Today’s blog post from the Merlin Law Group is based on this premise (click the link to read the blog post):
“Nobody Should Be Expected To Read Every Insurance Contract They Purchase”
The author, Chip Merlin, JD, cites a blog post of mine in the article:
“Duty (and Opportunity) to Read an Insurance Policy”
So, who has an obligation to read insurance contracts? Agents? Underwriters? Adjusters? Consumers? Let’s find out what YOU think. I created a poll with only five Yes/No questions…you will not have to answer more than 2-3 of them and it only takes seconds. The poll is limited to 100 responders, so if you have an opinion, click the following link now:
Poll: “Duty to Read Insurance Policies”
I’ll report the results as soon as I get 100 responses.
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Bill Wilson
Founder at InsuranceCommentary.com
One of the premier insurance educators in America on form, coverage, and technical issues; Founder and director of the Big “I” Virtual University; Retired Assoc. VP of Education and Research from Independent Insurance Agents & Brokers of America.
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Call me stupid and I will agree but everyone should read the contract you are entering into especially an insurance contract. After all you are giving financial consideration to obtain the risk pooling arrangement. You should know what riosk you have pooled for the charge you are paying
Charles, I understand your position in that buyer beware and everyone should read every contract before they sign it. Unfortunately since the policyholder can not make any revisions or have any input they simply pay for the coverage.
Now combine that with the fact that newspapers written at the 6th to 8th grade level. Which the insurer is aware of and still the policy language is still written in legalese.
I believe everyone is aware of the pattern and practice of an overwhelming percentage of policy holders not reading and or fully understanding what the policy actually covers.
Now i will not touch on the E and O claims issues.
Just my two cents on the issue.
I happen to agree. Of all the policy holders I have dealt with over the years, most do not read the entire policy. Many start to read it and quickly realize it is not written in a way that makes sense to them. Even people that I have spoken to that have read their policy often believe they have some coverage or amount of coverage they don’t have. They put maximum faith in their agent that they swear by and that agent often tells soothes and sells them using that trust. A woman I recently spoke to told me she has many properties and asked her agent to make sure she has all the coverages she needs. She was willing to pay. That agent let her down and split the cost of the restoration of damages with her on a small claim. She probably didn’t know she could pursue his E & O. Later she turned in another claim only to find out he did not include the Ordinance of Law coverage and the claim if filed would have needed approximately 15 to 20k of code upgrade coverage.
If you go see an attorney you put your faith in that attorney. People see the agent as someone on their side and assume there is a fiduciary responsibility that they can rely on.
It is clear the carrier bask in the fact that people cannot generally understand the give a coverage, take it away in an addendum, then add it back but differently with a combination of other changes in a rider or whatever.
I can tell you that I have met many adjusters who either do not understand the policy or misread it or ignore it. If someone trained by the carrier to know and use the policy to fairly adjust a loss does not know it, how can the carrier or courts expect the property owner.
Perhaps the carriers should have to interpret and summarize the policy language. I am not speaking of the summary currently used because that is a joke. I mean page by page paragraph by paragraph describing what it written in laymen’s terms.
Perhaps agents should have recorded sessions of the sale to ensure accuracy, when an insured asks for coverage over the phone, which happens often, that request is recoded and an email confirming the request and including any pertinent information the agent should explain to the insured.
I am sure there are many many many ways the carriers could help the insured. But why? The run this game, they have all the advantages, The more they can confuse and confound the insured’s and politicians the better.