16 February 2011

Insurance Tricks That Cost You Money

Insurance Tricks That Cost You Money ; Is there a way to get insurance against insurance? For some who have been victims of the scrupulous practices of some insurance companies, they probably wish they could purchase some protection against their insurance. Sadly, we often feel like we're at the mercy of the insurance giants, but there is a way to level the playing field: education. If you know their tricks,

1. You May Not Need Collision Insurance
So you purchased an older model car. It's only worth $2,500 and is seven or more years old. As your car depreciates, it gets closer and closer to your deductible. Remember that the insurance company won't pay you any more than the value of your car, so if the value is the same or less than your deductible, you won't get any money. If you're driving an old car, consider not getting collision insurance. The minimum policy required by law is enough in your case. Don't count on your insurance agent to tell you, though.

2. If You Have A Car Loan, You Need Gap Insurance
After you got rid of that old car, you purchased a shiny new car complete with that brand new car smell that everybody loves. You took out a loan for $25,000 and drove home. Two weeks later your car was totaled and the insurance company offered to pay you $21,000 for the car. The bank is going to still want the $25,000 you owe, so you'll be on the hook for the other $4,000.

Without gap insurance, you have to pay it out of your pocket. If you have a loan for your car, you should also consider gap insurance.

3. Anti-Concurrent Language in Your Policy
You live in a coastal town and recently a major hurricane came through and caused major damage to your home including tens of thousands of dollars in flood damage. Everything will be covered because you have hurricane insurance as part of your homeowner's policy, right? Wrong!

Your insurance company tells you that because of the anti-concurrent language in your policy, nothing is covered because flood damage isn't covered even though the damage was clearly caused by the hurricane. Adding insult to injury, they tell you that you should have read your policy. Does all of this sound confusing?

Make sure to ask your insurance agent about the anti-concurrent language in your policy and ask them to show it to you in the policy.

4. You'll Never Understand it, Anyway
Have you ever tried to read your insurance policy? Regardless of your level of education or your street smarts, these policies are written in an extremely complicated way, but this problem is quickly being solved. Legislation in more than half of the United States has been introduced or enacted in to law making insurance companies write their policies in plain English. Always ask for an explanation of the policy if you don't understand it. Do you have a phone that allows you to record? Turn the microphone on and record the insurance agent's explanation.

5. We Use Your Credit Score to Determine Your Rate
Had some troubles paying your bills? Bankruptcy? These may not seem like unreasonable items for your insurance company to look at if they're trusting you to make payments on your policy but think of it another way: What if you believe in paying cash for everything and you have no credit? What if you're elderly and no longer make purchases requiring credit?

This practice assumes that having credit makes for a responsible person when in actuality, some people are so responsible that they don't need credit at all. When receiving a rate quote, ask the agent if they used your credit score as a metric to determine your rate.

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