The one mistake you do not want to make when you buy insurance for your car or your home or anything else is to presume that insurance companies are on your side. They are interested in one thing and that certainly has nothing to do with you or your financial health.

Insurance companies are not charities and they will do everything the can to make sure their profits are as high as possible, including withholding valuable information. So what are some of the things insurance companies would prefer you not to be aware of?

A Good Insurance Policy

The question you should ask yourself when an agent tells you that the policy they are offering you is a good one is whom it is actually good for: you or the agent. You need to remember that agents sell insurance for a profit and they often get additional commissions from insurers to focus on selling their insurance policies over other competing ones.

Additionally, they are offered higher commissions for signing on customers that are low risk, meaning that the premiums they pay out are larger than their claims. As long as you are aware that the agent will put their own interests before yours, then you will find it easier to buy insurance that is good for you rather than the agent.

How Premiums Are Calculated

Even though all insurers use the basic risk factors when they calculate your premiums, such as where you live, your age, driving record, credit history and home ownership, there are many other variables added into the mix which are not revealed. Additionally, every insurer uses different formulas to calculate these risks and you are left in the dark. A report from the National Association of Insurance Commissioners shows that insurance rates can vary from $600 to $1,300 for the same policy, depending on the State you live in.

Diminished Value

Once you have been involved in an accident, the value of your car drops significantly, even if it has been repaired and runs like new, irrespective of the quality of parts used. However, what most insurers don't tell you is that you can actually collect the difference, which is referred to as the diminished value, an important factor you need to remember when you buy insurance.

Remember though that not all insurers will allow you to collect this amount, especially if they covered the cost of repairs. However, you can still benefit by writing it off against your taxes which is why it is a good idea to employ an inspector to verify whether or not the work was done properly and to evaluate the loss.

Your Mechanic?

If you are under the impression that the repair service is working for you then you may be laboring under a serious misconception that can cost you a pretty penny and maybe even your safety. An increasing number of insurance companies have established partnerships with repair centers which are on their list of "approved" mechanics. As this is quite a lucrative deal for the repair center they are quite willing to cut corners to keep the repair costs down to keep the insurer happy. There is no clear cut evidence that this does happen but the risk is too great to ignore.

These are only a few of the things that insurers keep from you which can affect the carrier you decide to buy insurance from.

Unfortunately, there is little you can do about some of them but since knowledge is power you can at least ask the right questions and not follow what the agent tells you blindly.