The Truth About Claims

The perceptions of insurance companies by the general public are nowadays varied, and most are unfortunately negative, particularly those involving claims and the way claims are handled. The most common complaints we hear from prospective new clients are that either their claim wasn’t covered, or if it was covered, that it caused their premium to increase.  So what can be done to avoid these two claim pitfalls?  The solution involves choosing a good agent or agency from which to obtain your insurance coverage.

Insurance policies in the 21st century are often purchased online or directly through the insurance companies via employee representatives, and therefore many people sacrifice the advantage of agency representation in favor of so-called lower pricing.  But price comparisons can be subjective due to policy differences, while competent agency representation is free.  So how can having a good agent help?

First, the agent can make sure you understand how your policy works, explaining the policy’s automatic limitations and how these limitations can be overcome. A restaurant, for example, has a large income-loss exposure if business is interrupted due to a power loss on the eve of a busy weekend.  Most policies contain a 72-hour waiting period before loss-of-income coverage goes into effect, which essentially renders the weekend a total loss.  However, a good agent will get that waiting period reduced, or often eliminated altogether, making sure the client doesn’t suffer a significant loss.

Second, an agent can assist in a claim scenario by becoming in involved in the interpretation of the policy. Since insurance company claims adjusters are mandated to deny coverage if not contractually obligated by the policy, they will attempt to make sure that the policy does not exclude coverage before authorizing payment.  However, they often interpret the policy incorrectly, as certain exclusions are often given back in other parts of the policy.  A good agent can often uncover the error and get the claim paid.

Finally, an agent can advise on whether making a claim is in the best interest of the client financially. Insurance companies often increase premiums due to claims, serving as a deterrent to making too many claims, particularly small claims.  An agent can evaluate the impact a claim will have on future premiums, and therefore determine if going through with the claim will result in a higher net cost than just paying for the damages out-of-pocket.

The most important thing to remember is that claims adjusters represent insurance companies, while agents represent you. Make sure you have someone in your corner.