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Understanding Insurance Policies

Updated on August 15, 2012


TIPS ON UNDERSTANDING INSURANCE POLICIES


Insurance is a necessity to protect your home, your car and your valuables.

However, there are many facts about insurance in general that people tend to overlook.

Usually if a situation arises where you need to use your insurance, you find out instantly how your policy works or doesn't work for you.

I’ve been in several situations where I’ve had to rely on my insurance policies.

That's perhaps the best way to know if the policy does work for you but knowing how it works before you need it is truly the best "policy".

Let’s explore some facts about insurance and then you can decide if your policies are working for you.

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SOME FACTS ABOUT INSURANCE

These are some things that insurance may cover depending upon your policy.

HOMEOWNERS INSURANCE

  • Stolen merchandise from your car (such as a video camera)
  • Stolen luggage
  • Packages stolen from your car while shopping (always carry your receipts on you)
  • Items stolen from your kid’s dorm room at college (but probably not an off-campus apartment)
  • Legal defense – when someone sues you for falling on your front steps
  • Spoiled food clause – some insurance companies carry this – in the event of a "peril" such as a lightning strikes, wind storms, etc. Your power is out for 4 days and all your food spoils


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CAR INSURANCE

  • Pet injuries – usually up to a certain dollar value for vet bills
  • Company car – if you only have 1 other car insured you may qualify for multiple car discount if you also drive a company car
  • Farm vehicle bonus – if you have a vehicle (including a tractor) that you drive strictly in performing your duties on a ranch or farm
  • Legal defense – if someone sues you for back injury
  • Borrowing your car – auto insurance on the car driven covers the driver of the car

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2O DISCOUNTS YOU CAN GET ON INSURANCE COVERAGE

There are multiple discounts available so check with your insurance agents to see which you qualify for but here are just some of the many available.

  1. Good credit scores will bring down your premiums – put person with best credit score on policy first, the person with lesser score on second to get the best discount
  2. Renewal discount – returning customer
  3. Paying online or automatic withdrawal
  4. Senior citizens
  5. Alumnus of certain schools
  6. Widow or widower qualify for married discounts
  7. New electrical wiring on homeowners
  8. No claims in 10 years
  9. Green commuter rates on car insurance
  10. Gated community
  11. Hail-resistant roofs or Class 4 roofing
  12. Student being a Boy Scout or a Girl Scout (car)
  13. Low-risk professions like teachers, accountants or engineers (auto)  
  14. Military personnel
  15. Professional association membership
  16. Safety devices such as anti-lock brakes, automatic seatbelts, airbags, anti-theft devices, emergency response systems, etc. (auto)
  17. Safe driver – no accidents, no tickets (car)
  18. Motorcycle and defensive driver classes (auto)
  19. Student discounts for GPA above 3.0     
  20. Insurance bundling – having multiple insurances with the same carrier

The above are just some of the many discounts available for the insured. 

Make sure you shop around for the best possible rates which are applicable to your own unique situation and insurance history. 

You can save thousands per year by employing some of the discounts available. 

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INSURANCE CLAIM SCENARIO


Lots of folks are afraid to make a claim on their policies because they’re afraid they’ll be canceled.  I’ve seen it from both sides. 

We had a homeowners policy for over 20 years and had never filed one claim.  When we were on vacation, a water pipe developed a leak in an upstairs bathroom which went undiscovered for a few days.  Luckily, our daughter came by to check on the house and discovered it but not before it had done about $20,000 worth of damage to the floor and also to the downstairs. 

An agent came out to assess the damage and sprang for replacing the drywall right away but decided that he did not want to replace the carpeting, which was completely saturated.  He contracted with a carpeting repair place and ended up drying out the Berber carpeting and pad and then putting it back down.

Months later, there was a moldy smell in our downstairs and we reopened the claim.  They fought us tooth and nail having people come out to inspect it who couldn’t detect a smell.  Finally, very reluctantly, they agreed to let the same contractor who had done the drywall replacement come out and replace the carpeting.  Lo and behold, when the carpet was taken up, there was a huge area of mold growing under the carpeting and also under the bathroom tile from the prior water damage. 

All this said, we did get everything replaced.  However, a year later when we moved to another home, they refused to give us coverage and we had to go shopping for new insurance – because we had filed a large claim. 

The moral of this story is I guess sometimes you get burned on insurance claims.  But changing companies turned out to be a good thing for us. 

It should not be that submitting a legitimate claim after being a great customer all those years would turn around to bite you but – it happens. 

That being said, filing multiple claims is always a bad idea – especially on homeowners insurance.  You want to weigh the value of something before you make a claim.  In the case of the water damage, however, we had no choice. 

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INSURANCE POLICY TIPS AND TRICKS


If you are shopping for a car, always investigate before you buy; find out what the best cars are to insure.  You'll be happier when you drive off the lot.  This extra time spent can save you thousands in car insurance premiums.  Check out the cheapest insurable cars by price comparison before you buy.

When thinking about filing a homeowner’s insurance claim, make sure that the value of the claim is worth filing.  For instance, a CD collection that’s stolen out of your car isn’t probably the best thing to claim but a $3000 computer out of a home office is something you definitely want to think about claiming. 

Also be aware that filing a claim may hurt you down the road.  In my humble opinion, it shouldn’t.  I’m not sure why filing a legitimate claim would reflect badly on you after paying in for so many years but as I said, in the long run, we ended up with better insurance and a lower rate so it was a win-win situation for us. 

If you have additional insurance tips or input, please share them here!

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    • akirchner profile imageAUTHOR

      Audrey Kirchner 

      7 years ago from Washington

      G1pkn - Good ideas and thanks for the visit.

    • g1pkn profile image

      g1pkn 

      7 years ago

      Great Hub, what do you think about my latest Hub http://hubpages.com/hub/I-Have-A-Mortgage-And-A-Lo... this focuses on an area you havent touched on. I have focused on taking an insurance plan if you have a mortgage or a loan ?

    • akirchner profile imageAUTHOR

      Audrey Kirchner 

      7 years ago from Washington

      All Surety Bonds - Thanks so much for stopping by - and for the vote up!

    • AllSuretyBonds profile image

      AllSuretyBonds 

      7 years ago

      Great Hub. This article is very thorough and looks like you did a lot of researching. Voting you up.

    • akirchner profile imageAUTHOR

      Audrey Kirchner 

      7 years ago from Washington

      Thanks, Hanna!

    • Hello, hello, profile image

      Hello, hello, 

      7 years ago from London, UK

      Very detailed and comprehensive hub.

    • akirchner profile imageAUTHOR

      Audrey Kirchner 

      7 years ago from Washington

      Pamela - You are not a kidding me! I think I have finances swimming in my old lady head! Thanks for the read.

      DTR0005 - Isn't that the most insane thing you have ever heard? It was all clean water so no sewage involved - and it was a reputable company - Allstate. The leak started apparently in an upstairs sink and by the time my daughter found it, it had saturated the floor and dripped down the walls into the laundry room, into the bathroom below and all the way across the hall and into our bedroom.

      He had no problem replacing the drywall - no duh since it was saturated a few inches up and then in the ceiling, etc. But to try and dry the carpet? It was insane - they brought in heavy duty fans and dried it for days - I can't remember if they did the pad or not and then restretched and put it back down. Within a month or so, I started to smell mold.

      I had to literally fight with them to get them to just 'do it' and replace it - when the contractor pulled up the carpet (and tile in the bathroom) he called me down to inspect it and said 'well kid - you were right'.

      The problem I had with the whole mess was that he blew thousands of dollars on trying to dry out the carpet! Wouldn't it have been better to replace it in the beginning? It just seemed like the stupidest thing I've ever heard of. We didn't know if we could argue against it so went along with what he said!

    • DTR0005 profile image

      Doug Robinson 

      7 years ago from Midwest

      This is very interesting and informative information. I adjust claims for a living - homeowners, auto, and bodily injury. That is fairly unusual that the adjuster opted not to replace the carpeting the first time out. Typically is you can get to wet/saturated carpeting within about a 12 hour window, it's salvageable. They simply remove the pad (replace later) clean and restretch. This is provided that is "clean water." Can you elaborate on the circumstances behind the claim? I am interested.

    • Pamela99 profile image

      Pamela Oglesby 

      7 years ago from Sunny Florida

      Audry, I bet you know more about insurance now than you ever hoped to as all these articles are very thorough and must have taken a lot of research on your part. You are really a winner!

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