Avoiding Insurance Scams and Making Insurance Claims

By MicaR | Online Venture | 7 Mar 2024

Before you buy the policy, you need to make sure you have read and understood every term and condition of the policy. Insurance companies will be liable for whatever is in black and white. Before you can actually get the benefits from your insurance policy, you need to follow a lot of legal procedures. You might be easily tricked by insurance companies if you do not properly understand what is being covered. Let's say, you bought a fire insurance policy for your house. Now, imagine there was a short circuit in your house, which resulted in your property being burned down. Insurance companies might take an excuse by saying it is not a fire but an accident caused by an electrical malfunction.

How to Avoid Insurance Scams

A lot of people get scammed with insurance. Here are some of the ways to avoid insurance scams.

Buy from a legit company: One of the common reasons for getting scammed with insurance is people end up buying insurance policies from a company that exists only on paper or a website. There is no physical existence of the company. Therefore, when you are buying an insurance policy do some research on the company. The research should involve things such as how long the company has existed, how many policies it has sold, where it has invested its funds, etc.

Check the policy terms: A lot of insurance scams are around the policy terms. People do not check the terms and the insurance companies find loopholes to scam people. Read every clause even if it means reading 10 pages of documents.

Check the legitimacy of the broker: A lot of people prefer to buy policies from brokers because brokers offer discounts (in most cases); however, when buying from brokers, people do not check whether the broker is actually a broker from the company that he claims to represent. Therefore, find out whether the broker is actually employed by the company. The best way to avoid the risk is by insuring directly from the company.

Have You Ever Made Any Insurance Claims?

The primary motive behind getting insurance is to get financial coverage against loss or damages. For example, if you have life insurance and if you accidentally broke your legs or if you become terminally ill, you will get financial compensation based on the clauses of the policy you bought. If you have whole life insurance, and if you die, your nominee will get the financial benefits. If you have a car and you encountered an accident and there was damage on your card, your insurance company will cover it.

Have you ever made any insurance claims? What was your experience like? Did you actually get what was promised by the insurance company? How long did it take to receive the coverage from the insurance company?

I have two different insurance policies, a term life insurance plan, and a motorbike insurance plan. It has been 8 years since I am paying premiums for my term life insurance and I have not been in a position to make claim. However, I have made a claim for my motorbike accidents once. It took me over two months to receive the compensation.

I encountered an accident and there was substantial damage to my bike. The insurance company was too harassing. I was asked all sorts of silly questions such as if I was under drugs or alcohol if I was sick when I encountered accidents, etc.

Can You Actually Cheat Insurance Companies?

You can buy house insurance that covers you from fire damage. Can you actually cheat on the insurance company by lighting up your house and claiming your insurance money? Or let’s say you are a business owner and you have warehouse insurance or factory insurance. Can you actually claim the insurance money and get away with it by lighting up your own factory and warehouse?

I have not heard of too many homeowners lighting up their own houses to claim insurance money. Perhaps, this is not a profitable idea as you will have to burn a lot of things inside your house and which might not be enough to cover your instance money. However, I frequently hear speculations in the media that a certain business lighted up its own warehouse and factory just to claim the insurance money. Most of the businesses that are claimed to light up their own properties have businesses already reeling with losses. Therefore, the speculation might be true to some extent. But the main question is can the insurance company not find the truth?

How do businesses make fake insurance claims and get away with them? Does the insurance money provide full coverage for the loss including whatever losses the business encountered?

5 Different Types of Insurance for Individuals

There are different types of insurance and knowing which type of insurance you need to have determined your financial success and financial security in the future.

Here are five different types of insurance that you can have

Health Insurance: Health services are getting expensive day by day. According to a World Bank report, one of the main reasons for poverty in low-income countries is because of the rising cost of health services. People in these countries do not have access to health insurance, therefore, they have to pay the bills from their pockets. Thankfully, in many developed countries health insurance is available.

Life Insurance: The second type of insurance that is a must for an individual is life insurance, you can either get whole life or term life insurance and get protection for yourself or your family against accidents.

Disability insurance: This kind of insurance policy covers income replacement for people who become disabled and can no longer work due to accidents or terminal illnesses.

Home insurance: This insurance is available for homeowners as well as home renters. This policy protects your home from damages caused by accidents, fires, or natural disasters.

Auto Insurance: If you drive a car or a motorbike, you need auto insurance as this policy will provide coverage against all sorts of accidents and damages.

Pet insurance: If you own a pet, you also need to insure your pet. Pet insurance will give you coverage for your pet’s medical bills as well as financial coverage against the death of your pet.

Business insurance: If you own a business, it makes sense to insure your business because it will provide compensation against any unwanted loss.

Insuring Your Entire Family

If you are a family person (have a spouse and kids), you need to insure your entire family. You will have to buy life insurance policies for each one of you in the household as well as health insurance for all family members.

There are a lot of benefits of insuring your entire family, one, all the members get financial coverage, two, you will have a substantial amount of money upon maturity, and three, if you die during the policy period, your family will still have some money to manage life.

Likewise, it also makes sense to get health insurance for your entire family. Some health insurance companies even offer free insurance to one of your kids if the couple gets health insurance.

Buying insurance for each one in the family can be financially difficult, but since you are getting all sorts of coverage, you need to buy life insurance and health insurance for all the members of the family.

Are you a family person? Do you have life insurance or health insurance for your entire family?

Benefits of Insuring Your Kid

Insurance policy is not only for financial coverage against loss or damage, it is also to ensure financial security in the future. After the maturity period, you can claim your insured amount and use it for your own benefit. The best thing about buying an insurance policy is you get a substantial amount at the end of the maturity period, which was built through paying small premiums

If you have a kid, you need to buy an insurance policy for your kid. There are numerous benefits to buying a child insurance policy. Let’s say you buy an insurance policy for your kid when he is 1 year old. Imagine the policy has a maturity period of 15 years. For 15 years you pay little money as a premium and by the end of 15 years, you will have a substantial amount that your kid can use to fund his college education. He does not have to get an education loan to fund his education.

The benefits of a child insurance policy will differ from company to company but one of the common benefits includes, the exemption of premiums in case the parent dies. If you have bought insurance for your kid and if you die, your kid will still get the insured amount without having to pay the remaining premiums.

For the financial security of your kid, you should buy a child’s insurance policy.

How do you rate this article?



Web Designer and Content Creator

Online Venture
Online Venture

A blog on Business, Finance, and Making Money Online. The blog offers useful and interesting articles on how to start and run a business and how to make money online.

Send a $0.01 microtip in crypto to the author, and earn yourself as you read!

20% to author / 80% to me.
We pay the tips from our rewards pool.