Buying Insurance Is Like Getting Married

Well, I just discovered that I had posted a bunch of answers to reader questions in the editor's blog. (Imagine me with a sheepish grin on my face.)

I love technology. I love the speed of it and the instant gratification. However, combine speed with sleep deprivation (I'm the mother of a 5 year old boy and a 5 month old girl) and speed can work against you.

So, there I was, posting answers to questions and happily feeling like I was on top of things. Ha! I'll have to pay better attention to which blog I'm actually working in.

Having said that, I think that we all can be victims of sleep-walking through all sorts of things that we are doing. One of those things we sleep through can be the decision on what insurance we buy, what coverage we pay for, and any comparison shopping of insurers. Frankly, many of us just take the advice of our insurance broker; other times we may just pick the first insurer that we notice in the yellow pages.

Sometimes, we just want to get something done, and we jump for the first (fastest) thing.  

While insurance may seem like an unhappy necessity, something we pay for when we don't even need it, the truth is: you don't want to be caught with the wrong kind of coverage -- or the wrong company covering you -- if it turns out that you do need it.

One of the more frequent problems that I'm hearing about lately is insurers who promptly cancel your insurance once you actually make a claim. Here's where you really need to have done some digging around before you buy. Unfortunately, one of the best ways for a company to reduce their liabilities is to get rid of people who make claims. There is no law against this, although it is surely less than completely ethical. After all, the service you have paid for is to be covered in the case of a claim, and since you've paid for that service, it's clearly not quite right to then be penalized for needing precisely what you have paid for!

However, no company is going to tell you that they'll drop you like a hot potato once you make a claim.  Buying insurance is like getting married. First of all, you should really get to know your future insurer before you sign up with them! Otherwise you can be blind-sided later. When you are looking to sign up, the insurer will pull out the stops to woo you. After all, you are a prospective "mate". When you are signed up and making regular payments, you are in the "honeymoon" stage. Everyone is happy with the arrangement, as long as things are running smoothly. However, once a claim is made, you put your relationship to the test. That's when you might find out that your insurer wants a quick divorce.

Here's the worst part: once one insurer has cancelled your insurance, others will be less likely to take you on. You become "high risk". If you can't get coverage, your mortgage will likely go into default. Why? Because your lender wants assurances that if anything happens to your home that they will get their money. If you aren't insured, and you lose your home to a disaster of some kind, you'll likely default -- and they are out their money.

Now you're in a real pickle: You don't have insurance. You do have a lender who wants their money now. And you have no legal recourse because none of this is technically against the law.

The moral of our story? Do your research! Know if the insurer that you hook up with is in the relationship for the long haul, or whether you are simply a handy "meal ticket". After all, it's not just the lowest premium you want; it's the best customer service when you need it.

MLA

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