4 Things About Insurance Companies You Should Know

4 Things About Insurance Companies You Should Know

When you become an adult, you’ll probably realize you need insurance. The more of it you have, the better you will feel. You might need homeowner’s insurance, various car insurance varieties, life insurance, and potentially dozens of other kinds.

There are some things about insurance companies, though, that either the general population doesn’t realize, or else they don’t spend very much time thinking about them. We’ll talk about insurance companies a little bit in this article, and we’ll point out some ways they operate that you should never ignore.

They’ll Often Try to Shift the Blame Rather than Paying You

Let’s take car insurance as an example. Various states require different car insurance amounts, but just because you have the minimum that your state requires, that does not mean you have to stop there. It’s often in your best interest to get extra insurance that goes above and beyond what your state requires when you drive.

Think about Texas, for instance. They are one of the states that have what insurance companies call a comparative negligence rule. Texas uses a 51% comparative negligence recovery bar.

What that means is that if more than one party causes an accident, so they share the blame, from a legal standpoint, then the amount that the accident was their fault will determine how much of the damages they have to cover.

You can potentially recover compensation if a car hits your vehicle, except if the court system determines that the accident is more than 50% your fault. The reason this matters is that you might expect to get some money after a car accident, but your insurance company may not have to pay if the legal system says you caused more than 50% of the crash.

That is different from a no-fault state, where you have to carry a minimum amount of vehicle insurance that you can use to cover your vehicle’s damages, regardless of how the legal system metes out blame. If you didn’t realize this, then you might be in for a nasty shock if you try to collect money from your policy and the insurance company rejects your claim.

Many insurance companies won’t bother to explain this to you until after the fact. That’s why it definitely pays to do your own insurance-related research when you sign up for a policy.

4 Things About Insurance Companies You Should Know

They’re Not Likely to Explain Any Clauses that Aren’t in Your Favor

To put it another way, the average insurance company is probably not going to go out of their way to explain anything in the policy you get that is not in your favor. That’s why you should study every policy very carefully before you sign it.

If there’s anything in an insurance policy you’re considering signing that you don’t fully understand, it’s helpful to get an attorney to look it over before you commit. Sometimes, insurance policies are written in near-incomprehensible gibberish, and that’s not by accident. The company wants you to sign something that you don’t completely understand to avoid paying out later if they feel like they can get away with it.

Insurance Companies Are For-Profit Entities

You should also realize that insurance companies are for-profit entities. However, they often try not to market themselves that way. If you look at a Geico or a State Farm commercial, these companies like to use celebrities or cute animal mascots to try and get you on board. More often than not, they’re trying to demonstrate that they are your friends, and they’ll have your back if something happens to you.

Insurance companies are trying to make money, though. The fewer policies they pay out, the more of your money they get to keep. 

These companies are like sportsbooks. They want to retain as much money as they can, so they’ll often try to stack the deck in their favor if you ever try to collect.

They might rely on technicalities to stop payment of a policy that you clearly feel is yours by right. That brings us to our final point.

You Can Fight Your Insurance Company in Court

Just because an insurance company does not want to pay out your policy, it does not mean you have to accept that. If you threaten legal action, you may be able to get them to pay that way.

If they see that you’re willing and able to hire a lawyer, they might relent and pay you to avoid any bad publicity.

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.