When buying insurance, most of us depend on our insurance broker to choose a suitable policy and properly fill out the insurance application forms. It is very important for you to be familiar with the terms of the insurance policy because you are paying for it.
You should be aware that there have been several cases of insurance fraud in which brokers have gotten kickbacks from insurance companies for deceiving clients into buying a policy from one company rather than a more suitable company or fooling clients into buying an unsuitable policy. These kickbacks result in higher premiums and hidden costs. You should also be aware that buying insurance is never a prerequisite for getting a loan, so do not let any insurance company, bank or broker fool you into buying an insurance policy by promising that if you do, a loan application will be approved.
Liability Insurance
Liability insurance provides coverage in case you injure another person or their property in an accident. In order to ensure you get this coverage when you need it, you must read your insurance policy very carefully and do a lot of research to be sure you are getting a fair deal. Compare insurance quotes and read the fine print in the policies. Get the advice of independent insurance agents (those who sell policies of many companies) and captive agents (those who sell policies of one company only). Find out which insurance service or providers your friends and family have used and what sort of experiences they have had. Use the Consumer Reports Buying Guide or another buying guide to help you decide.
Sometimes it is cheaper to buy the insurance policy directly from the insurance company rather than going through a broker because the insurance company does not have to pay the broker. However, sometimes buying the policy from a direct insurer proves to be more expensive. Liability insurance usually covers the drivers of vehicles, people who offer professional services to the public such as nurses, doctors, personal trainers and contractors, people or companies that manufacture products that may be harmful and employers. You should have a public liability insurance, employers’ liability insurance and product liability insurance.
UK Insurance and Consumer Protection ACT
In the UK, the Consumer Protection Act 1987 and the EC Directive on Product Liability require that manufacturers or suppliers of goods carry some form of product liability insurance that is usually part of a combined liability policy. In public liability insurance, premiums depend on the type of business, turnover and number of employees. It is a good idea to compare the quotes given by your broker with the quotes being offered by other brokers. When you apply for an insurance policy, you fill out a proposal form which is your offer to the insurance company where you state the premium amount you are willing to pay. Get advice from more than one broker about this that you do not offer to pay more than is necessary. The insurance company will either accept or reject your offer. Obviously, you should apply to several well reputed, reliable and licensed insurance companies to be able to choose the best possible quote.
Sometimes, they will agree to accept your offer if you make certain changes to the terms you have proposed. In this case, get advice from several brokers about whether the amount the insurance company has quoted is reasonable or not. In an indemnity contract, the insurance company will pay you no more than the actual loss suffered. This will ensure that you remain in the same financial position that you were in immediately prior to the accident which led to the insurance claim. Most personal accident insurance contracts and all life insurance contracts are non-indemnity contracts. You need to watch out for under-insurance and excess clauses issues in your contract. Do not under insure your property in order to pay lower premiums. This is not a wise decision because if you under-insure a car worth £20,000 at £10,000, if there is partial damage to your car your insurer will pay only a percentage of the £10,000, which means you will have to bear the remaining amount of loss yourself.
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