The insurance consumer still does not spend the analysis time that he needs to choose good insurance. We give more importance to the price than to the benefits, so most of the time, we do not read the insurance proposal and we only see …
The time has finally come! I am surprised that I have not touched on this topic before. There are more than 130 articles published and it is not until now that I write about the insurance proposal.
It will be that it is not important if you have not written before on the subject!
Well, yes, it is essential, because it is the first information that you will receive about the insurance you want to take out and that should allow you to select the best.
I have realized that the insurance consumer still does not dedicate the time of analysis that he needs to choose good insurance.
Too often we stay in the fat print, in the ad, and don’t get down to the details.
So this article is about that, about what information an insurance proposal should contain, they are generic but key aspects to know what to see.
7 Data that the insurer should report in its insurance proposal and that are not always available.
I have to admit that more and more insurers include an information note with the most important aspects of the contract in their insurance proposal. In the case of life insurance, the insurers have agreed and have standardized the information so that you can easily compare the different proposals.
The initiative comes to us from the EU and should be incorporated into the insurance distribution legislation – for now, pending approval in Congress – so insurers have chosen to gradually adapt their offers to the new requirements.
If you are one of those who subscribe to the insurance online, you buy it from the agent on the corner, the broker friend or you do it at the bank office, you should have an answer, in the insurance proposal, to these seven questions.
1. What risks are covered by insurance?
Depending on the type of insurance you will have some risk covered or others. In general, coverage is divided into two groups: basic guarantees – typical of the insurance branch – and optional benefits.
If it is car insurance, mandatory civil liability, and extraordinary risks, make up the basic coverage. The rest, voluntary CR, own damages, theft, fire, legal defense, or travel assistance, among others, are grouped as optional guarantees.
In damage insurance, especially in the so-called multi-perils, the same thing happens. The group of basic guarantees includes damages caused by fire, lightning strike, explosion, together with the supplementary costs associated with these causes; firefighters, rescue, debris, or the replacement of plans and documents, permits, and municipal licenses. Extraordinary or catastrophic risks are also included, the coverage of which is provided by the Insurance Compensation Consortium.
The list of damages covered as additional benefits in damage insurance is too broad to list in this post. Among them, some as relevant as damage from atmospheric phenomena, theft, breakdown of machinery or electrical and electronic equipment, or loss of profits.
In the field of personal insurance, it is normal for basic coverage to revolve around the risk of illness or accident. In both cases, benefits can be limited to medical assistance or receive compensation in the event of the insured risk ( death, permanent disability, or temporary disability).
2. Do the risks covered have any limitations?
You are already clear about what the insurance covers. Well, now it’s time to know the possible limitations of the risks covered. But beware that the limitations are not exclusions, what is not covered, we will talk about later.
Let’s go back to the limitations because it is important to know what you are going to find. Doubts must be resolved before contracting the insurance.
For example, in car insurance, it is common to limit the number of roadside assistance during the insurance annuity or the distance to your home to provide the service. Also, if there is any limit when repairing the moon in a workshop of your choice or those arranged by the company.
When it comes to health insurance, the waiting period of the different tests, diagnoses or treatments should be reported in detail. Also if there is a limitation to a certain number of assists in any coverage.
In damage insurance, the most frequent restrictions are related to atmospheric phenomena, establishing the minimum thresholds for the coverage to take effect. Thus, for example, in the case of rain, the precipitation must be greater than 40 l / m², while if it is the wind, the speed must exceed 80 or 90 km.
It is also very important to know the quantitative limits of certain guarantees, as well as the amount of the franchises, fixed or progressive, that the insurance includes.
All this information allows you to assess which insurance proposal is best for you, even among those that the same insurer can offer you.
3. What is not insured?
This is possibly the point that you should pay the most attention to in your insurance proposal. If the previous one dealt with the limitations of the covered events, this one focuses on the three groups of risks not covered and that normally affects all types of insurance.
Damages are caused by intent or gross negligence by the policyholder, insured, family members, partners, or beneficiaries of the insurance. Those, derived from the breach of contractual commitments, their penalties, or administrative or judicial sanctions.
If at some point it has crossed your mind to set fire to the house to get some money, better let it run because if you get caught, you will not charge a euro.
In a second group would be those damages caused by phenomena covered by the Insurance Compensation Consortium, the differences between the damages suffered, and the compensation paid by this entity. Damages as a result of armed conflicts, those classified as a catastrophe or national calamity, or caused by strikes or riots, would not be covered either. The same occurs with damage to the nuclear origin, losses, expenses for decontamination, or recovery of radioactive isotopes.
And finally, there is the group of damages related to the maintenance of the facilities. That is, where the cause that originates the damage is due to wear and tear, lack of preservation, own defect, or is not the product of a fortuitous event.
Hiring insurance and thinking that everything is covered is falling into a frequent error, the problem is that many times you only become aware when the accident occurs.
4. What is the scope of insurance coverage?
I am convinced that you know that, in-home insurance, the guarantees apply in the situation where you have indicated that the property is located. But it is possible that you are unaware that incidents that occur in the national territory, which affect civil liability, are also covered.
When it comes to vehicle civil liability, the territorial scope extends to the countries of the European Economic Area.
If you plan to travel outside the country, I advise you to check your health insurance, you may find yourself with some surprise, such as that in your destination you also have medical expenses covered.
But you should already be informed of all this, as long as the insurer has included it in its insurance proposal. Make sure they don’t skimp on information.
5. When is coverage start and when does it end?
From the inquiries that I receive from readers, together with the experience of years of work in the sector, I have come to the conclusion that the data regarding the period of insurance coverage is overlooked quite often. And it is important that the insurance proposal is well detailed.
The insurance can be contracted for a specific period of time (temporary insurance) or for a year, extendable for the same period of time (annual renewable). In the first case, the insurance expires on the agreed date without the possibility of extension.
In the second case, if neither of the two parties opposes its renewal when the expiration date arrives, the contract is extended for one year and the insurer will want to collect the corresponding premium.
You should pay special attention to the dates because some insurers have the habit of accommodating the expiration date as they please.
Some, the expiration date is adjusted to the first day of the month in which you contracted the insurance. For example, you have hired it on March 12, since the expiration will be set on March 1 of the following year.
In health and funeral insurance, the normal thing is that the expiration date is set to December 31, regardless of the date on which you subscribe.
If I want to cancel the contract, how do I do it?
If the insurance is extendable, knowing when it expires will allow you to cancel it under the legally established terms. The law establishes that it must be communicated at least one month before the renewal. But this term is maximum, so there are companies that have established more favorable terms for the insured (15 days).
In some cases, they have not only modified the term, but also the way in which to communicate the cancellation of the insurance. In this regard, the norm establishes that it must be done in writing, while for some it is sufficient to do so using the form provided on the company’s website.
When it comes to analyzing which insurance proposal is best for you, the small details also count and this should not go unnoticed.
6. What obligations do I have with the insurer?
As in any other contract, where the parties who sign it assume certain obligations, in insurance, too.
While the main obligation of the insurer is to pay the agreed compensation in the event that the loss occurs, the policyholder undertakes, among other things, to:
Accurately declare the information required in the insurance application, for a correct risk assessment. These data are often hidden or falsified and when the loss occurs we are surprised by its consequences.
While the insurance lasts, we must inform – in writing – the insurer of any modification that the declared risk suffers or of those other insurances contracted that guarantee any of the subscribed benefits.
In the event of a claim, notify the insurer of its occurrence as soon as possible and within seven days of knowing its existence. In addition, you are obliged to use the means at your disposal to lessen its consequences, providing all known information on the causes and consequences registered.
And most important of all, pay the established price for the insurance to start.
7. When and how can I pay for the insurance?
I assume that I do not have to remind you that you have to pay the insurance in advance if you want your coverage to take effect. From here on, the means of payment established for the initial and subsequent premiums will depend on each insurer. The normal thing is to use these means:
- Direct debit in bank account : It is the most common and the one that presents the best response in successive renewals of the insurance, especially when we forget to cancel it on time.
- Card payment : It is a means used in the payment of temporary insurance and especially the means used in contracting through the Internet.
- Payment letter : Some entities still use this form of collection, in which you pay the amount of the payment letter at the bank window designated by the insurer.
You can agree on the fractioning of the payment with the insurer (monthly, quarterly, semi-annual), who will normally increase the premium according to the chosen type. The more terms you establish, the greater the increase.
Two other pieces of information should be added to this information about the insurance proposal: everything related to the protection of your personal data; where they are kept, who keeps them, and what they are going to do with them. The other data is related to the claims to the insurer; where and how to claim or what period of time you have to respond.
- This is standardized information that, together with the following data, will allow you to decide what insurance you are going to hire. Do not forget to ask, if they do not inform you by:
- The coverage of the policy, its limitations, and especially what is not covered.
- What is the scope of insurance coverage, and depending on the type, if it has an extension abroad?
- When it starts, ends, or what to do when you want to cancel it.
- For the obligations, you acquire when hiring it or when and how to pay what it costs.
And like everything else, the insurance proposal also expires. It depends on each insurer, but the normal thing is that the proposal is valid for 15 or 30 days and always conditional on the declared terms of the risk being the same as those that have been used to propose.
When you are going to take out insurance, do you consider that you receive all the information you need?
It is your turn, leave us the answer in the comments, we are eager to know your point of view.