The Public Liability Insurance Blog

How insurance is a waste of money

waste of moneyInsurance companies (and YOUR Insurance is no real exception to this) will shout from the rooftops until they are hoarse that insurance is not a waste of money and is an absolute necessity when it comes to protecting your business. This is not however always the case.

Now that the sharp intake of breath from the rest of the marketing team has cleared, let me explain. Insurance is an absolute waste of money if you have the wrong insurance in place.

Pointless

There is no point in having an insurance policy that doesn’t cover you for anything, or will never pay out on any of your major risks. At this point, it really is simply money down the drain and you should avoid being hassled into taking out policies of this nature like the plague.

The trick is therefore in establishing what constitutes as the wrong insurance. Getting an inappropriate policy in place can predominantly be the fault of two things:

  • A lack of understanding about what the policy actually covers
  • Incorrect information being given when setting up the policy

This isn’t to say that insurers are blameless in all instances and in a lot of cases they could put a bit more time and effort into double checking some of the more troublesome areas. However, a lot of the misunderstandings and faults originate from a client either being careless, trying to be sneaky and get a lower premium, or simply not understanding the weight and purpose behind the answers they are giving.

Trying to get a lower premium

There are some things that everyone realises raises insurance premiums and in response to this, some try to game the system. To use an example in the car insurance market, everyone knows that traditionally, young male drivers are very expensive to insure and thus some have tried to get around this by including them as a named driver on someone else’s policy. Although many insurers have become wise to this trick, it will still all unravel if it comes to a claim and transpires that the named driver is in fact the main and only driver of that particular car and that claim will likely fail once it is investigated due to the lack of accurate disclosure.

Some will say the insurance is therefore a waste of money, but instead, you should look at that example and see that what happened was not something that would have been covered in the first place, because that scenario was not one that was detailed by the person taking the cover out.

Similar things will happen with public liability insurance from time to time. A client might lie about their annual turnover and when it comes to a claim be denied a payout because it becomes apparent that they make four times as much as they stated, meaning that the risk was much higher than the insurer realised at the time the policy was set up and premium established.

Nothing personal

There is very little room for manoeuvre when it comes to insurers paying out on claims. They don’t want to pay out claims if they can help it, but they’re not going to find ways to deny payments unnecessarily. Instead they will look at what happened, check it against what they said they would pay out for and investigate that the information supplied by the client is accurate.

If everything checks out, then they will send out that cheque, but if it does not, then they won’t because that’s not what they agreed to. When you take out insurance, you’re not applying for free money in the case of a disaster striking you, you are protecting against the things specified by that particular policy and paying a premium based on how much of a risk it is for you to be engaging in the activity in question.

The bottom line is if you try and scrimp on your policy and take out a bare minimum amount of cover, or if you try and trick your premium into being significantly lower, then you will probably have landed yourself with an utterly worthless product that nobody could argue is anything more than a complete waste of money.

Provided by YOUR Insurance, a specialist broker that does not want you to waste your money.