Insurance plays an important role in the life of any person. Whenever some incident, accident, injury, or misfortune happens, this financial aid is there to help us get back on our feet as soon as possible. So, getting the insurance that will cover your basic needs and be there when you need it the most is in your best interest.

Unfortunately, the insurance market is also riddled with various hidden costs and worthless clauses that can considerably bring the value of your insurance package down.

Let us take a look then at what are some of these hidden costs and how to avoid them.

Car insurance

Let us start by first checking one of the most common insurance policies you will ever encounter and that are the car insurance products. That being said, virtually any federal state and country in the world will require that you purchase liability coverage while other products like comprehensive insurance are optional.

When it comes to the actual hidden costs you may overlook when signing the policy they can be divided into a couple of different categories:

• Renewal fees: A small sum you need to pay to renew the contract.

• Adjustment fees: Charge for making the changes to your policy

• Annual percentage rate (APR): The cost of breaking down the insurance costs into installments

Even though it doesn’t exactly qualify as a ‘hidden cost’ we would like to remind you that as you are growing older, you can see the insurance premiums becoming comparatively higher.

Junk insurance policies and clauses

If you are not familiar with the term, junk insurance describes any policy or clause that is added to the insurance contract without your explicit agreement or stipulated in such a manner that you will never be able to make a claim.

The most notable examples include the likes of consumer credit insurance, tire and rim insurance, and mechanical breakdown insurance. Of course, this practice is considered highly unethical so if you are wondering can I get my junk insurance refund, the answer is yes. But, due to the legal complexity of these cases, it is highly advisable to look for help from a professional third party or join an existing class action.

Property insurance

When it comes to the properties, the United States laws don’t recognize any kind of mandatory property insurance, so getting the appropriate policy is left entirely to your own discretion. According to recent research, the annual price of insuring your home currently sits at around $1,383.

As for the other expenses you should keep an eye on, the standard property insurance protects the home’s structure and your belongings in the case of some destructive incident (e.g., fire). The things that are not covered are floods, losses due to theft, and the damage from the earthquake.

You will need to buy all of these policies separately or remove them from your contract if they are added against your explicit agreement.

Life insurance

Last but not least, let us quickly cover another popular product – life insurance – that doesn’t exactly feature some sorts of hidden costs as much as the clauses and add-ons that are not widely marketed. Be that as it may, there are a couple of examples of the charges that are not considered regular insurance premiums:

• Discontinuance charges (cannot exceed 50 basis points per year on the capital value)

• Fund management charges

• Mortality charges (the sum that compensates the insurance company if the insured person does not live to the expected age).

• Administration charges (compensation for the expenditures like premium intimation, paperwork cost, etc.)

We hope these few examples gave you a general overview of the most common hidden costs and clauses you are likely to find in the popular types of insurance policies. For the very end, we would like to remind you that, even if working against your best interests, the insurance companies will need to make all costs they are planning to charge a part of a written agreement. Being extra thorough in reading this fine print and shopping for different insurance options can save you a lot of money in the long run.