Posted on Mar 04, 2020

5 Costly Mistakes to Avoid When Comparing Insurance Quotes

Two women comparing documents

There’s no doubt that price comparison sites have transformed the way people buy insurance, for the better. Now, buying insurance is much quicker and easier to do than ever before. When you compare insurance online (be it car, home, life, business or health insurance), you can make your policy purchase in the time it takes to drink a cup of coffee.

However, that doesn’t mean you should be cutting corners. When you rush comparing insurance quotes or automatically opt for the cheapest quote, you could be making mistakes that will prove very expensive later on.

Here’s how to avoid the biggest, most costly mistakes:

Costly mistake 1: Assuming all results are equal in the cover they offer

When you look for insurance quotes on a price comparison site, you’ll need to put in some basic details and requirements. This will ensure your results are suitable. They are also probably fairly similar. However, look closely and you’ll see key differences between policies.

Aside from price differences, there might be differences in the level of cover offered and in the excess or deductibles payable by yourself. When you gloss over the differences and don’t look closely enough, or when you buy on price alone, you leave yourself open to any of the next four costly mistakes.

Costly mistake 2: Accidentally under-insuring yourself 

When you are looking for insurance cover in a hurry, it can be easy to accidentally choose a policy that doesn’t fully meet your needs or provide the level of cover you require. This is called under-insuring and could cause you big problems in a time of emergency. 

Don’t assume that every policy in the results list has the same level of cover. To avoid underinsuring yourself, you should have a list of must-have requirements for the policy before you begin your search. Any policy you are considering must be vetted against this list before you commit to purchasing it. 

For instance, if you are buying medical insurance, you might decide that you need cover for both in-patient and out-patient treatments, emergency hospitalization, and diagnostic testing. Anything else is either a bonus or expendable. You would then need to cross-check your mandatory list against any policy before clicking to purchase. If you don’t make this simple check, then you may under-insure yourself and not have the necessary cover should you need it. This would then result in large medical bills to be paid out of your own pocket. 

You should always buy the best possible cover for your budget and avoid under-insurance by checking the small print and policy details thoroughly. This reduces the chances of unexpected bills coming your way and more stress in times of crisis. 

Costly mistake 3: Starting with an incorrect valuation of your possessions 

Before you begin comparing insurance quotes, you must have all the correct information at hand. This includes the value of any item or items you wish to insure. You must have an accurate valuation to ensure you have appropriate insurance coverage to cover the full cost of replacing them. 

Avoid overestimating the value of the item. When you submit the item’s worth, the higher the number, the more the item is likely to cost to insure. If the value of the item is inflated when buying the policy, you may end up paying higher premiums than necessary. 

Conversely, if you underestimate the value of the item, then you may find yourself underinsured. You will not receive the full value of the item in the event of a claim and this will be more costly in the long-term. 

When more than one item is covered under the policy, you need to be extra careful. For example, home content cover purchasers are at a high risk of underinsuring themselves, simply by miscalculating the total value of their home contents. You should always be sure that the sum insured matches the total cost of replacing the entire contents of your home should there be colossal damage through fire or water, for instance. Otherwise, you would need to cover the difference.  

Costly mistake 4: Accidentally over-insuring 

There are other ways you may inadvertently pay for cover you do not need

For example, when buying a car insurance policy, check that you are not paying for additional cover you will not need. This might be something like off-road insurance. 

Or, for travel insurance, check that you are not buying an annual policy when you are sure that you’ll only take one vacation next year and single-trip coverage will do.  

For home contents, check that the insured value of your possessions is not considerably more than their actual value. 

Always check exactly what you are paying for before you commit. 

Costly mistake 5: Not checking excess or deductibles

Nearly all insurance policies apply excess or deductibles. This is the proportion of any claim to be paid by the customer. For example, on your health insurance policy, it will be the amount the patient needs to pay to the hospital before the insurance company pays the remaining bill. For car insurance, it may be the portion of a repair bill the driver needs to pay before the insurance company pays the rest.

Excess and deductible rates can vary a lot between insurance providers. Some providers help keep premiums lower by charging more excess or deductibles on claims. Paying for a cheaper policy now can sometimes mean a much larger bill later if you need to make a claim. 

How to always get the best deal 

The most important thing to remember when using insurance comparison sites is to stay savvy and not automatically opt for the cheapest policy. Often, the lowest priced policy is ideal for your needs, but sometimes, it may cost you much more in the long term if you need to make a claim. This would be a false economy. 
To get the best insurance deals, make sure you use the side-by-side comparison tools if available and always read the policy details before you make payment. Talk to our team at CompareDubai for more information.

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