3. Essential things you should pay attention to when entering into an insurance contract

You have decided to enter into an insurance contract but you suddenly realise that:

  • you do not know how to enter the data correctly as required by the insurer;
  • you do not understand clearly what the insurer requires from you;
  • you do not know how much you will have to pay to the insurer;
  • you do not know what you will receive from the insurer in return and when;
  • you do not agree to certain clauses of the insurance contract.

Where this is true, do not sign the contract.  Request an explanation and take your time to reconsider your decision; you can still find another insurer and sign a better contract. Be particularly cautious when entering data in the contract form or the related questionnaire (about yourself, your property, etc.).  Before or when you sign an insurance contract, you may be requested by the insurer to provide some additional data about yourself or the property you want to insure.  It is very important for you to enter the data requested correctly and truthfully. 

attention!  Insist on doing so even if you are told that the data you are requested to enter are irrelevant.  If you do not understand a question in the questionnaire or you are not sure whether you have answered a question correctly, request assistance from the person who is to sign the contract on the insurer's behalf or enter a note directly in the questionnaire or the contract. 

Please BEAR IN MIND THAT if you lie or provide inaccurate information in an insurance contract, the insurer may reduce the benefit / claim paid or pay nothing when an insurance event occurs.

How to proceed? Read both the questionnaire and the contract carefully to find out whether there are any open questions therein.

  • Answer these questions truthfully, accurately and fully.
  • Where the questionnaire offers only a YES or NO option but you would like to add a comment or explanation, do not hesitate to do so.
  • Check the contract and its annexes even if you have nothing to insert or delete.
  • A contract or its annexes may contain declarations which you can confirm only by signing the insurance contract.

Such declarations may state, for example, that:

  • your house is not situated in a floodplain,
  • you have never caused a traffic accident, or
  • you have never had high blood pressure, etc.

If you find an untrue or inaccurate declaration in your contract or questionnaire, WRITE a comment in the contract or in a printed copy of the declaration or on a separate sheet, and give it to the person who is to sign the contract on the insurer's behalf.

We advise you to request written confirmation. Thus, you will be able to prove that you have warned the insurer before signing the contract.

You do not know how to fill in a questionnaire or you do not understand a question. You do not understand certain medical terms in the questionnaire concerning your state of health.  Or you do not know whether your illness belongs to the category mentioned in the questionnaire.

What to do in such cases?  WHENEVER you have any doubt, request a detailed explanation from the person who is to sign the contract on the insurer's behalf.  Such an explanation should be requested in writing; you should always communicate with your insurer in writing. Thus, you will be able to prove something if the need arises.  Consult your family practitioner about questions concerning your state of health.  Provide the insurer with as much information as you can, even with medical reports or other documents if necessary.  You should also mention your other health problems, even if they are not listed in the questionnaire. 

The phrase ‘Less is More'  DOES NOT APPLY in this case - the opposite is true.  Otherwise, it may happen that you pay for insurance for years and the insurer will pay you less or nothing upon the occurrence of an insurance event, because it may claim that you lied or withheld important information when you signed the contract.

Are you aware of the fact that the insurer may refuse to pay in certain cases? The conditions under which the insurer is obliged to pay you the promised benefit / claim amount are set out in the contract or in another document.  There are, however, cases when the insurer may REFUSE TO PAY or pay only part of the amount agreed upon in the contract. It is important for you to know these cases.

EXEMPTIONS FROM INSURANCE: An insurance contract or the documents attached may contain certain exceptions. These are referred to as INSURANCE EXEMPTIONS.  Such exemptions specify when the insurer is not obliged to pay an insurance benefit / claim amount. These cases are not covered by insurance.  For example: you have your house insured against fire but the contract contains an exemption for fire starting from a fireplace; you have your flat insured against flooding but flooding from a washing machine is not covered by that insurance, only flooding from the water tap to which the washing machine is connected; you have your car insured against theft but the contract contains an exemption for theft if the car is not equipped with a security device or if you are not the exclusive owner of the ignition keys.

What is co-insurance? Imagine you have your house insured against break-in. On one day, something worth €150 is stolen from your house but your insurance claim is rejected by the insurer.  WHY?  You have probably agreed in the contract that the insurer will pay claims only above €200.  Hence any loss up to €200 will be covered by you, the insurer will pay compensation only for losses exceeding €200. This is called co-insurance.  The definition and level of co-insurance may vary considerably among insurance firms. Find out how co-insurance is defined and how it will function in your case. Check the level of co-insurance in  the insurance contract or the documents attached, because it greatly influences how much you can receive from the insurer.

WAITING PERIODS:  the insurance contract or other documents may stipulate that, after the conclusion of the contract, a certain PERIOD is to lapse (e.g. several months or even years) before your insurance coverage takes effect.  For example,  you take out insurance for the case of illness or loss of employment.  If, however, you fall ill earlier than two years after the conclusion of the contract or you lose your job earlier than three months after its conclusion, the insurer may refuse to pay.  The length of the waiting period may vary considerably.

When is the insurer entitled to pay less than you have agreed in a contract or nothing at all?

 a) The insurer may do so if you deliberately lied or provided incomplete information when the contract was signed.  Be particularly cautious when entering data (about yourself, your property, etc.) in an insurance contract.

b) The insurer may pay you less than you have agreed in the contract if you fail to meet your obligations when an insurance event occurs. For more details see:  5. What to do when an insurance event occurs?

c) The insurer may also pay less in compensation for an insurance event if you consumed alcohol or any other drug before that event and you are thus responsible for its occurrence or consequences.

What are limits? You have, for example, your house insured against damage up to a certain limit.  The insurance covers various types of damage, e.g. damage to windows, water pipes, roofs, etc.  It also covers various risks, e.g. fire, flooding, lightning, etc.  Although the amount payable for a claim is fixed in the insurance contract, this does not mean that the insurer will pay out the claim amount in full.  For example,  your house is insured against damage up to the amount of €100,000.  The terms and conditions of insurance, however, stipulate that the insurer will pay maximum €800 for damage to the windows and maximum €1,000 for damage caused by lightning.  These upper limits on claims paid are called limits. Ask your insurer about these limits and check them in the insurance contract and in other documents related thereto. They are equally important as the claim amount agreed upon in the contract.  Another limitation may be that the insurer will pay you only for a certain period.  For example, if you are insured for the case of loss of employment, the insurer will pay only if you are unemployed for no longer than six months.

Other limitations: The insurance contract or other documents related thereto may contain further limitations to which you should pay increased attention. Ask the insurer about these limitations, examine them in detail and request explanations.  They may greatly influence the amount you will receive from the insurer.  ATTENTION: all types of insurance may contain such limitations.  Examples:

  • You have a mortgage loan and need insurance for the case of illness, incapacity to work and the resulting loss of income.  You want the insurer to pay your mortgage loan instalments during that period, i.e. to insure your debt servicing capacity.  The insurer may reject your claim for various reasons.  For example, your incapacity to work does not last long enough, etc.  For more details see: Debt servicing capacity insurance.
  • You are going on holiday and you buy travel insurance in the last minute, either over the Internet or directly abroad.  You assume that you will be insured as soon as you have paid the first insurance premium.  It may, however, happen that your insurance becomes effective only after several days so you will not be insured over the first few days. For more details see: Travel insurance.