Insurance policies just don’t provide the cover they used to

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1024px-Liverpool_Riots_2011_damaged_carIn this economy even the short-term insurance policies that you thought covered your assets adequately may not be doing so at all.

The problem is that it’s become harder for insurance companies to get new business in this economy and with each fighting more fiercely for market share, more pressure has been put on their revenues. On the claims aside, insurers have adjusted for the cost increases of labour and materials and are now hitting you hard when it comes to claims.

If you want to see just how badly the insured party is being treated now, all you need to do is take a look at the consumer complaint sites where hundreds of downgraded claims are being reported. For example, a Mercedes-Benz owner requires a light and wheel hub caps to be replaced and the insurer refuses and sends the customer to a downbeat, low-cost panel beater where the job is poorly done and one of the hub caps is excluded without explanation.

I’m talking about insurance because it still is an important part of managing risk in your small business and your personal life. But watch out when you try to claim because you will be in for a big surprise. Even the so-called consumer-friendly short-term insurance companies that have high profiles are behind-the-scenes often treating their customers like dirt.

So much for branding that is out of sync with the reality of what the short-term insurers are offering you. There is a huge credibility gap between the hype that you see on these social media platforms, radio advertising and magazine advertising and when you try to claim.

I have been the victim of this new cost squeeze by short-term insurers. They refused to use a reputable and credible panel beater and instead insisted on using a backyard panel beater stuck away in a gloomy industrial area. When I enquired why they had chosen this panel beater, they said it was because my car was close to 10 years old and no longer could qualify for sending it to a regular panel beater. When I tried to get the real information out of them, I was told that the panel beater that I preferred had higher labour rates. Subsequently this proved to be erroneous thinking because the panel beater that they insisted on took more than a month to complete the job and the insurer had to provide a hired car for this period. This quickly knocked out the argument of begrudging a reputable panel beater the normal rates for similar work.

So what you do? How can you avoid the false and misleading claims from short-term insurers?

Well one thing you can’t do is shout at them. But they don’t listen any more. The game now is survival. Plus you have virtually no leverage with them. Yes, you can put your complaints on a consumer complaint website but go take a look at those websites and see how many insurers actually reply to them. Very little.

The first thing that you can do is to review the policies that you have with short-term insurers to see exactly what is covered and what is not covered. You’ll be surprised how they have cleverly worded the policies with major exclusions that they don’t point out to you when rubbing their hands to get your business.

The other thing is to do your utmost to do due diligence on short-term insurance companies before you take out an insurance policy. Don’t be beguiled into their social media hype. Notice which short-term insurers only put compliments on their social media and erase any form of complaint. It’s also effective to talk to friends and family to find out their nightmare experiences with insurers and find out which short-term insurers (if any) provide a better deal.

It may also be worthwhile, if possible, to keep some money stashed away in a kitty that can act as a sort of self-insurance float that you can use to cover shortfalls in short-term insurance now that short-term insurers are putting up obstacles and roadblocks in the way of anyone who wants to claim. If you don’t believe me think of this: in the 10 years that I’ve had a homeowners policy, the bank insurance company has refused every single claim bar one.

If you don’t do something about your short-term insurance now you’ll only have yourself to blame when you later need to make a claim. You may erroneously think that they are the consumer’s friend and out to help you but it’s not so in this economy. If you have any thoughts or suggestions on how to better ensure short-term risks, please let me know.

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