Most common mistakes when choosing insurance – and how to avoid them

Insurance is an important financial service that requires careful consideration of every detail to ensure that clients are well protected in the event of unforeseen circumstances. In this article, we will look at the most common mistakes made when purchasing a policy and how to avoid them.

What is insurance?

Insurance is a fundamental tool for risk management and provides financial protection in the event of unforeseen events. The market offers a wide selection of insurers and insurance intermediaries who provide a broad range of products designed to meet the needs of every client.

Insurance can be categorized into several types, such as:

• Mandatory and recommended
• For individuals and legal entities
• General insurance and life insurance
• Property and health insurance, among others

Regardless of your needs or whether the insurance is required by law, every policy has specific features that every client must be aware of.

The most common mistakes when choosing insurance include:

• Insufficient coverage

A covered risk under an insurance policy is a specific event upon the occurrence of which the insurer is obligated to pay compensation. All covered risks are described in the General Terms and Conditions of the insurance policy or are defined by law. It is especially important for every client to know exactly what type of coverage they need.

In case of uncertainty, it's essential to provide the insurer with comprehensive information about your needs and preferences. In Bulgaria, there is a well-established network of insurance brokers who represent clients and help them choose the most suitable and cost-effective insurance policy.

A key point when signing an insurance policy is to carefully read the general terms and conditions attached to it.

These terms clearly outline all covered and excluded risks. This way, you can avoid the risk of being left without coverage for something you actually need.

For example, the basic coverage in travel insurance typically includes medical expenses. However, if your luggage is stolen and you haven't included “luggage theft” as a covered risk, you will be unpleasantly surprised. This can not only ruin the enjoyment of your trip but also lead to serious financial consequences.

• Ignoring the fine print

In most cases, the general terms and conditions of an insurance policy are written in small print, which often leads to annoyance and reluctance to read all the specific details of the coverage. Insurers also use specific terminology that is often not fully understood by consumers. That’s why it’s extremely important to ask all the questions you may have or anything you don’t understand, in order to make an informed decision.

Insurers are required to publish so-called Key Information Documents on their websites, which provide a brief summary of each insurance product. These are very useful, but they should not be considered a substitute for thoroughly reviewing the full General and Special Terms and Conditions of the policy.

• Focusing only on price instead of coverage

It’s common for clients to choose the cheapest insurance policy available. However, this can result in very basic coverage or a shorter policy validity period. The lowest price doesn’t always reflect the level of protection you actually need. In many cases, paying a slightly higher premium for more comprehensive coverage can save you from significant future expenses.

One such example is a home insurance policy that primarily covers the risk of fire. If your apartment is flooded by a neighbor, you won’t be protected unless you’ve specifically included that clause in your policy.

• Lack of awareness about policy terms and renewal conditions

A common mistake clients make is not keeping track of the validity and renewal dates of their insurance policies after signing them. Most policies are paid in installments, and missing a payment deadline can result in the policy being canceled. Many insurers and intermediaries make things easier by sending SMS reminders about upcoming due dates or policy expiration. For example, Euroins offers an online service that allows clients to check the status and validity of their insurance policies themselves, entirely online.

How to choose the right insurance policy?

To choose the most suitable insurance policy, you first need to clearly understand what kind of protection you need and what your individual requirements are. The market offers a wide range of insurers providing diverse products and services.

You can also take advantage of the services of insurance brokers, who can present you with multiple offers to help simplify your choice. And if you value your time and resources, some companies—like Euroins—offer online insurance, allowing you to browse and purchase some of the most popular insurance products with just a few clicks.

Our advice: always stay well-informed, carefully read the general terms and any special clauses in the policy, and if you have any doubts or questions, don’t hesitate to contact the insurer.