Assumptions in Insurance

30 January 2015

When people make complaints about insurance agencies the root cause of the complaint is inevitably  that the  “expectation of the client” is not met.  While there are the odd occasions when the Insurance Agency is to blame the main reason we have found are the assumptions made by clients on what they think they should be covered for and how this cover is applied is different to the wording of the insurance policy.

Most people are very price focussed when they are looking for insurance.  “Just give me the cheapest”.  This is one classic area where people can stumble and go for an inferior policy believing that they are comparing the same types and level of cover.  A simple example of this could be seen in some “trauma” insurance policies.  One product could be markedly cheaper than the other so if you are focussed just on pricing you would choose the cheaper one.  But that product may not cover the same conditions as the other.  We have seen some trauma products that will not cover eg Cancer.  Cancer is believed to account for 60% of all Trauma claims so no wonder that policy would be markedly cheaper.  Unless you know what to look for you could be paying for a product that the chances are you would never be able to claim on.


Many people believe that they are covered for a general issue – eg if they couldn’t work their income protection insurance would pay out.  If you can’t work there may be many reasons – redundancy being a most obvious one.  We find that many of our clients assume that redundancy is a standard feature of income protection insurance whereas generally you have to have it added on.  When we recommend a product such as income protection we advise clients what they will be covered for and when they would be able to make a claim.  We highlight that they will not be covered for redundancy unless they want to pay extra for this extra benefit.  While clients may not take the redundancy feature because of the higher cost - at least they know from the start that this will not be covered and can make alternative plans in the event of this happening.

No one wants to read insurance policy wording.  It is full of legalese that you think says one thing when it could mean something entirely different.  Short of hiring a contract lawyer to explain it to you there are some major areas in which you can ensure that if you had to make a claim that your expectations are based on Knowledge and not Assumptions thus ensuring that they are met.  The most important issue would be to use an Adviser who specialises in the area of the insurance that you are looking for.  These Advisers are the ones that are selling the products and the ones that will be assisting you in making the claims.  So they have to make sure that the plan that they recommend will be robust enough to meet all of your expectations.  They should have a panel of different insurance agencies and products that they can access and they must have knowledge of the differences between each one and be able to recommend the cover that most accurately reflects what you are looking for.  

While it may seem the same thing dealing with an insurance agency directly as dealing with an independent adviser it is not.  The agency will only be able to offer their insurance products and as such their recommendation will be limited.  Whereas an Adviser is able to look at different products and be able to show the real differences between products ensuring that you get the cover that most accurately reflects your needs.

Most importantly if you had to make a claim an Adviser is able to assist you in lodging your claim.  Assisting you in completing the forms, following up on the progress of the application.  They are almost as motivated as the client would be that the claim is paid out because it’s their recommendation that is being called in to question if clients’ expectations are not met.  Your Adviser is Accountable to you.  Whereas the insurance agency is accountable to shareholders – nothing wrong with that but when your back is against the wall do you want someone who has your back or someone who needs to justify why a claim may not be able to be paid out.  


Published In Whakatane Beacon

This post was written by

Trish Marsden - who has written 96 posts

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