Dispelling Common Misconceptions About the Insurance Industry

Don’t believe these common insurance misconceptions.

While most people understand the need to secure different types of insurance, when it comes down to it, the general public knows very little about the world of insurance.  Unfortunately, this lack of knowledge often leads to misunderstandings, and belief in common insurance misconceptions can cause people to make uninformed coverage decisions.  To ensure that this doesn’t happen to you, here is the truth behind some of the most common insurance myths.

  • “All insurance companies offer the same policies.”

Many people assume that insurance policies are the same across all carriers.  However, this couldn’t be further from the truth.  While many carriers offer similar policies, the quality and specifics of the coverage will vary depending on the company.  For instance, the underwriting experience, coverage limits, policy customizations, premiums, and claims management strategy of one insurance carrier might be completely different from a competitor’s.  This is why it’s so important for you to research all your insurance options before choosing a carrier.  Treating all insurance companies as the same could mean that you are paying more for less coverage and a bad experience.

  • “A little white lie won’t affect your insurability.”

When filling out insurance applications, it’s incredibly important that you answer questions honestly and disclose all the information that the insurance provider requests.  Oftentimes, people attempt to conceal information from their insurance providers as a way to save money on their premiums.  While a small lie or omission may not seem like a big deal, it’s important to understand that this constitutes an act of insurance fraud.  If your fraud is uncovered (and chances are it will be caught easily), then the insurer will hike up your rates or deny you coverage altogether.  This is because your dishonesty will be seen as high-risk behavior.  Even if your lie does escape notice and you are issued a policy, there’s a good chance that it will be discovered later when you file a claim.  In this situation, your insurer has the right to deny your claim, cancel your policy, and even pursue legal action.  Long story short; take your insurance application seriously and always be upfront and honest with your insurance provider.

  • “Coverage gaps don’t affect you in the long run.”

Many people allow their insurance policies to lapse without renewing their coverage or securing a different policy.  This often happens when a policyholder is forgetful, lazy, or cannot afford coverage.  Whatever the reason, many people do not think that coverage gaps are a big deal.  However, it’s important to understand that lapses in coverage are considered high-risk behavior.  When insurance companies see that you have coverage gaps, they will automatically place you in a higher risk classification, which can mean higher premiums or even total policy refusals.  Rather than placing yourself in this tenuous position, it’s important that you stay on top of your existing insurance policies.  By consistently paying your premiums, and either renewing or switching policies when your coverage expires, you can maintain continuous coverage and protect your insurability.

This is the truth behind some of the most common insurance misconceptions.  Do you have additional questions about your various insurance needs?  If so, then contact the experts at CIA Insurance and Risk Management.  Our dedicated team is eager to assist you with all your coverage needs today.

Post written by Sam Crudo, Chief Executive Officer| Commercial Risk Management (CRM)

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