We’ve all seen the “USAA for Life” TV ads. They speak to customer loyalty, a subject I’ll be covering in a blog post in the near future. For now, the issue is coverage and the value of an independent insurance agent. As best I can tell, USAA seems to be a fine insurance company. I know some of their customers, including some that work within the independent agency system.
But, you can be a fine company with a product or a claims practice or perhaps an individual decision that might not be so fine. As I have written and spoken about for years, insurance is NOT a commodity. There are differences in products and practices among insurers. This blog post is about one such example.
Last week, I was included in an email exchange originating with an independent agent. He has a friend insured with USAA. Her husband recently passed away and she has been driving his 2015 F350 diesel pickup truck. When refueling, she accidentally put gasoline, instead of diesel fuel, in the tank. The resulting damage/cost to repair is estimated to be $11,000. She reported the claim to USAA and they sent a written claim denial [emphasis added]:
[Your claim] has been denied due to negligent servicing:
We will not pay for:
Mechanical or electrical breakdown or failure, including such damage resulting from negligent servicing or repair of your covered auto or its equipment. We will pay for ensuing damage only to the extent the damage occurs outside of the major component (such as transmission/transaxle, electrical system, engine including cooling and lubrication thereof, air conditioning, computer, suspension, braking, drive assembly, and steering) in which the initial or electrical breakdown or failure occurs.
The primary basis for the denial is that refueling a vehicle constitutes “servicing” it. ISO’s auto policies have no such exclusion. So what does “servicing” mean? Since the term is not defined in the policy, a court would look to its normal and customary usage, typically by citing one or more dictionary definitions. Dictionary.com defines it as “supplying maintenance or repair.” Merriam-Webster has essentially the same definition, adding an example of its use in a sentence in the form of, “I need to get my car serviced.” Vocabulary.com discusses “periodic maintenance on a car or machine…inspection and repair, overhaul…interim overhaul…care, maintenance, upkeep…activity involved in maintaining something in good working order…tune, tune up, adjust for (better) functioning….”
If you’re going to a filling station, do you say, “I’m going to get my car serviced?” Of course not. The “servicing” of an auto usually refers to things like oil changes, tune ups, maybe tire rotation, etc. Simply putting fuel in a vehicle to keep it running is not what any reasonable person would consider “servicing” the vehicle. Google “what constitutes ‘servicing’ a car” and I don’t think you’ll find any mention of the owner putting fuel in it.
So what can this widow do? She has allegedly been told that there is nothing more to do internally but not given any options by the insurer other than to contact the insurance department (while pointing out that the DOI approved the form though, of course, not this interpretation). That pretty much leaves her only recourse to be finding an attorney willing to take the case on a contingency. The latter would likely go only so far as a letter or two from a lawyer since there might not be enough in a lawsuit to justify the time involved.
What’s interesting is, who did she immediately turn to when the carrier denied the claim? Her friend, the local independent insurance agent. You know, the guy whose “15%” she saved by going direct with the insurer. This agent has tried to appeal on her behalf, but he has no connection with the carrier. That would not be the case if he was her agent and she was HIS customer, not the insurer’s customer.
Providing superior product options and advocating at claim time are just two ways that independent agents earn their keep. And, sometimes, how they earn new customers.