I'm making a travel insurance claim. Do I get my premium back?
January 25, 2016 12:45 PM Subscribe
The policyholder is Allianz. Just wondering if I include the amount of the original premium in the cost to be reimbursed. I've heard it both ways--just wondering what the standard is. Thanks!
Best answer: Nope. You exchange a known, controlled loss (the premium) against protection against a much larger loss. So, rather than either losing $0 (trip was fine) or $1000 (trip cancelled, non-refundable) you will lose $20 (the premium) but if you come up snake-eyes, you don't lose the $1000.
You still lost the premium, regardless, but on this deal, the policymaker lost (you bet ~$20, they're paying you out much more than that.) The art of insurance brokering is making sure that the total sum of the premiums is more than the total sum of the payouts. Insurance companies that fail at this over the long haul go broke.
Insurance companies that fail at this in the short term (like when a hurricane hits?) This is why they have reinsurance, so if there's a sudden payout hit, they're covered. Of course, they pay a premium for that as well, and they lose the premium regardless as well.
posted by eriko at 1:03 PM on January 25, 2016
You still lost the premium, regardless, but on this deal, the policymaker lost (you bet ~$20, they're paying you out much more than that.) The art of insurance brokering is making sure that the total sum of the premiums is more than the total sum of the payouts. Insurance companies that fail at this over the long haul go broke.
Insurance companies that fail at this in the short term (like when a hurricane hits?) This is why they have reinsurance, so if there's a sudden payout hit, they're covered. Of course, they pay a premium for that as well, and they lose the premium regardless as well.
posted by eriko at 1:03 PM on January 25, 2016
The art of insurance brokering is making sure that the total sum of the premiums is more than the total sum of the payouts.
Which should tell you that when an insurance company rewards a behavior with a premium discount (seatbelts, etc.), it's because the behavior works.
posted by John Borrowman at 1:29 PM on January 25, 2016
Which should tell you that when an insurance company rewards a behavior with a premium discount (seatbelts, etc.), it's because the behavior works.
posted by John Borrowman at 1:29 PM on January 25, 2016
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posted by HeyAllie at 12:49 PM on January 25, 2016 [4 favorites]