When expectation does not match reality

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The policy schedule sets out clauses

Many disappointments with insurance policies are a result of expectation and reality. But here’s the thing. All the clauses, the ifs and buts, in your policy are available for you to read before you buy. You just have to ask your agent for a policy schedule and see what clauses apply to you depending on the options you choose.

In a typical motor insurance claim, for example, your cost of repairs/ spares/ replacement will not be given in full.

The cost of plastic and fibre-glass parts will be adjusted for depreciation, and these rates will be stated right there in your policy.

Depreciation will also apply on the entire claim depending on the age of the vehicle and can go up to 50%. You can usually purchase additional cover for the depreciation.

Compulsory excess

These days most policies come with a compulsory excess, also called a compulsory deductible. This is a specified flat amount, the first part of the claim that you have to bear yourself. In addition to this, you can opt for a voluntary excess or voluntary deductible and you will get a discount in your premium.

In health insurance, there can be an excess and there can also be a co-pay. This will be a percentage of each claim that you have to bear, as different from a flat sum. Considering that the larger your claim, the larger your co-pay, it is worth being aware of this well ahead of time, before you sign up.

Once you know you have to to look for these so-called small-print clauses, you can shop around for your policy with other insurance providers whose terms suit you better. Or, at the least, you will go in with your eyes wide open.

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