Understanding What Insurance Will and Won’t Cover
The insurance industry is a multi-billion-dollar enterprise that includes huge sub-sectors like health, homeowner’s, business, life, and many more. The question most consumers ask is “What does my policy cover?” It’s important for consumers to know exactly what their various insurance policies cover and don’t cover. The only way to find this out is to read the fine print of the insurance contract. Unfortunately, those contracts are often brimming with legalese and arcane terminology that nearly no one can fathom. So before you plan your next exotic trip, here’s a quick list of the most common items not covered by standard types of insurance policies, so you can inquire about purchasing additional coverage if needed:
No matter how comprehensive your health insurance coverage is, there will be times when it won’t protect you against a loss. The most common example involves foreign travel. If you are on vacation in India, for example, and have a heart attack, your own policy likely offers no coverage. You could end up owing a large amount of money to the facility that treats you. There are multiple types of travel insurance you can buy to cover these kinds of risks. In fact, people who frequently visit foreign countries make sure to maintain comprehensive travel insurance.
Another major exclusion in health policies is for pre-existing conditions. If you have a serious illness when you purchase the policy, you may not be covered by that policy for the illness in question. Always ask your insurance agent about the specific kinds of exclusions in your health policy, as adequate coverage could not only mean life or death, but the amount of debt you could incur if you had to pay out of pocket, which everyone knows how inflated the cost of hospital care is. This could mean spending your remaining years paying off medical bills.
Many auto insurance policies may not pay a benefit if your car sustains damage as a result of your negligence. A common example is a wreck that occurs because the owner of the vehicle is driving under the influence of drugs or alcohol. Auto policies contain many types exclusions, which is all the more reason why vehicle owners need to read their policies carefully and purchase separate or additional coverage for specific situations.
Losses from earth movement (earthquakes, mudslides and avalanches), mold, flooding, and losses caused by intentional acts on your part are usually not covered by homeowners’ policies. If you live in a flood zone and want additional flood coverage, you can purchase it separately from the federal government (and it may be required by the lender if refinancing a mortgage).
Some life insurance policies can be extremely comprehensive in the types of situations they cover. However, there are four common exclusions that pertain to most life policies. For example, you’ll usually not be covered in the event of suicide, death that results from dangerous activity, an act of war or anything “aviation-related.” That’s a short way of saying that policies will not pay out to a beneficiary if the insured commits suicide, dies while piloting an aircraft, dies from enemy attack in a war or while doing something inherently dangerous, like rock-climbing or sky diving.