Is Your Insurance Company Trying To Crook You?

Insurance has become a necessary evil in our times. When I say necessary evil I mean that insurance or at least the need for insurance mostly arises from need for financial security in case of theft, accident or incident such as ill health. Seeing the growing need of people to protect their assets, there have been many more insurance companies popping up over the past decade.

The weakness of the insurance industry like many other industries can be attributed to the greed and dishonest practices of some companies. These are companies which are only out to make a profit. This article is about how to safe guard yourself from an insurance company which has dishonest practices. There are companies which really do have a strict code of ethics in their dealings, who really do try to deliver the best possible service to their clients.

How does an insurance company make money?

When you buy insurance you are buying a form of risk management. Every month or term, depending on the policy, you pay your premiums. You pay these premiums in exchange for shared risk with the company. If nothing happens to your during the insured period the insurance company keeps the money. If something does happen to you the insurance company must pay out the claim.

So you can say that an insurance makes business by banking on the likelihood that the client will not claim. Because a company will usually have thousands of clients, they hope to make more money on premiums than they need to pay out in claims.

Another way they make money is by investing the collective premium reserves. These reserves- which is the amount of money left over after all claims have been paid is invested.

How do dishonest companies operate?

The insurance company which is dishonest in its dealings will try everything to not pay out claims. An insurance company which uses dishonest means will try to crook people in one of the following ways:

False advertising- These companies will offer benefits and prices to hook the potential client at the beginning. The client then only finds out half way through the process that there are added cost involved. Because many people will not back out when they feel they have partially committed themselves the company will usually get away with it.

Hidden Clauses- Often an insurance contract will be written in a way, which makes it difficult for the client to understand what is actually being offered. Hidden clauses are the insurance companies way of getting out of paying a claim.

Prolonged investigations- When the client needs to make a claim, the insurance company prolongs or even denies pay out, stating that the person either did not have the documents to support their claim or that they find the incident was not covered in the contract.

These are just some of the ways a dishonest company can try to crook you. Also make sure you read your contract scrupulously before signing. Choose a company wisely!