Are insurance companies trying to rip you off? Is car insurance a scam?
You may not not want to take the opinion of an insurance broker, but we’ll be honest and unbiased in our take… so read on.
Our honest opinion is insurance companies don’t have a goal to rip you off. That doesn’t mean that all insurance companies are perfect, but they are not actively trying to rip you off.
It’s important to understand that even though insurance companies are there to help you when something goes wrong, insurance companies are still in the business of making money. Insurance companies are not charities, they are running a business and they’re trying to make money.
This doesn’t make them bad or unethical. It just means they’re business owners like the millions of other businesses that are out there in the world. There’s good companies and there’s some bad companies, there’s some good insurance agents and there’s some bad insurance agents.
If you educate yourself and understand how insurance works, then you don’t have to worry about those bad agents or those bad insurance companies. You’ll be knowledgeable and you’ll be able to see a scam when it’s coming from a mile away because you are educated.
Lets discuss different examples and give you some education about how insurance companies may lead you down the wrong road and what you can do to stop that.
Table of Contents
Claims
Most of the time when someone says insurance is a scam, it’s because they’ve had a bad claims experience, plain and simple. There are just some bad claims adjusters out there. Bottom line, they’re not as educated as they should be.
There are a lot of unexperienced claims adjusters who don’t know how to properly communicate, don’t know how to properly interpret a policy and don’t know how to give good customer service.
However, there still are a lot of good claims adjusters out there and just because an insurance company has a couple bad employees doesn’t mean the insurance company is bad, it doesn’t mean they’re trying to rip you off. It just means they have a few bad employees.
The solution for when you have a bad claims adjuster, when you feel like you’re getting the runaround, when you feel like maybe you’re getting scammed, it’s as simple as asking the claims supervisor for a new claims adjuster.
I have never asked for a new or different claims adjuster and have the insurance company tell me no. Anytime me or any of my clients ask for a new claims adjuster, they grant me that request. It’s very simple.
Don’t waste your time. Just straight away say, “hey, I need a new claims adjuster please.”. More than likely you’re gonna get one.
Online Insurance Companies
If you’ve watched or read any of our content, you know, we’re not huge fans of online insurance companies for a number of different reasons.
However, that doesn’t mean they’re scams. It just means we’re not fans of them and I’m going to tell you why.
When you use an online insurance company, you just have to know what you’re getting yourself into and what purpose these online insurance companies serve.
Online insurance companies are for those people that don’t really care so much about coverage. They’re just trying to find some something simple, fast and cheap. That’s what online insurance companies can do.
When you go online, you obviously don’t have a licensed agent there explaining coverage to you, they’re not asking you the right questions to make sure that you get the right coverage.
You’re doing it all on your own, you may not get the best coverage because someone who’s experienced didn’t help you.
Just know if you get the wrong coverage, then you have a claim and you’re not covered, that’s not the insurance company scamming you. That’s just you knowing what you were getting into with an online insurance company. So if you’re not worried about coverage, you just want to save money, go with them.
Bad Insurance Agents & Insurance Brokers
There’s some bad agents out there, plain and simple.
They don’t know their product. They don’t know much about insurance to begin with and they only sell on price. They are order takers.
To make matters worse, it’s actually pretty easy to become an insurance agent. You study for a few weeks, take the test, and boom you’re suddenly an insurance agent. So because it’s so easy to become an insurance agent, you have a lot of bad, inexperienced agents out there.
And then at the same time, you do get a lot of unethical agents that are trying to scam people. As long as you ask the right questions, as long as you’re more concerned about coverage rather than price, as long as you asked to see things in writing, you’re going to be able to tell pretty quickly who the good agents are and who the bad agents are.
If the agent is only talking about price and is just quickly trying to get you into a new policy, I would step back, assess the situation and probably call another agent or broker. And again, just because there are bad agents out there just because there’s unethical agents out there doesn’t mean that the idea of insurance is a scam. You just have to go with the right company in the right place and find the right agent or broker and suddenly insurance is a pretty cool experience.
Tips If You Feel You’re Being Ripped Off By Your Insurance Company
Lowball Offers
What should you do if you feel like the amount of money that the insurance company is offering to you is not enough?
You do not have to accept their first offer. You can counter offer. If we’re talking about vehicles, you can go and pull comps for similar vehicles and say, “hey, this vehicle is selling for this much or this part is worth this much”.
You can send that information to the claims adjuster and they will adjust their pricing accordingly. So just know that you don’t have to accept the first offer. You have the ability to go back and forth with them and ask the right questions to make sure that you’re getting the full offer that you deserve.
Not Understanding Claim Situation
If you don’t understand something, don’t just say so. Ask questions, push back. The insurance company and the insurance broker have an obligation to you as the client to fully explain things to you until you understand them.
Don’t just accept what they tell you without fully understanding.
Don’t Sign Until You Understand
Many times you’ll get pushy sales agents and you’ll also get claims adjusters that just want to close things out. The sales person either wants to get the sell or the claims adjuster wants to get your claim off their desk.
They may push you to try to sign something. Do not sign anything until you 100% understand it. If your insurance agent sends you something and asks you to quickly sign and return something, don’t quickly sign it, make sure you fully understand it before you sign it, ask them questions.
If they don’t want to answer the questions that’s a red flag. If they take the time to explain and answer all your questions, then that’s a good sign and you should feel comfortable signing it after you have all your questions answered.
Call A Lawyer
Many times people spin their wheels for much too long, never getting anywhere. If it’s a serious situation and you can tell from the start that you’re gonna get the run around, call a lawyer. They have the experience and knowledge that you don’t have. They can get things quickly taken care of.
Work With An Independent Insurance Broker
The last tip is to work with an independent broker. Brokers don’t work for the insurance company, they work for their clients. Agents like an Allstate agent or State Farm agent work for the insurance company.
There’s a huge difference there.
We work for our clients and that helps clients feel like they’re not getting scammed. It makes you feel like you have an advocate on your side between you and the insurance company. Independent brokers have so many more options as well just to get you the right coverage.
Insurance is not a scam. That doesn’t mean the system is perfect or that there aren’t bad agents and companies out there. However, the general idea of insurance is not a scam, rather it’s a product that can jump in and save the day when a huge disaster happens and you have no where else to turn.