Glenn D. Carr, CPCU, MBA State Farm Agent
Insurance really isn’t terribly complicated. However, most people don’t take the time to try to understand it, and that can lead to problems.
The most common mistakes I see customers make are (1) not understanding the coverage they have, (2) not paying their premiums when they are due, and (3) submitting claims frequently.
It is important that you take the time to sit down with your insurance agent at least once every year to review your coverage. Tell him or her what has changed since you last met. Did you get married? Have or adopt a child? Did you do any work on your home? Is there a new driver in your household? Did a child go away to school or move out? Was there a death in the family? All of these things can be important information for the agent to identify potential changes or additions to your coverage (some of these changes could actually save you money). At this meeting you can also ask any questions you have about how your coverage works. The time to find out is before you have a claim, not after.
No one likes to pay bills, but ignoring them doesn’t make them go away. Pay attention to your insurance billing statements, and pay your premiums on time. If your premiums are billed monthly, pay them on time every month. Don’t be late or skip a month and then question why your next bill is double. DO NOT let your coverage cancel for non-payment. In the State of New York, if you let your car insurance cancel and have not turned in your license plates the DMV will fine you and eventually suspend your registration and driver’s license. A police officer can pull you over and impound your vehicle on the spot. It happens. Don’t let it happen to you.
Letting other types of insurance like home or life cancel for non-payment isn’t a good idea either. You could find yourself with a loss that isn’t covered, and even if you don’t have a loss you may find getting coverage back in place is more expensive than it was before. You may even find that the company you had before won’t take you back.
Insurance on property such as cars and homes is intended for catastrophes, not inconveniences. Putting in frequent, small claims will raise your premiums and could lead to your policy being cancelled. For example, putting in claims for towing bills several times a year is going to raise some red flags. If you have major damage the cost of which would be difficult to pay out of pocket, call your agent and ask about putting in a claim.
One last word on claims – the amount of time you have been with an insurance company has absolutely no bearing on whether or not your claim will be paid. If you submit a claim for a loss that is not covered by your policy, it will be denied. Premium payments are not deposits to a bank account that you can draw on. An insurance policy is a contract, and it rigidly defines what is covered and what is not. Nowhere in the contract does it say that claims will be paid because someone has been insured with a particular company for a number of years.
As I said at the beginning, insurance isn’t terribly complicated. But the expertise of an insurance professional is invaluable to the responsible insurance consumer. Buying your insurance online or from an 800 number may seem like a good idea, right up until the time you have a claim or need to talk to someone about coverage. At that point who do you go to?
Talk to a local, licensed insurance agent who will take the time to sit down with you, ask you the pertinent questions, and make sound recommendations. And then take the time to review every year.