Operating a small business is not easy, especially with the limited time and resources on hand, some business owners may overlook the need to manage their company’s risk. However, one single incident may instantly change everything, and can even result in disastrous outcomes for your business. According to the Allianz Risk Barometer, business risks associated with market developments (e.g. market stagnation) and cyber incidents (e.g. cyber crime) are on the rise. With this in mind, it is becoming more essential than ever before to secure insurance so that rain or shine, your business remains protected.
Like most businesses out there, insurance companies will always think about the bottom line. As governed by law, insurers are expected to act in good faith, which means that any transaction between the insurer and the insured should be as honest and objective as possible. Most reputable insurance companies out there will operate in good faith, but some providers will use shady tactics to pay out as little as possible. To help you detect these bad faith tactics, award winning insurance advisor Pacific Prime Singapore has created the following guide to familiarize you with some of the top most common shady insurance tactics to look out for.
1.The issue of betterment
Insurance operates on the principle of indemnity, meaning that policyholders will be compensated in the event that they suffer a loss. Indemnity ensures that not a single penny of profit will be gained when the policyholder makes a claim, because this insurance policy clause dictates that compensation is limited to cover the total cost of your loss based on its perceived value before the loss. However, a common tactic that some providers may use is betterment, which stipulates that once a damaged piece of property has been repaired, its resulting condition is better and more valuable.
Utilizing the betterment tactic, insurance companies may only pay back a certain percentage of the damaged item’s original cost, based on the concept that the replacement item increases the value of the insured object above what it was worth before it was damaged. This method of claims adjustment is often unfair, especially because an item that has been damaged will usually depreciate in value, even if it has been replaced with newer parts.
2. Unreasonable delays on the claims process
Another common bad faith tactic is unreasonable delays on the claims process. By delaying the process, it can either push the policyholder to accept an unreasonable payout offer that is much lower than it should be, or even discourage the policyholder from making a claim. Some of the methods that shady insurance adjustors may be using include:
- Changing the point of contact: Insurance providers will usually assign an adjuster to help process your claim. By changing the adjuster in the middle of the claims process, this will delay the time taken to process your claim. Sometimes, this can cause the claims process to start from the beginning all over again.
- Requesting copious amounts of information: Another common tactic that some shady insurance adjusters use is to request for large amounts of information in order to burden you with paperwork. With this tactic, it is easy for the claimant to become overwhelmed and forget to supply certain essential documents, which may result in their claim being rejected.
3. Misinforming benefits and policy details
In order encourage you to buy an insurance plan, some deceitful insurance providers and advisors may provide biased, misrepresented information on the insurance policy’s coverage benefits without divulging you with the caveats present in the fine print of said policy.
This misrepresentation may also occur when dealing with an insurance adjustor. For example, when you are filing your claim, your insurance adjuster may mislead you by failing to inform you that you have certain coverage benefits in your plan that you can use for compensation on your loss.
Another thing to be aware of is that adjustors may also fail to mention the forms the you are required to fill in in order to successfully make a claim before your statute of limitations runs out (the duration of time you have available to file a claim).
It can be daunting to familiarize yourself with all the fine print of an insurance plan and to know exactly what you are entitled to as a policyholder. Insurance companies are aware of this, and some shady providers may choose to maximize their profits by taking advantage of the imbalance of knowledge. To avoid this, it is highly recommended that you work with reputable and trusted insurance advisors.
About the author
If you are looking for the most reputable and trusted insurance plans on the market, why not visit global health insurance broker – Pacific Prime today? Their team of experienced insurance advisors offer a wealth of experience that you can rely on.