Important Facts To Know About An Insurance Contract
Insurance salesmen over the years have acquired a bad reputation in many people's minds
, not so much for what they do, but the policies they sell. It's true that insurance contracts can be tricky to understand, and contain a large amount of fine print. This usually becomes evident when something bad happens, and the insurance company refuses to pay, bringing up one of a thousands possible reasons related to the policy itself. That's why it's important to know some basic facts about insurance contracts.First, insurance policies are contracts of adhesion. This means the contract is typed up by the insurance company, and presented to the client as a whole. In most cases, the client has no choice on the various clauses contained, or any of the fine print. It's a take it or leave it situation. Worse, in many cases when someone buys an insurance policy, they don't even see the full contract before they sign up. If there's any ambiguity however, because the company wrote the contract, the burden of proof is on them.
Another important fact is that these contracts are one-way. This means that the insurance company makes legally enforceable promises in the contract, but the insured does not. In fact, in many cases, when you get a policy, you aren't even forced to pay your premiums. However, it's a double-edged sword. This means that in many cases, when you forget a payment, the company may not even tell you, and instead the policy would expire without you even realizing it. Then, when you make a claim, it's useless because they claim you aren't insured anymore.
These policies are also aleatory, which means while the premiums you pay are known, the money the company will pay you is unknown, and the difference between the two can be very big. For example, when you sell a house, the contract that governs that sale specifies that the value going both ways is fairly similar: a house for a pile of cash. In the case of insurance however, there's no guaranty that you will ever see any gain from the monthly payments you make. The company only pays if something bad happens that is covered by the policy, and if they don't find a reason not to pay.
Those facts are just some basic, broad factors that govern most insurance contracts. They are worth knowing when you start looking at acquiring any insurance policy, because they can affect your decision as to whether to get insurance or not. Past these facts however, you also need to read all the fine print in the actual policy, since this also has a great effect on how the contract will be applied.
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