We would all like to be sure that the things we care about are always going to be safe and sound. However, just as we sometimes fill our bags with ‘just in cases’, it is also necessary to prevent unfavourable future situations. That is why there are insurers, to help us to look to the future with confidence.
If this is the first time that you are thinking of buying insurance, there are several key points that you should know. We discussed it with Adrián Gutiérrez de la Dehesa, who runs the Insurance and Pensions for All project from the MAPFRE Foundation.
When to take out insurance
In addition to obligatory types of insurance that the State requires by law (for example, compulsory motor insurance or insurance for potentially dangerous animal breeds), a person should consider insurance in these situations:
- “When they are aware of the existence of a risk that may cause a loss, whether material or personal“, indicates Gutiérrez. For example, “owning an object of some value, starting a business, or thinking that you may suffer illness, injury or even death”.
- “When you assess whether, if the loss arises, you may be able to handle it at your own expense or not,” adds the expert. If the answer is no, it is advisable to take out insurance “onto which you transfer that risk and that allows you to sleep peacefully.”
Before jumping in at the deep end, it’s a good idea to know what can and can not be insured.
A basic dictionary
If you have already decided that you need insurance, the first thing to do is to understand some industry terms. The most basic are:
- Insurance: a contract by which someone is obliged, by charging a premium, to compensate for any damage caused to another person.
- Policyholder: the person who is themselves (or their goods or their economic interest) exposed to the risk.
- Exclusions or limits: a decision meaning that certain risks are not included in the coverage of the policy.
For Gutiérrez, the insurance industry uses a lot of technical terms, so he advocates “bringing insurance concepts closer to the general public”. That is why he proposes some more understandable synonyms to replace them:
- Contract, rather than policy.
- Contracting Party, instead of policyholder.
- Price, instead of premium.
- Accident or incident, instead of loss.
These types of terms can be looked up in glossaries like the one by Insurance and Pensions for All
Things to really bear in mind
- Have an expert broker. “The most important thing is to have as much information as possible before taking out insurance. Although it can be obtained from the Internet, it is recommended that you seek the advice of an expert advisor, especially when it comes to non-conventional insurance,” says Gutiérrez.
- Compare and analyse. “You don’t have to settle for a single option. Search and compare,” advises Gutiérrez. According to him, the key things to take into account when looking at the different options offered by the market are “to compare the coverage, other value added services offered by each product, and the price of the insurance”.
- Understand and fill out the insurance in detail. “A customer should never have doubts about the exclusions and guarantees of their contract,” insists the expert. For example, with health insurance it is very important “to be clear on the existence of waiting periods, the scope of the coverage for pre-existing conditions and completing the health questionnaire correctly”.