Insurance has its own peculiarities that make the way its market operates and the distribution of its products, insurance policies, different from any other economic activity.
Normally, when something physical is bought or sold, the buyer receives the good and immediately begins to enjoy it. In the case of insurance, the buyer pays a premium in exchange for a possible future service; however, protection begins from the moment the insurance contract is signed.
The sale of the insurance constitutes the beginning of the relationship between the policyholder and the insurance company; the latter not only has to handle the claim, it must also keep its customer informed and properly advised at all times.
Keys to buying insurance
So that the insurance that is taken out is adequate in terms of the real protection needs, the consumer must jointly evaluate several factors, including: the coverage, the insurance company, other additional services to the insurance, and the price.
This is the most important factor, since the level to which the goods are protected depends on the choice of coverage. There are many options on the market, even within the same insurance company; it is therefore essential to be familiar with their meaning and scope, and to compare them until one is found that suits the real needs of the individual.
The sum insured is an important factor to take into account when determining coverage. It is the monetary value assigned to the insured goods, and it is also the maximum amount that the insurer would pay to the policyholder in the event of a loss covered by the policy.
Knowing which risks or circumstances are not covered by the insurance is also very important information when taking out the policy.
An essential requirement is that the insurance company must be legally authorized to carry out the insurance activity. Throughout the life of the policy, it is the contact person with the policyholder, providing the information and offering the service.
It is advisable to take out policies with reliable and financially solvent companies so that the response in the event of a claim is adequate and the policyholder is reassured by the product they have purchased.
The experience that the company has in this type of insurance, the variety of products offered and the access to information, either physically or digitally, are other aspects to take into account.
It is interesting to consider the additional services provided by the insurance company, such as, for example, professional maintenance and repair services, medical services, and so on.
The price is an important aspect when purchasing insurance, but it should always be evaluated in conjunction with all the previous factors.
Each insurance company sets its rates according to the different elements that make up the insurance, the extent of the cover offered and the quality of the services provided. For all these reasons, very cheap insurance will possibly imply less coverage and benefits than a higher-priced one, so before taking out the policy, you should check whether the coverage is adequate for your protection needs.
Sometimes, the excess is related to the price of the insurance. This is an amount for which the policyholder is his own insurer, since in the event of a claim they will bear the cost of the portion of the damage that corresponds to them.
In a car insurance policy, an excess of 300€ is set. This means that if the vehicle is involved in an accident with damage amounting to 250€, the insurer will not compensate the policyholder. Up to a value of 300€ (the excess) any costs will be borne by the policyholder.
If the loss is valued at 1,000€, the insurer will indemnify 700€, which is the amount above the excess. The policyholder will have to pay 300€.
Buying and selling insurance
To understand this better, we will separate, on the one hand, the purchase process and, on the other hand, the actions that take place during the sale of the insurance.