Conceptually insurance protects people and their assets from the risks in life, but often due to the ignorance of policyholders it fails to do just this. Insurance companies do not help much and intentionally make policies hard to understand and include clauses that result in policyholders being underinsured or not covered at all. We are going to explore three common insurance traps and provide solutions to them:

Tell the Truth

This might seem so obvious, but people all too often try to bend the truth or sometimes just tell outright lies in order to secure cheaper insurance premiums. They do this thinking that insurance companies will not discover the truth. However, insurance companies are geared to uncover any lie or mistruth so that they have a valid reason to decline insurance claims. Insurance claims investigators save insurance companies many millions every year by investigating and declining claims. A good example of this is when people declare that they use their insured vehicle for personal use while they really use it for business purposes. If you are involved in an accident while on a business errand and submit a claim then it is very likely that investigators will not only find out that you were using the vehicle for business purposes on the day of the accident, but will also establish how regularly you were using it for business purposes in the past. They do this by interviewing your colleagues, analysing traffic fines, checking your vehicle mileage and checking on your fuel payments. If you refuse to assist them in their investigation then your claim will be instantly declined. Do not take the risk of telling lies in order to save a bit of money as it may result in you losing a lot of money.

Update Your Details

Your insurance policies, especially car and home, are contracts which are only valid as long as the original conditions agreed upon are maintained. These conditions include your address, marital status, and the vehicle use and characteristics to name but a few. If you have moved from a neighbourhood with a low crime rate to one with a high crime rate, then your policy needs to be adjusted to take into account this increased risk. If your car is stolen without you having updated your policy with your new address, then your insurance company has the right to decline your claim. Avoid being left without cover by notifying your insurer about any changes that could affect your policy.

Include New Drivers

As your kids get older and become eligible drivers they will most likely start using the family vehicles. This is a critical time with regards to your motor insurance coverage. It is essential that you update your insurance policy to include these new young drivers as failing to do so could leave your vehicle without cover. Young drivers are regarded as very high-risk drivers by insurance companies and accordingly ask require higher premiums to cover them. Failing to include them in your policy to try and cut down on expenses could result in major financial losses if a vehicle is badly damaged and the insurer refuses to pay the claim. When your child starts driving the family car, include them in your policy or buy another car and source an insurance policy for them.