Critical Short-Term Insurance Mistakes and How to Avoid Them
Short-term insurance provides cover against risks such as theft, break-ins, property damage, disability, professional liability, and more. Going through life without cover leaves you open to large financial risks.
Perhaps you’ve been lucky enough to not have had to deal with life’s misfortunes like hail damage to your home’s roof or having to replace a stolen laptop. But not having insurance is similar to playing Russian roulette with a loaded weapon.
At some point or another, you have to deal with damage to your property, loss of assets, loss of health, or perhaps being held accountable for personal injury. The financial damage can be so immense that it could ruin your business, reputation, and financial security.
However, taking out short-term insurance can be a risk in itself. Below are some of the common mistakes people make when they sign up for this type of cover. We also look at the solutions to help you make an informed decision.
Incorrect choice of insurer
Choosing an insurer that’s more focused on not paying out than keeping up their end of the bargain can be a costly exercise. Avoid the issue by working with financial planners who have your financial health and security at heart. Let them help you choose a cover that’s relevant for you, at an affordable price, and which will pay out. You’ll want to consider the percentages of the claims the insurer pays out when choosing the right insurer. Consult with our financial planners to help you mitigate cover risks.
Not insuring for the right amount
Don’t compromise on the pay-out for the sake of a lower premium. If you take out short-term insurance based on the original value of the asset, when it comes to claims pay-out, you will end up with a loss. Insure at the replacement value to have the insurer pay out the true replacement cost.
Not being honest with the insurer
Failure to disclose the required information upon sign-up for short-term insurance can leave the policy void or a claim to go unpaid. If you have an underlying health condition and are aware of it, but fail to disclose it, then the insurer will have the right to reject a claim when it’s related to the condition. Likewise, a claim for a break-in and theft can go unpaid because you didn’t disclose that one entrance to your home is without adequate security. Don’t lie, hide information or give incomplete answers when you sign up for cover.
Assuming something is covered
Never assume when it comes to insuring your home, vehicle, or household goods. Ask if something is included or not. When you work with our financial planners, they make sure you understand what’s included in the cover and what is not. If you’re still uncertain, ask.
Opting for a high excess to save on premiums
Unless you save up money for paying the excess in the event of something happening to your assets, you risk not being able to have the items replaced if the excess is too high. If you can afford it, rather pay the higher premium for a lower or no excess policy.
Short-term insurance helps to mitigate financial risks by giving you the opportunity to pay a monthly premium in return for cover against the risks. Choosing the right insurer, policy, and excess amount, being honest and not assuming are the best ways to get the most value from your short-term insurance cover. Get expert help to mitigate the risks. Reach out for financial planning and cover help.