Financial Literacy

Yes, you need to read your insurance policies

By: Desirae Odjick on November 17, 2016
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I get it: you don’t want to read your insurance policies. Nobody does. Given the choice of reading that great new novel you ordered off of Amazon or your super-dry insurance policy, no one chooses the latter.

Except that, just like saving for your retirement, reading your insurance policies is one of the greatest gifts you can give future-you. And, oh right — it’s also 100% your responsibility. When you sign on the dotted line with your insurance company, you’re telling them that you’ve read it.

Now sure, maybe you didn’t actually read it before you signed up, but if you haven’t, you need to read your insurance policies ASAP. Like, literally do it today, if not right now. Here’s why.

  • You might be on the hook for certain things in order to stay covered

  • You might not know how much you have to pay in different circumstances

  • You might need to adjust your emergency fund accordingly

Yeah, those are not insignificant issues. You might think they don’t impact you, but if you’ve never read your policies in full, how do you know for sure?

As a fellow not-perfect-person who hadn’t read most of her insurance policies in full, I fished them out of my stack of Important Papers and took a deep dive into the legalese of my policies to make sure I wasn’t inadvertently sabotaging my own coverage.

When I did, I had a few fairly major realizations — here’s what they were, and the steps I took afterwards to make sure I avoided a hugely unpleasant insurance surprise. Because honestly, when it comes to insurance, are there ever good surprises?

Checking in on Fido’s insurance policy

Yes, I am a crazy dog lady who has pet insurance. If we’re over that, let’s move on to the good stuff: pet insurance is a minefield of terms and conditions. There’s a laundry list of small-print terms in the coverage documents, so after hearing a few “My dog wasn’t even covered!” horror stories, I knew that I needed to read my dog’s insurance documents very carefully.

Since I did my research and compared pet insurance policies (which you totally do too, right?) I knew that I wanted to get insurance that would cover true accidents and illnesses, but nothing else. I could pay for regular vet appointments and issues out of my own savings, but if my dog broke his leg or ate a sock? I wanted that covered.

Because of that, a lot of the things that weren’t covered in my terms and conditions, like dental care, weren’t a huge shock. The one thing that could have been a huge “Gotcha!” moment was the timing of his checkups. If I didn’t book him for a yearly vet visit or get him checked out for pre-existing conditions within 30 days of buying coverage, any and all of my claims could be denied.

And if my dog eats a sock and needs surgery, the last thing I want is for a claim to be denied because of his vet visit schedule. That’s why I make sure that nothing trumps our annual vet visits.

What’s up with that whole snow tires thing anyway?

I have this vague memory of my car insurance broker telling me that I had to have my snow tires on in November for my policy to be valid, especially since I got that sweet 5% snow tire discount for Ontario drivers. Did I ever confirm the specific date they had to be on by in November? Of course not. This conversation happened in April, and the last thing I wanted to do was think about snow.

So, with winter looming and November well under way, I pulled out my full car insurance policy to find the legalese that would tell me exactly when I had to have my snow tires on.

And I found nothing.

It turns out, car insurance policies are so dense and complex that they don’t even send you the full, nitty-gritty details in your policy documents. However, they do include a clause about your rights and responsibilities when it comes to car insurance, and one of your responsibilities is asking questions about your coverage to make sure you understand what you need to do.

So I shot an email to my insurance broker and put my snow tires on earlier this month. Even if it doesn’t snow until Christmas, I like having insurance coverage. Can you imagine how awful an accident would be without it?

About that disability insurance I’m pretty sure I have…

When I read Stop Over-Thinking Your Money, the one thing that stood out more than anything else was that I had no idea what’s up with my disability insurance. I only knew the basic details: yes, I have it, and this is how much coverage I have. I was missing key information about how long it would take for my coverage to kick in if I couldn’t work, whether I could take my policy with me if I left or was fired, and just how long my coverage would last me.

So I dug up that pamphlet that HR handed me on my very first day at work and got into the details. It turns out, almost all of my questions were answered right there in black and white, with only a bit of confusing language.

The biggest thing I learned was that it takes 6 months, not 3, for my disability coverage to kick in if I need it. Lesson learned: I need to bump up my emergency fund to cover a few more months, just in case. I’ll be happy I did if I ever do need to claim my disability insurance.

If those three stories didn’t convince you that yes, you do need to go read your insurance policies like, right now, I don’t know what will.

Happy reading!