Reading Between the Lines
Insurance policy fine print often hides exclusions that can cost you big bucks after a loss
We’ve all heard the old saying, “It’s Greek to me!” It comes up when things get complicated. Well, the saying definitely applies to the fine print in insurance policies. The language is deliberately written in legalese that makes it practically impossible for a lay person to understand what’s covered, what’s partially covered, and what isn’t covered at all.
And, guess what? That’s all by design.
The insurance companies use the fine print in your insurance policy to provide reasons to limit or not to pay your claim. An ignorant customer base enhances the profitability of the insurance companies because payouts will be less if policyholders don’t understand the extent of the benefits owed to them after a loss, and then fail to ask for everything they’re entitled to under the contract.
Misunderstood or ignored fine print can lead you to buy a policy thinking a specific type of loss is covered when it is actually excluded. The gap in coverage usually only comes to light when there is a loss and you find out you’re not covered. Then it’s too late. The damage has already been done.
The next time you’re watching TV or listening to the radio notice how the ads for insurance companies almost always pitch on price. The ads tell you that you can save 15 percent on your car insurance in a matter of minutes. Sure, the lizard is cute, but fast and cheap is a recipe for disaster.
Likewise, another company seems to think people pay for insurance they don’t need, and so the company pitches cheap policies that cover only what you do supposedly need. Yet another company’s ads make fun of losses, but there’s nothing funny about a big claim on a cheap policy that doesn’t deliver the coverage you thought you bought after you file a claim. I see cases all the time where policyholders who bought on price alone end up with half the settlement money they could have gotten if they’d bought on quality and breadth of coverage instead.
Price is driving the insurance market these days. The emphasis on price leads insurance companies to bury more and more exclusions—stuff that’s not covered, but you probably don’t know it yet—in the fine print. This in turn leads to lower payouts, thereby boosting profits for the company.
It’s gotten to the point where most of us never read the policies we buy. We just hope that the coverage we think we’re buying will cover what we think we need to insure. It often doesn’t, and the devil is in the details buried deep in the exclusions masked in the fine print. As I’ve mentioned before, a reputable independent insurance agent is someone you want in your corner. The agent understands what’s in the fine print. Think of him or her as your Rosetta Stone. Egyptian hieroglyphs were never so easy to understand!