7 Insurance Tricks That Cost You Money

After you got rid of that old car, you purchased a shiny new car complete with that brand new car smell that everybody loves. You took out a loan for $25,000 and drove home. Two weeks later your car was totaled and the insurance company offered to pay you $21,000 for the car. The bank is going to still want the $25,000 you owe, so you'll be on the hook for the other $4,000. Without gap insurance, you have to pay it out of your pocket. If you have a loan for your car, you should also consider gap insurance.

You live in a coastal town and recently a major hurricane came through and caused major damage to your home including tens of thousands of dollars in flood damage. Everything will be covered because you have hurricane insurance as part of your homeowner's policy, right? Wrong! Your insurance company tells you that because of the anti-concurrent language in your policy, nothing is covered because flood damage isn't covered even though the damage was clearly caused by the hurricane. Adding insult to injury, they tell you that you should have read your policy. Does all of this sound confusing? Make sure to ask your insurance agent about the anti-concurrent language in your policy and ask them to show it to you in the policy.

Had some troubles paying your bills? Bankruptcy? These may not seem like unreasonable items for your insurance company to look at if they're trusting you to make payments on your policy but think of it another way: What if you believe in paying cash for everything and you have no credit? What if you're elderly and no longer make purchases requiring credit? This practice assumes that having credit makes for a responsible person when in actuality, some people are so responsible that they don't need credit at all. When receiving a rate quote, ask the agent if they used your credit score as a metric to determine your rate.

A neighbor accidentally hit a baseball through your kitchen window but you don't remember what your deductible is and you've never made a claim against your homeowner's insurance so you call the company to collect some information. You tell them the situation and simply ask for information. Your insurance company may view that as a claim and adjust rates accordingly and the call may go in into the CLUE (Comprehensive Loss Underwriting Exchange) report on your house which is available to anybody with a financial interest in your home. That one phone call may make it difficult to get insurance for your home.