The Three Most Basic Rules About Insurance
You have been led to believe that the insurance company is your friend, a benefactor who will rush to your aid when trouble strikes. It is nothing of the kind. To understand exactly what it is, study these three simple -- but inescapable -- rules about insurance.
Rule No. 1: The Insurance Company is Not Your Friend.Insurance companies spend millions of dollars every year to convince the public of their good will, their benevolence, their readiness to be that strong and reliable friend when the chips are down. Don't be fooled. The insurance company is not your friend. It is a business whose primary goal is maximize its owners' profits. When the chips are down the insurance company's lawyers will be quick to tell you that the insurance company's only obligation to you is what the policy calls for and nothing more. They don't have to go the extra mile. They don't have to give you the benefit of the doubt. They don't have to take your word for anything. Make this fundamental truth part of your world view, especially when it comes to protecting your home, family, business, or profession. You will be much happier and more prosperous in the long run.
Rule No. 2: Your Insurance Policy is a Contract.One of the darkest secrets kept by the insurance industry is that your insurance policy is a legally binding contract, one that was revised and refined by insurance industry lawyers over many years for the sole purpose of maximizing insurance company profits. Each and every word in the contract was carefully chosen because, as the lawyers know, courts almost always enforce the contracts word for word. You, on the other hand, probably never saw the contract before you bought it. You probably did not read the contract when you received it. You knew you wouldn't understand it if you did. You were in good company, too. Most insurance consumers, including high net worth individuals, high powered business executives, and highly educated professionals, have never read their insurance policies. They, too, would not understand them. So is it hopeless? Are you condemned to just "take it" from the insurance industry? Emphatically, no. You can learn to read insurance policies. You can comparison shop before you buy. If you doubt it, or just can't find the time, you can hire an attorney or other professional to help you sort out the bad from the potentially much, much worse.
Rule No. 3: When You File a Claim, You Initiate an Adversarial Process.If you read the first two rules above, it should be obvious to you that when you file an insurance claim you initiate an adversarial process. It may not always be a hostile process, but it will always be adversarial. It has to be. You want the insurance company's money; the insurance company wants to keep it from you. Unless your claim is relatively insignificant, or the insurer's liability is completely beyond dispute, you should expect your insurer to work very diligently to minimize, delay, and if possible completely defeat your claim. Just remember Rule No. 1. (Your insurer will remind you of Rule No. 2.)