4 Interesting Facts About Insurance That You Probably Didn’t Know
Your insurance policies may be there for you when you need them, but their inner workings can be mysterious. What follows are 4 interesting facts about the insurance industry. Some of these facts can actually help you as you buy insurance for yourself.
Your home insurance may cover you against volcanoes and meteors, but not earthquakes and floods
Many homeowners assume that their home insurance policies cover them against damage from floods and earthquakes. Home insurance policies don’t cover against these events, however. Earthquake protection needs to be added on, and flood insurance is a separate policy. What most policies do cover automatically is against damage from volcanoes and meteors. The fact that such damage is exceedingly rare may have something to do with the fact that it is covered without additional payment.
Even when home insurance covers you, you may not be fully covered
When you buy home insurance, the policy covers all your belongings. Some kinds of possessions, however, are usually limited to $1,000 of coverage. Coverage for electronics, silverware, jewelry and furs, for instance, tends to be limited in this way. As an example, if you have furs and jewelry worth $10,000 stolen, you may find that your homeowners’ insurance only covers you for a fraction of what you’ve lost.
Your credit score can affect your insurance premiums
Most people realize that a good credit score can gain them access to lower mortgage rates and credit card rates. Not many people realize that their credit score affects the insurance quotes that they receive, as well, however. Nearly all home and auto insurance companies use credit scores wherever the law allows it, (states like California and Massachusetts do not permit the use of credit scores in this way).
The reason credit scores are relevant? When you have a low credit score, insurance companies believe that you’re less likely to have an emergency fund on hand, and are therefore more likely to file for a claim when the need arises. When you have a low credit score, your car insurance may be twice as expensive as what you would need to pay if you had a high credit score.
Many people believe that Obamacare and the Affordable Care Act are distinct
The Affordable Care Act is informally known as Obamacare. Both terms refer to the same healthcare law. The launch of the law was met with strong opposition from many people, and many lawmakers tried for years to undo it. Research by Morning Consult, however, has uncovered that many people claim to dislike Obamacare while they approve of the Affordable Care Act. One in three people in America are confused about the two terms, often not knowing that they refer to the same idea.
Many people also don’t realize that the Affordable Care Act does more than bring access to healthcare to more people. It also changes the way hospitals approach healthcare. In the past, hospitals made more money when they prescribed more tests. With the Affordable Care Act, however, the focus is on hospitals delivering value. Under the law, hospitals make more money when patients stay healthier through superior preventive care and don’t need to return to the hospital often.
While some features of insurance policies may seem to not make sense, it’s important to realize that the industry has been around for centuries. When the insurance industry favors some ways of operation over others, there are usually historic reasons for those choices. What you can do as a consumer is to learn about the rules of the industry, and use them to protect your interests as well as you can.
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