Learning About Insurance- Part 1

I worked in the insurance industry for the last eight years and I was always amazed by how many people knew so little about insurance. Between cars, home, life, health, dental, short-term disability, and more there is so much to know. We spend thousands of dollars each year on insurance so shouldn't we know all about it? I am licensed to sell insurance in Massachusetts, which is easily one of the worst states for auto insurance. Far too many people trust the insurance companies to tell them they are properly insured.

When you go buy a new car do you trust the car dealer to tell you how to spend your money? Do you trust a real estate agent to tell you what is a good deal on a house you are looking to buy? If you answered yes to either of these two questions I have some land in Florida I think you might be interested in. So why do we trust the insurance companies? Insurance companies are some of the wealthiest companies in the country. They got that way for a reason.

You hand over your money to an insurance company really for nothing in return when you think about it. You go to Best Buy and buy a new TV and you get a new TV. You buy a policy from an insurance company and you get a piece of paper. You get their "promise" to protect you in the event of a loss. But what happens when you have a loss and actually use the policy? Your rates go up is what happens. Not all policies are like this but in general this is how it works.

Basically, if you never use your policy you hand over your money for no reason. If you do use the policy you pay more. So that initial policy is a bunch of garbage. There are no guidelines set up in the policy saying you get 3 accidents for free or anything. One claim means you pay more.

In most states you can be cancelled for having too many accidents. Homeowner's insurance is different altogether. It can be very difficult to get insurance in the first place and if you do get it forget about ever making a claim or you will be cancelled.

Using the same example above regarding the TV, think about the extended warranty/service plan you can buy. If you buy that and something happens you do not pay more for that service. I have had to use my protection plan on my TV twice already. I am not getting a bill for more money now. In most cases insurance is just a scam, a way for them to take more of your money. I used to work for Liberty Mutual Insurance. The CEO reportedly made $12 million in 2004. He insured his properties through the office I managed. He had 4 houses at the time I left. One in Weston, MA, the most expensive town in Massachusetts. He had one on the Cape, one in Vermont, and one more that he had just purchased in Vero Beach, FL. That one was right on the ocean. I won't even tell you what the replacement cost was on that house.

How are you feeling about your insurance company now? In part two I will discuss some bargains that are not really discussed much in insurance. You won't want to miss that section.