Criticism of Insurance
Insurance is a valuable resource in which many people put trust. With the recent rise of expensive cars, smart phones, and all the gadgets and gizmos we now use on a daily basis comes the big question of how to protect ourselves in case something goes wrong. The insurance industry seems to be there for our protection with its discounts, low-cost insurance company policies, and helpful customer services representatives. But recent news that a young woman received $89 million just because she was hit by another driver has caused some people to question the way insurers work. A recent poll has found that 15 percent of Americans under the age of 30 think that the insurance company "cheated" them (Scott). With this in mind, it seems like the public is questioning whether insurers really work for the best interests of their clients or if they are only out to scam them. In this essay, I will first talk about some of the pros and cons from getting insurance, which will include personal anecdotes about my own experience. Next I will talk about some of the prevalent issues within the industry itself and explain my hypothesis as to why somebody would have a particular viewpoint on these issues.
The amount of money you spend on insurance depends on what kind you're looking for. The cost can vary from as little as $10 to a few hundred dollars per month.There are three types of insurance: personal auto, homeowners', and life insurance. Personal Auto insurance is the most common insurance, with over 70% of Americans having at least one policy. It protects your car and also helps pay for damages caused by an accident. Another popular example of insurance is homeowners' coverage, which will pay for what you have damaged in a fire or other disaster (Scott). The third type of insurance is life and disability coverage, which pays out if you die or become disabled before you complete retirement age (Mullaney). People who leave it long enough to collect a death benefit are often surprised by the amounts that they receive. There are five basic types of insurance: Life Insurance - pays out if you die, disability - pays out if you become disabled, auto - protects your car or home, homeowners - protects your home from damage, and umbrella - adds extra coverage layer (Insure.com).
One thing many people want to know when getting insurance for the first time is whether there are price discounts available or whether they need to purchase more coverage than what is necessary. The answer to that question really depends on the type of policy you purchase, as well as the coverage you actually need. For example, if you're buying a personal auto insurance policy for the first time, you'll have to pay full price on coverage. However, once you've paid your premiums for a while and have accumulated enough experience driving with insurance, most companies will offer discounts on future rates (Pondering why people buy insurance). In fact, according to the AAA Foundation for Traffic Safety (the non-profit that operates "AA.com"), rates are typically lower when younger drivers buy insurance (AAA Foundation). In addition, when you purchase automobile insurance coverage, you have the option of purchasing just one type of coverage or a combination of different types (AAA Foundation). So for example, if you want to buy just liability insurance and comprehensive coverage, then you can do so without paying extra. However, if you want to include both comprehensive and liability insurance in your policy, then you must pay additional money for it.
A common question that many people ask is whether customers actually receive discounts due to their use of the "safety inspection" stations that most car insurance companies provide. The answer is yes; here is how it works: Customers do not have to purchase their coverage through these stations. Instead, if they choose to, they can purchase their coverage through an agent in their local area (AAA Foundation). This option is offered when insurers find that a customer makes more use of their service than the agent on site. This practice helps ensure that the customer is more likely to renew his or her policy. The savings will be reflected in the quoted premium and will not exceed 30% of the premium. If you want a discount on your policy but don't want to go through a car safety inspection, carriers have other options for you as well (AAA Foundation).
There are several issues that I see within the insurance industry. The first one is that most insurers do not provide information about these discounts and how much they offer. This keeps people from being aware of the savings they have available to them. The second issue that I see in the insurance industry is that many customers receive less than they would want. This is because most carriers offer discounts of around 10%. If a customer were to use 10% less, then he or she would pay on average $1,500 less each year (AAA Foundation). And in some cases, these discounts can be even higher. This large savings can help make up for some of those unpleasant fees that you are charged by your insurance company.
One of the most significant issues that I see in the insurance industry is the difficulty people have when they are filing a claim. Filing a claim can be very difficult because you need to provide all of your claims, police reports, and any other information that may be needed. Then you have to worry about whether or not your company will investigate your claim thoroughly as it must do under state and federal law (AAA Foundation). If you feel like this process is going really slow, then you should be aware that there are many different reasons why delays can occur. These delays can also occur while the insurer is investigating your claim. However, customers can generally improve their experience by following the claim procedures and thoroughly documenting their damages and losses (AAA Foundation).
Having experienced some of the issues myself, I am going to share my personal experience in getting insurance. The first type of insurance I ever got was when I bought my first car. It was a 2004 Honda Civic. Obviously it had a lot of bells and whistles that are standard for any modern car. When I took it to get insured, my agent gave me a basic coverage plan from Geico because he said that it would be less expensive than all the other companies that were available at the time (Scott).
Conclusion
Insurance companies are very important to the economy. They provide an invaluable service that helps people protect themselves and their families in case of mishaps and other variables that cause harm. Without insurance, many people would not be able to afford to cover the costs for their homes, vehicles, and life without spending more money than they can afford. For example, a young family will not be able to purchase their dream home if they have no way of paying for the mortgage down payment or closing costs. And then there are other types of insurance like umbrella and life coverage where you can also get a large payoff from your insurer when you need it most.
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Criticism of Insurance