The law takes a dim view of people trying to get away with paying less insurance than they should, or people making fraudulent claims. Unfortunately, the sword doesn’t quite swing both ways when it comes to protecting consumers against greedy insurance companies. While there are many laws to protect us, there are just as many ways to get around these using loopholes.
The only reason insurance companies manage to continue doing things like this is because we don’t know any better. Educating yourself is the only sure way to protect yourself from being taken advantage of – because if you don’t know it’s happened, nobody else is going to pick up on it.
Here are 7 evil insurance company tricks to keep an eye out for:
1) Direct Debit and Interest
If you choose to pay off your insurance on a monthly basis instead of one stomach-churning lump sum, then you need to be sure to read the fine print. In essence what you are doing is “borrowing” the money for insurance from your insurer, and then paying it back, on their terms. It is not uncommon to see APRs of up to 30%, so if you have to pay your insurance this way, pay very close attention to this little number.
2) Comparison Site Results and Deductibles
Insurance companies are so desperate to get their quotes to come out on top of a set of results at an insurance quote comparison site that they will hike the deductible up to ridiculous levels in the hopes that you just “won’t notice”. Deductibles of up to $1,000 have been seen next to the best monthly premiums, so be sure that the deductible attached to your policy is one you can handle paying if you have to.
3) Yearly Premium Increases
Every year you should get a letter from your insurer, telling you about their new rates. These documents are ostensibly designed to make insurance more transparent, and to make sure your new premiums are competitive – but they seldom are. There is a good chance that if you were to apply as a new customer, with your added year of no-claims bonus, you would get a better rate than the one offered to you. Use an insurance quote comparison site to prove your insurance company wrong.
4) They’ll Charge You Again in a Year
Somewhere at the bottom of your contract is a little piece of fine print that says “Don’t worry about remembering to pay us – we’ll automatically bill the same card next year”. Uncheck it if it is an online form, or notify your insurance company that you don’t want them to do this. They’ll send you a note reminding you to pay, but if you were to go and get a new policy you might end up doubly-insured, which is a nightmare to sort out.
5) They’ll Add Things You Don’t Want
If you suddenly see a large increase in your monthly premiums, or you get a renewal quote that is much higher than the one before, double check the fine print. You might find that something like “collision cover” is added when it wasn’t there before – even though you didn’t expressly ask for it.
Insurance companies occasionally change the composition of their policies, and then allocate the ‘best fit’ one to you, without asking you if you want to renew on these terms. It’s unethical, but not illegal as you did sign it before checking the fine print.
6) They’ll Cover Things You Don’t Need
Just because an insurance company’s offer is “better” than its competitors doesn’t mean it suits you more. If it offers $25,000 collision insurance, and your car is only worth $5,000, you don’t need it. You can probably find a better policy that is more stripped down to meet your needs. Insurance companies are experts at “upselling”, which is convincing you to pay for cover you don’t need, and tricking you into thinking you can’t change it.
7) Don’t Believe Fad Insurance Policies
Recently there have been a lot of new insurance companies offering insurance to select groups, such as women or students. Simply because you fit into an insurance company’s target market segment, doesn’t mean they necessarily offer you the best deal. Do your homework and regular shopping around even if someone seems to have a policy created especially for you.