Insurance Policies - Concerns Concerns with Insurance Policies One of the biggest consumer complaints regarding insurance policies is being able to understand the mounds of paper and legalese involved in a coverage contract. The come all the various fees and limitations as well. Because the wording uses a lot of boilerplate phrases designed for provider protection and unfamiliar terms, consumers frequently find themselves agreeing to policies that don’t necessarily favor their interests. Additionally, many consumers don’t even understand what all the terms included may mean. Governments, both local and national, have repeatedly passed legislation requiring clarification or simpler statements to represent contracts. However, insurance providers continue to seek ways around these requirements to still ensure their protections and limit losses. Other rules affect the marketing and sales methods used, trying to ensure honesty in dealing. Again, the rules are only as good as how well they can be enforced. Thus litigation continues to be the strongest answer to keeping insurance provider abuse in check. Tort lawyers frequently take on cases against insurance companies, knowing full-well these companies are more inclined to settle to keep losses limited than risk taking on a big court case judgment. Additionally, laws have been put in place to make bad faith denials of coverage, where companies just walk away from a policy with a big claim after collecting the premiums, very expensive when proven. Damages awarded can be tripled under such penalties. The incentive, of course, is to make sure companies play fair at all times. Another problem is the practice of insurance brokers versus agents versus independent consultants. Brokers are third parties who sell insurance policies on behalf of insurance providers to consumers. Appearances make it seem that the broker is part of the same company, but in reality he is not. The broker can play multiple companies against each other for deals and discounts, thus being able to offer a consumer a variety of policies to choose from for the same kind of coverage. The broker gets paid via commission when an insurance policy is actually agreed to and approved. However, due to the third party status, the broker works in a gray area that can sometimes make promises that don’t exist or embellishes areas the insurance provider may not actually cover. Consumers need to do their own research and be careful. Direct purchases are handled through insurance provider agents. Agents are representatives and employed by the insurance provider, either as direct employees or proxy salespeople. However, given their relationship status, they are restricted to tighter controls of sales behavior versus brokers. Conclusion Insurance policies are part of modern-day life today. If you own a house, a car, are married and have kids, you likely also have various insurance policies protecting these interests financially. Whether it’s a homeowner’s policy or a life insurance plan, the principles are the same: you agree to certain terms of coverage that protect you from a given loss in exchange your payment of regular premiums to a provider. And, like any market, the best product requires the consumer to do their own research before buying. Make sure the policy fits your need and compare options. The worst time to find out you got the wrong insurance policy coverage is when you put in your claim and find out it’s ineligible for payment.