Insurance companies are one of the sectors of the economy that we all love to hate. Even the people who sell insurance are seen as just a little bit shady by some. Much like car salesman, we love not to trust them and although that’s largely unfair to the hard working sales force in America, the insurance industry, like every other industry, carefully picks and chooses what they tell you and what they would rather you not know.
It’s not that they’re lying but if a lie of omission is still a lie then you may be able to make a case that some fabrication is going on. Hidden within these omissions is everything from largely non-significant all the way to something that could cost you big dollars if you’re ignorant to the specifics of the policy.
The hurricane that ripped up the east coast in 2011 put a spotlight on the anti-concurrent policies contained in homeowners’ insurance policies. Those who live in coastal regions often have hurricane insurance and everybody knows that with a hurricane always comes water. The “storm surge” is that big wall of water that is forced inland due to the massive force of the hurricane but did you know that hurricane insurance may not cover flood damage? In order to claim the losses from a flood, you need flood insurance even though it was caused by the hurricane.
How do you defend against being a victim of the anti-concurrency clause in your insurance? Of course you do your best to read the policy but after that, you call the company or your insurance agent and ask them to explain it to you. Lay out some scenarios and ask them if you’re completely covered. You might even record the call and put it somewhere where a flood wouldn’t ruin it.
You’re Going to be Confused
Insurance companies know how to play the game. All they have to do is make your policy impossible to understand by using big words with small print jam packed on a small piece of paper and the chances of your reading it and understanding it are slim to none.
Lawmakers caught on to this and that’s why more than half of the states have laws that require insurance companies to write their policies in plain English so people who are insurance industry insiders can understand it.
Still, it won’t be easy. That’s when you once again call your agent and tell them to get comfortable because this is going to take a while. They earned commission off of your sale so make them work for it.
Your Credit Score Matters
In the post 2008 economy more people have credit problems than those who don’t but that doesn’t stop the insurance companies from penalizing you for your credit problems. If you can’t pay other people you owe, why would you pay them? Often, when you need to purchase insurance, you can’t afford to wait until your credit improves but you can ask the agent if the company is using your credit to determine your eligibility and premium.
They’re Paid More to be Difficult
In a 2007 study, one insurance company was found to give bonuses and pizza parties to employees who met low payment goals. Translation? The less that you get for your claim, the better their paycheck looks. It’s important to think about incentives. Although not all adjusters or companies are bad people, they care more about their paycheck than your claim so you have to go in to negotiations armed with all of the knowledge that you can. Know the fair replacement value of the items you lost and don’t give in to a low ball offer.
Don’t Call Unless You Have To
Do you have a CLUE? The Comprehensive Loss Underwriting Exchange or CLUE is the insurance version of your credit report. If you call and tell them that a deer ran through your bedroom window and you wanted to know your deductible, even if you don’t file a claim, that goes in to the CLUE. Enough negative entries and you’ll have a tough time getting insurance at a good rate in the future.
It’s not fair to vilify the insurance industry but just like all companies, their goal is to make money and they can only do that if they limit their losses. Your goal is the opposite so don’t count on them to be fair or reasonable. They may easy to work with but always do your own fact finding.
(Photo: alancleaver )