their conclusion. Insurance is not just misunderstood but can be a bit complicated.
As insurance advisors, we have our hands full with several misunderstood facts about insurance regularly. We will attempt to put this confusion to rest through this piece.
Many think that their insurance policies are not a good deal, they forget insurance protects their largest and most important assets; their home, auto, and financial security.
Let’s put this straight, insurance is not an investment but a protective activity. It’s putting in place a form of security for you, your loved ones, and their future. The feeling of investment is why numerous policyholders cancel their policies. When you have to use insurance is when the value is seen.
Low probability events in the United States includes earthquakes, flooding, and other natural disasters. While they are low probability events, they often have devastating impacts.
But can you imagine that despite California being prone to earthquakes, only 10% of Californians subscribed to earthquake insurance. The belief is that this won’t happen to them. They are forgetting that this is where insurance could have been more valuable. You purchase insurance to protect you if an event happens.
You may not have realized, but there’s a limit your home or auto insurance has over some claims. Umbrella insurance isn’t about how rich you are. It is more about protecting your home and financial security if you are sued for amount higher than your policy limits.
It is a small cost for the extra protection for liabilities. What you think of as a simple event can turn into a legal battle if you or your business is sued.
In the minds of many, long-term care insurance is intended for older adults. This is far from the truth. While long-term insurance can pay for nursing home expenses for the elderly, there’s a lot the younger generation can also benefit from.
As a young person, long-term insurance can be beneficial if you are in an accident and need rehab. You’ll be able to pay for long-term rehabilitation. It can also help pay medical bills and other related expenses.
Your homeowner’s insurance policy may not cover everything in your home. Or more likely, it may not cover the full value of all of your items. There’s a process you’ll have to go through to create a cover, and it’s called scheduling.
Scheduling specialty or high value items like jewelry, musical instruments, or computer equipment and electronics. Keep an ongoing inventory of your items and review with your insurance advisor. We also recommend doing a video walk through of your home and saving it in a cloud based system in case of a loss.
There’s nowhere where the color of a car is considered when calculating auto insurance premium. This is another misunderstood fact about insurance that has to be corrected.
Truly, the red color is always evident from anywhere, but it’s never considered when valuing your premium. A red car will not cost you more to insure than a Black or Green car. Your insurer only considers the age and value of the vehicle, your driving history, and the brand of your car in valuing your premium.
An insurance policy is just like every other agreement. As a policyholder, you should make it a habit to renew your policy early enough. However, if this is not possible, you may be eligible to a 30 days grace period.
Please check your policy first. Even though you are not eligible to claims during the grace period, you are maybe entitled to other crucial aspects during the waiting period.
There are still dozens of misunderstood facts about insurance out there. Reach out to us at Tillman Insurance Advisors; our expert advisors are ready to provide the correct answers to your questions.