The 5 Important Tips to Know When Buying an Insurance Policy

Buying an insurance policy is an important decision. It is primordial to ensure that you understand what you need to know before you commit yourself.

Having some guidance beforehand can help to reduce unnecessary stress and frustration that come with choosing insurance.

Here are 5 important tips to consider when purchasing any insurance policy.

Read your insurance policy and don’t be afraid to ask questions

Always make sure that you read carefully and understand your insurance policy. If you do not understand any terms or conditions of the policy, it is your right to ask questions and do not be afraid to do so. Insurance coverage documents can be written in legal terms and being confusing and complicated. Hence ask questions for any necessary clarification you need.  The insurer should respond to your questions in plain language and clearly to make sure that you fully understand.

Reading and understanding your insurance policy will ensure that you understand the rights and obligations of each party under the contract, and avoid disagreements with the insurance company when a loss occurred.

Be aware of the exclusions

Exclusions are policy provisions that state the risks or losses that are not covered by the insurance policy. Insurers use the exclusion provision to eliminate coverage for some risks they are afraid to insure.

The main categories of exclusions are excluded property (for instance a restriction coverage of jewellery, pet, automobile under a homeowner policy), excluded perils (earthquake and flood) and excluded losses (for example damage caused by wear and tear under an auto insurance policy).

Understanding the exclusions helps you to know what is covered under your policy and what is not, and avoids problems and disagreements with the insurance company when a claim is denied. You can find the exclusions under the exclusion section of your insurance policy document. But some important exclusions can be written under the Policy Condition section or somewhere else in the document.

Understand the claim process

It is important to clearly comprehend how to claim when buying your insurance policy. The claim process must be explained clearly to allow you to access your benefit when you face a loss and it is time to claim.

It is crucial to know the information and required documents you need to provide when submitting a claim, the time to submit your claim from the moment of the event or the date that you become aware of the incident, how to contact your insurer to submit your claim and even track the progress.

Always provide true and correct information when purchasing insurance to allow the insurer to accurately assess the risk and avoid a situation where a claim is denied in the future.

Request the insurance policy documents

The insurance policy is a formal document detailing all the terms and conditions of the contract between the insurance company and you. The document contains information such as premium, exclusions, deductibles (if applicable), benefits, the risk assumed and the nature of coverage, the duration of the contract and policy rider (add-on provision that becomes a part of the policy).

It is your right to be provided with a copy of the policy document. You can request for the document by contacting the insurance company or through the online platform service if provided by your insurer.

Don’t rush to sign

Never sign an insurance policy without reading and understanding the document. Remember that an insurance policy is a contract between the insurance company and you that comes with obligations and responsibilities of each party to the contract.

Never sign a blank application form. You can ask to keep the document for few days to take the time to go through it carefully and understand the full policy document and see if the coverage meet your needs. You can even seek the opinion of someone knowledgeable who can explain you the document.

I hope you find this useful. Please don’t forget to share and comment.

3 Comments
  1. Sarah Mukenge 2 years ago

    Great article, very useful !!

  2. Author
    Khumalo 2 years ago

    I like the post. It is indeed very useful. This is the kind of article you should read before you buy any insurance policy.

  3. BM 2 years ago

    Thank you for the tips!

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