Hay muchos aspectos para tener en cuenta cuando buscamos la protección más adecuada y lo cierto es que alguno se nos puede There’s a lot to consider when searching for the right protection, and it’s easy for something to slip through the cracks. But most of these mistakes are avoidable.
- Don’t choose your policy on price alone
Nobody wants to overpay, so it’s natural to compare policies by focusing on the premium. But two policies with similar price tags can offer very different levels of coverage. Don’t let price be your only guide. Several factors can make all the difference when a claim arises, such as payout limits, assistance services, included benefits, deductibles, and exclusions. Premium cost does matter, but it shouldn’t be the deciding factor.
- Hiding or misrepresenting information can cost you
Leaving out details when you take out a policy, such as preexisting conditions on a health policy or failing to disclose that your teenager will be driving the family car, are critical mistakes. Insurers calculate risk based on the information you provide. If they discover that information was falsified, the insurer has the legal right to cancel the contract immediately and deny any claim payout.
- Insure your property at its true value
For homeowners and business policies, avoid underinsuring; that is, declaring your property to be worth less than its actual value. If a loss occurs, the insurer will apply the proportional rule and pay out only a percentage of the damage. Avoid the opposite mistake, too: over-insuring, or assigning your property a value higher than it’s actually worth. In the event of a total loss, the insurer will only pay the item’s true value, not the inflated figure.
- Read the exclusions and limits carefully
It’s essential to know what a policy covers, but it’s just as important to know what’s excluded and what limits, whether time-based or monetary, apply. Many claims disputes arise because the policyholder assumed a risk was covered when it wasn’t. Common gray areas include certain weather events, professional activities conducted from home, high-value items, and damage caused by lack of maintenance. These kinds of risks may not be protected, or may require specific add-on coverage.
- Understand how deductibles work
Many policies today come with a deductible, a concept that still causes confusion. Under this arrangement, the policyholder agrees to pay a fixed amount toward each claim, and the insurer covers the rest. One common mistake is choosing a deductible that’s too high, leaving you without the cash on hand to cover it when an accident happens. Here’s a clear example: if your auto policy has a €400 deductible and you’re in a fender-bender that costs €600 to repair, ask yourself whether you could actually afford that €400 out of pocket.
- Update your policy whenever your situation changes
Once you’ve purchased a policy, your circumstances can change at any time: a major renovation, installing a smart-home system or solar panels, a change in how you use your home or run your business… A common mistake is assuming there’s no need to notify your insurer. The reverse can happen too: your risk level may go down. If so, it’s worth reporting the change, since it could lower your premium.
With life insurance, it’s easy to forget to update your beneficiaries. Life events like marriage, divorce, births, or deaths make it wise to revisit this information to avoid disputes when it comes time to pay out a claim.
- Extraordinary damage that falls outside coverage
Sometimes we assume a policy covers everything, even the most unlikely events. But that’s not always the case. Certain extraordinary risks, like earthquakes, floods, or volcanic eruptions, are covered in some countries by specialized institutions, such as the Consorcio de Compensación de Seguros in Spain, the CatNat scheme in France, or the National Flood Insurance Program (NFIP) in the United States (which covers flood risk only). Don’t get caught off guard.
Toward more transparent policies: a shared challenge
These mistakes aren’t unique to any one market. Organizations including Insurance Europe, the Global Federation of Insurance Associations (GFIA), and the Federación Interamericana de Empresas de Seguros (FIDES) all point out that many policyholders lack awareness of key aspects of the policies they buy, particularly around coverage, exclusions, and the need to update risk information, which can lead to costly errors. To help address this, the OECD notes that greater insurance and financial literacy leads to better-informed decisions, reducing the likelihood of disputes down the road.
As with any contract you sign, it pays to get your questions answered beforehand. At Mapfre, our network of professionals is available to help answer any questions you may have when purchasing a policy, helping you avoid these common pitfalls, so you can count on the full value of good protection when you need it most.
