2. What should you consider when deciding to take out insurance?

If you wish to be adequately insured against a certain risk, you must consider a number of factors as explained below.  First of all, try to answer the following questions:

A. What do you want to be insured against?

B. How much do you expect to get paid if an insurance event occurs? How much are you willing to pay to the insurer in insurance premiums?

C. How long do you want to be insured and to pay insurance premiums?


The next phase is search for an insurance product that satisfies your needs (this is a more complex task).  How to proceed?

A. Are you being persuaded to buy insurance?

B. Do you know how to arrange  insurance?

C. Do you know that the insurer must give you an information sheet before you enter into an insurance contract.

 

You should have a clear idea of what you expect from insurance and what exactly you want to insure.  If you are going on holiday and considering taking out travel insurance, the right type of insurance will depend on the type of holiday you are planning.  If you are going hiking in Slovakia, you will need insurance covering the costs of the mountain rescue service, which you would otherwise have to pay yourself in the event of emergency.  Since domestic health services are covered by your compulsory public health insurance, you will not need any separate insurance for the risk that you may fall ill during your holiday.  If you are travelling abroad, you will need travel insurance that covers the costs of medical care too, because you as a foreigner would have to pay for such care. If, however, you hold a European health insurance card, you are also eligible for medical care in other European countries on the basis of your mandatory health insurance. You are entitled to the same public health care as the citizens of the country you are visiting. This means that any health service that is free for the locals will also be free for you. For extra services, you will have to pay like the locals do.  I you are flying, you may also need luggage insurance for the case your luggage is stolen and you need to buy new things during your holiday.  I you are travelling abroad by car, your insurance package should include car breakdown insurance for the case your car needs to be hauled to a repair shop, you need accommodation for the night, etc.

More detailed information about insurance is available here:  Life assurance - Motor third-party liability insurance - Comprehensive motor vehicle insurance - Travel insurance - Property or household insurance and third-party liability insurance - Debt servicing capacity insurance.

If, for example, you buy a cheap car, you will probably take out only the mandatory motor third-party liability (MTPL) insurance to minimise your insurance costs. Such insurance will cover any damage you may cause to another person in a traffic accident, but will not cover damage to your car.  If you buy a new expensive car, you may be willing to pay more in insurance and buy both MTPL and comprehensive motor vehicle (CASCO) insurance, which will cover any damage caused to your car.  You should consider in this regard whether you need CASCO insurance only for damage caused to your car in a traffic accident or you also want to have insurance for the case your car is robbed or damaged by vandals.  It is also important whether you want insurance cover for the total damage (the insurance premium will be higher) or for only part of the damage (the premium will be lower).

An insurance contract may be concluded for any period and cancelled if no longer needed.  In certain cases, however, it is very important to know how long you are willing to pay for insurance.  This applies mainly to life assurance, which may be arranged for a period of up to 25 years.  After a certain age, the insurer may refuse to provide you with insurance, because you are a high-risk client.  If you can answer all these questions honestly, you probably have an idea of what you need.

Make sure the actual terms and conditions of insurance are clear to you.  The offers of insurance companies vary, though they seem to be the same at the first sight. You should, therefore, compare the offers of different insurers accurately before you make your choice.  If you pay insufficient attention to search for the best offer, you may easily make a bad choice.  Before deciding, read over the insurance contract carefully, in particular the insurance terms and conditions. You should focus primarily on the clauses concerning the arrangement of insurance, the definition of an insurance event, protective and grace periods (during which the insurance terms and conditions do not apply) and exemptions from insurance.  If you do not read these clauses carefully and you fail to  understand them, it may happen that, when an insurance event occurs, you will rely on the insurer to pay you the benefit / claim amount agreed upon in the contract but the insurer will pay you less or nothing at all.

What to do when the insurer refuses to pay?  If you have duly reported an insurance event and met your obligations in full but the insurer refuses to pay you the agreed amount or pays you less or fails to respond to your application for an insurance benefit/claim payment, defend your rights.

Insurance can be arranged in any of the following ways:

  • you visit a branch of the insurance company you have chosen, tell them what sort of insurance you need, specify your requirements, and you will be offered an insurance product;
  • you find an appropriate insurance product on the insurer's website and enter into an insurance contract over the Internet or by phone;
  • you are addressed by a staff member of an insurance firm or by a financial agent who offers you an insurance product on the insurer's behalf.

It is very important that you should not allow yourself to be persuaded into signing an insurance contract which is not clear to you in every respect or which you have not examined in detail.  Unless you are absolutely certain, do not sign a contract without reading it.  Never sign a contract on your first visit to branch of an insurance firm or when an agent contacts you over the phone for the first time.  Never sign a contract with the first insurance firm you visit. Take your time and visit more insurance firms, collect all the information you need, compare the offers and select the one that most suits your needs.

We advise you to proceed as follows:

  • tell what kind of insurance you need (your idea and expectations);
  • ask for a detailed explanation about everything you do not understand;
  • request a copy of the insurance contract, the terms and conditions of insurance, and of the related documents;
  • take your time to think about the insurance product offered, to examine the contract, and to compare it with the offers of other insurers;
  • sign the contract only when you are quite certain that you have found the right product.

What kind of documents should you receive from the insurer?

as a general rule, you must receive a copy of all the documents you have signed.  Make sure that the documents you receive from the insurer are duly signed by the insurer.  You should sign a document only after you have read it carefully.

bear in mind that the insurance contract to be signed is not the only document that contains the terms and conditions of insurance. There are further documents that are relevant to you, e.g.  the General terms and conditions of insurance, Specific terms and conditions of insurance, Table of fees and charges, Valuation tables, Questionnaire, etc.

The insurance contract contains a list of these documents, usually at the end of the contract under ‘Final provisions' or in another part of the contract.  Search the contract for the list of the documents the contract refers to.  Ask for these documents (unless you have received them from the insurer) and read them before you sign the contract. Otherwise you will not know for sure what you are buying from the insurer.

Before you decide to sign an insurance contract, the insurer must give you a copy of the information sheet called ‘Important terms and conditions of insurance contracts'.  This sheet must be given to you well in advance of the conclusion of the contract. If you do not receive it automatically, you should ask for it.  The sheet contains vital information on insurance, which will help you to make the right decision.  You can also download this sheet from the insurer's website or get a copy at one of its branches. Take your time to read it carefully, preferably at home.