That’s a good question when buying insurance. “The devil is in the details,” some say. It’s true. Even little decisions can make big differences. Let’s briefly consider how insurance works, the importance of buying the right type of insurance and keeping it updated as your circumstances and assets change, and the important role of an experienced insurance broker at claims time.
How Insurance Works
Basically, insurance is paying someone else to assume risks that would normally be yours. You pay the insurer a fixed amount, and they then undertake the responsibility of paying for the costs of repair or replacement of the asset that you have insured, such as your house or automobile.
In some ways, insurance is like a wager you make with the insurer. You’re betting that something terrible, such as your house being broken into or it being burned down will happen. The insurer is betting that it won’t. But you don’t want to take any chances, so you buy insurance so that in the event of a loss or damage to your home, your costs to replace or repair the asset are covered.
It has been said that all insurance is the same—until it comes to filing a claim. There’s a lot of truth in that statement. Filing a claim usually becomes the ‘moment of truth’ for most consumers and their insurers. Here are three ways to help ensure you get fair compensation at claims time:
- Be sure to buy the right type of insurance that is tailored to your unique situation
- Maintain the correct type of coverage as your assets change over time
- Work closely with an experienced insurance broker who will provide support throughout the entire claim cycle
Choose the correct type of insurance
Each person’s insurance needs are unique because everyone’s circumstances and assets are different. Therefore, take the time to discuss you unique needs with your insurance broker. Fundamentally, you will need to select:
- types of coverage
- levels of coverage (the amount you will be paid when you need to make a claim)
- deductible levels for each type of coverage (how much you will be required to pay toward the loss)
The process of choosing also means asking questions so that you understand precisely what is and isn’t covered under the policy you select. Choosing the correct insurance is the most important way you can ensure you get fair compensation when filing a claim. Getting the right insurance is like a fireman, a police officer, or some other rescue worker—they all carefully choose their protective equipment unique to their needs. When trouble comes up they are prepared and covered.
Quickly choosing your insurance or buying the cheapest policy available may mean inadequate coverage, which can translate into unpleasant surprises and big disappointments at “claims time.”
Maintain the correct type of coverage
Everyone’s life changes over time; children come along which means renovating your home or maybe moving to a larger one; the value of your home or your personal belongings increase; or you’ve added a suite to your home for your parents to live in; or you start a home-based business, etc.
Whenever a person’s assets, such as their home and personal property change significantly, it is always important to review your insurance coverage with your broker. A number of changes can incur what insurers consider a “material change of risk.” For example, if you add a rental suite to your home, this changes or increases the risk levels for damages or losses. In addition, the value of your home has increased. Adding a suite also increases the replacement costs should your home be damaged by fire or water, and so forth. If you don’t update your insurance coverage because of adding the suite, then the policy you bought prior to adding the suite will not cover this “material change of risk.” You may not be covered for losses when making a claim—if you have not updated your coverage. In fact, you could void your entire policy!
Work closely with an experienced insurance broker who will provide support throughout the entire claim cycle
Your insurance broker’s level of knowledge, experience, and expertise are all critical to getting satisfactory results at claims time. It’s helpful to consider them as part of your protective network, in a similar way to the local fire and police departments.
Insurance Expert: To secure the right type of coverage they need to take the time to understand your precise needs and then offer a matching policy. To achieve this, a capable broker knows what the markets are doing, what the underwriter is looking for, and how to present the clients’ properties in the best possible light. What does that involve? They need to thoroughly understand each insurer’s policy applications, the meaning, and significance of each question, how the information being requested is likely to be interpreted, and how that information can best be communicated to the insurer. Adequate coverage and the cost of such coverage will depend on your broker’s knowledge, as well as the time and attention that they devote to your needs.
In addition, as new risks emerge (and they always do), or as your insurance needs change, your broker needs to stay alert and pro-actively keep you informed so that there are no gaps in your coverage. An example of change that can arise is the dramatic increase in the cost of reconstruction. Without a recent evaluation of the reconstruction cost for your home you could be under-insured, which can translate into a very unpleasant surprise should you need to make a claim for damages or losses to your home.
Risk Manager: A broker should also act as a risk management advisor. He/she should be able to explain simply and clearly the differences in coverage and their relevant importance to clients’ properties. Clients should be able to expect objective advice on the benefits and risks of changing the type or level of coverage they currently have, as their needs evolve.
An Advocate: Finally, a competent broker will be there when disaster or accidents arise and clients now need to file a claim. Brokers’ claim satisfaction ratings are an easy benchmark to determine those who are good negotiators and carry weight with the insurer—and those that don’t. The characteristics of a competently managed claims process include:
- Time it takes for property to be repaired or replaced
- Proactively contacting the customer, keeping them informed and explaining the process at each stage
- Number of people a customer interacts with throughout the claims process (as the number of representatives a customer interacts with increases, so does the level of dissatisfaction)
As with all other service providers, some insurance brokers are better than others. Choose an insurance broker who has the experience and expertise to argue well with insurers the merits of their customers’ claims.
In conclusion, getting fair compensation when filing a claim is more about doing one’s homework, keeping your insurance current, and choosing the appropriate broker—than getting the right lawyer when filing a claim! Contact one of our experienced insurance advisors today to learn more.