Stacking the Deck Against You
Your insurance company pays big bucks to keep lawmakers in line
One hundred and fifty years ago, you could buy fire hazard insurance that required just two pages to sum up the terms of the policy. It was pretty basic stuff. If the house burned down, you could almost always count on a quick payout as long as you didn’t set the fire yourself. These days? No so much.
Even the simplest policy looks like a condensed version of the Encyclopedia Britannica, spanning dozens of pages written in complex legalese that most people, including many attorneys, can’t ever hope to understand. And understanding your home or auto insurance policy isn’t going to get any easier in large part due to insurance politics. In short, complex insurance policies translate into reduced payouts, delayed claims processing, and claim denials that blot black ink on the insurance company’s bottom line thanks to the lobbying efforts of Washington insiders who don’t give a hoot about you.
In most states, the state insurance commission staff comes from the insurance industry before going into civil service. The bias toward passing regulations that favor the insurance industry is obvious. This is also true with every state legislature, where lobbyists consistently work to influence lawmakers to pass laws that promote the interests of big insurance over what’s good for you. It’s all about passing regulations that protect the insurance companies, not consumers, and, as a result, bad practices, bad faith, and outright deceptions often occur with little or no recourse left to you as a potential remedy.
It’s increasingly more difficult to find insurance products that lay people can understand. It’s also increasingly more difficult to get a fair shake when you suffer a loss because of all the exclusions built into the insurance policy.
Even experienced insurance agents can become confused on what the legalese means in the insurance product they sell. I once handled a case where the agent sold a policy after clarifying exactly what was covered and what wasn’t only to discover undisclosed exclusions buried deep in the legalese after the final policy was delivered for signature. That’s what often happens when insurance is sold based on price instead of quality coverage. Corners get cut, and the consumer almost always loses.
I may be just baying at the moon, but I am a big advocate for the adoption of simple all-risk policies that specifically spell out the scope of coverage in language that’s easy to understand. No such policies exist in today’s insurance market, and that’s a shame. Based on the way things are going it looks like change for the better will be a long time coming, if it ever comes at all. This is why it is so important for policyholders to obtain professional help and not to think that those making regulations on statues are doing so for your best interest.