When Financial Planning in Dubai, this Insurance Broker in Dubai says make sure you have the right cover
Seven Insurance Pitfalls
When you’re buying Insurance, make sure these sneaky slip-ups don’t catch you out!
1. Drink dilemma
If you have an accident abroad whilst you’re under the influence of alcohol, your Travel Insurer may refuse to pay out. And unfortunately, many Insurers are very vague about what ‘under the influence’ actually means. Of course, it’s unrealistic to get completely drunk, break several bones and then expect your Insurer to pick up the pieces (no pun intended). But if you have a single drink – then fall over and break a leg – an Insurer may still decide the alcohol was a contributory factor. That seems a little unfair!
It often comes down to whether the medical report the company obtains mentions alcohol. There is pressure on Insurers to more clearly define the alcohol limit above which cover becomes invalid. Until this happens, it’s best to err on the safe side and not get carried away.
2. Extremely risky
Most people now know that if they’re doing extreme sports overseas, they’ll need to buy specific extreme sports cover. But unfortunately, many people don’t realise just how specific and riddled with exclusions some of this cover is. For example, travel cover for snowboarding will usually only be valid if the board is lashed to your foot at all times. And hikers are often only covered if they stay below a certain altitude.
So, if you’re the adventurous sort, you need to go over that small print with a magnifying glass. You don’t want to break your leg on a ski slope only to find you have to pay for the helicopter rescue yourself, which can cost around $80,000!
3. An overpriced rip-off
The mobile phone cover sold with handsets is one of the worst-value types of insurance out there. It’s usually massively overpriced, and peppered with surprising exclusions. For example, basic policies don’t usually cover wear and tear or mechanical problems. And if you put your phone down for a second, some companies will claim you didn’t pay due care and attention, and also fail to pay out.
This happened to a friend of mine, who put her phone on the roof of her car for approximately four seconds while she got the keys out her handbag. A ‘yoof’ shot by on a bike and grabbed it – and the Insurer refused to shell out a penny.
4. A cycle of disaster
Bicycles are almost always specifically excluded by home insurance policies – even if the cover is classified as ‘unlimited’, and the rest of your possessions are covered outside of the home.
That means if you want your bicycle insured, you’ll need to make a point of paying extra and getting it individually covered. Don’t leave it until it’s too late!
5. Unhappy Christmas
Many people buy Home Insurance up to a specific value limit – for example, up to $65,000 worth of cover. They then forget to raise this limit when the value of their home contents increases. This often happens around Christmas, when the house is full of expensive new gadgets and other presents. If you’re unsure of the value of your home contents, err on the side of caution and go for higher cover – an Insurance Company will never pay more than the insured value, but can pay less.
For example, if the value of your Contents is say $60,000 but you have only insured for say $30,000; in the case of a total loss (through fire, flood, etc), the Insurer will say you only insured for half the value, so will only pay out half the cover – $15,000 in this case. Read the small print! You always have to agree to insure for the full replacement value……
6. Extended absence
If you’re about to jet off on a nice long holiday, make sure you’re not leaving a gaping hole in your home cover. Many policies will not cover properties left vacant for more than a certain period of time. Some Insurers set the limit at ninety days, some at sixty, some at thirty and some at even less than this. As always, check those terms and conditions, especially if you go away for Ramadan!
7. An ‘interesting’ surprise
This last pitfall relates to how you pay for an insurance policy. Home and Car Insurers will often give you the option of paying for your cover in monthly instalments, rather than one upfront chunk of cash. This sounds good in theory, because it means you don’t have to find a large amount of money all at once. However, you should steer clear of monthly payments if at all possible – because most Insurers will charge a hefty rate of interest for the privilege.
Lastly, always consult a professional Independent Financial Adviser/Broker who can give you the best plan from the whole market, not just from one Insurance Company (like a bank usually does).