FINANCE TIP OF THE DAY
Can you afford your loan?!
Know the quantity of loan you can afford. The banks may sanction loan based on your income but you should look at your monthly expenditure and see if you can afford the maximum that banks offer. As a thumb rule, remember not to let your credit exceed 40% of your income!
Don’t overlook general insurance!
Generally, we are very cautious while taking a loan or a life insurance policy to save those last minute surprises. But most of us have a misconception about general insurance that choosing a tailor made policy will take care of you and your belongings. Besides the required coverage and sum insured, it is important to ensure that the final policy document of a general insurance should comply with all the terms that the agent / insurer has agreed with you.
A few things that should be cross checked in a GI policy
In case of health insurance policies even a misspelled name or a wrongly entered age can cause rejection of a claim. For others, a full description of the property has to be given to the financier. Commercial policies should have correct door numbers if the insurance is for a building and correct serial numbers in case of machinery.
Vehicle models or seating capacity can be entered wrong if the software of the insurance company is not updated with that particular vehicle model. If you have made any alterations in the vehicle, like seating, LPG kit etc, check whether it has been entered in your policy. Errors in registration numbers can also cause disputes when claims arise.
If your belongings are hypothecated to any bank or financial institution, the details of the same should be mentioned in the policy. This is because in case if the property is lost, the claim has to be settled against the financier and not to the insured.
The address of the insured to which all communications in respect to the insurance contract should be sent is important. There is a practice among agents to direct the communications of their clients through them. It is better to make communications direct than routing through agents, as there are chances of delay or failures in passing them on the right time. For example, a renewal notice if not reached on time can put you in trouble if a claim comes during the lapsed time or you can lose your No Claim Bonus.
Period of Insurance-
Always check the date of issuance of the policy. Delay can happen in policy issuance even if you had paid cash for renewal to your agent. Always ensure that your policies are renewed at least a day before the date of expiry. Because, in case if an event occurs even in an hour’s gap between policy expiry and renewal, the claim will not be considered.
Ensure that correct estimate of the assets are made, to avoid the risk of under insurance or over insurance. For commercial policies, the average value of the products in your premises and their possibilities of wear and tear should be mentioned. Don’t ever compromise on asset value for getting a lower premium. Cross checking the insured amount and value of your assets on a regular basis is highly recommended.
Things Covered and Not Covered-
Insurance companies today sell products in combinations as package policies, both pre underwritten and underwritten after considering the needs of customers in different segments. Ensure that your policy covers all your needs, considering all risk factors associated with your product service or belongings.
Always check if there are any special conditions attached to the policy like loadings, voluntary / compulsory excesses. For a bargaining customer, the agent / company would give the policy at lesser rates compromising any of the mentioned. This could trouble you at the time of making a claim.
Take time to go through the underwriting guidelines to know about the coverage, extensions, riders, omissions, voluntary / compulsory deductibles. These may vary from product to product and company to company.
Third Party Insurance
The obligations of the insured in relation to the subject matter of insurance to those who are associated with it in case of occurrence of a claim are covered under the third party section of the policy.
For example, if a fire damages a customer’s car in your workshop, you are liable to your customer also. In auto-loans third-party component is compulsory. But in others we can make a choice considering the possibilities.
Carefully choose them in consultation with an expert in the field and check with the policy documents whether all are covered.
If there are errors in the policy, it can get endorsed from the insurer, but ensure that you receive the endorsement certificate duly signed and stamped from the branch.
All policy holders have the right to cancel a policy within 15 days of receipt of the policy document, if they are not satisfied with the policy terms and conditions or on grounds of misrepresentation, non-disclosure of material facts or non-cooperation of the insured. Refund of the premium will be made, subject to deduction of a proportionate risk premium for the period on cover and the expenses incurred by the insurer on inspection.
It is suggested that you get all your insurance needs fulfilled by a single company. This will help build a good relationship which is useful both in terms of discounts as well as claims.