by Yvonne R. Hunter | Jul 11, 2017 | News & Updates
Thank you for your interest in learning more about consumer insurance matters. I hope that you find the information helpful in guiding your discussions with insurance agents or brokers when determining what insurance products provide you the protection you seek.
I started this process because, like everyone, we are inundated with commercials and ads touting the benefits of having insurance. Insurance is one of those adulthood purchases that can overwhelm us when deciding what to include in a policy and how insurance works. And while it looks easy enough to purchase insurance, and may even be easy to file claims, customers find themselves hurt and confused when the relationship sours.
For the next three offerings, I will address your options when you receive a notice of cancellation or non-renewal of your insurance policy. When you receive a notice of cancellation or non-renewal for an insurance policy, it could trigger criminal penalties for not having an auto policy, or a default on a mortgage because your lender requires homeowner’s insurance. By learning about what to do when faced with a notice of cancellation or non-renewal, you will know you have rights as an insurance consumer. The following points may help you as you determine your next steps.
- There is a difference in terminology for a “cancellation” compared to “non-renewal”:
- A cancellation of an insurance policy usually happens in the middle of the policy term. It may be tied to an event such as not paying an insurance premium.
- The non-renewal of an insurance policy occurs when the insurance company will not renew the policy at the end of its term. A non-renewal of may be tied to too many points on your driver license.
- Arizona law allows an insurance company to cancel a new auto or homeowner insurance policy for no reason within the first 60 days of the policy. However, even with this broad authority, most states limit the information that an insurance company can use to make this decision. If you have questions about the reason for a cancellation within the first 60 days of your policy, you should contact your state insurance department or commissioner to determine that the cancellation was based on lawful reasons.
- Not all insurance policies are the same. If you have changed any aspect of your insurance policy, you will need to thoroughly review the most recent version to identify any changes. If the insurance company offers a new “plan” or “program”, use a healthy dose of curiosity when you review the proposed policy changes since the new plan may impose new restrictions, a higher insurance deductible, or other changes that may not be a bargain for you.
- All of my comments on cancellation and non-renewal pertain to consumer insurance policies because most consumer policies will not cover commercial activities. Commercial insurance policies are governed in most states by different statutes and regulations. If you believe you need insurance for your business operations, you should consult with your legal counsel to identify what kind of insurance policy is best suited for you. For example, if you use your automobile to deliver pizza, or operate a bed and breakfast from your home, you may find that your consumer policy will not cover these activities.
Finally, to those readers located in other states, this information on cancellation and non-renewal of insurance policies pertains to policies regulated by the Arizona Department of Insurance. Insurance is a business regulated state by state. While Arizona laws may not help you, I hope that the information provided encourages you to contact your own state’s insurance department, commissioner, or your legal counsel.
Now to address the question of why your relationship with your insurance company seems destined for failure: “It’s you, not me…”
Yvonne R. Hunter is a licensed attorney and the Principal Consultant for YH Strategies, LLC, in Phoenix, Ariz. After a stint with the Arizona Department of Insurance, she learned that many consumers remain unaware of some of the issues associated with insurance products. This blog reflects her opinion and should not be regarded as legal advice. She encourages consumers interested in learning more about their own insurance experience to contact their state department of insurance or insurance commissioner or seek advice from an attorney. If you would like additional information on matters dealing with consumer insurance products, you can reach Yvonne at yrhunteraz@gmail.com.
by Yvonne R. Hunter | Jun 7, 2017 | News & Updates
The best reason to regularly check and compare property and casualty insurance policies is a concept that you have probably experienced in other consumer purchase experiences: price optimization.
How does this work? Consider the price of a Las Vegas hotel room on New Year’s Eve, compared to a Tuesday night in July. Another example is the street price of a sports ticket when the home team is on a winning streak compared to when it’s on a losing streak. In each case, market conditions set the price rather than the cost of the product. You take advantage of the bargain when demand seems low for the product or service.
For insurance policy costs, price optimization causes you to pay a higher price for a policy because of years of loyalty or simply convenience. Over time, the insurance company may seem to “sweeten” the deal by offering a discount on a new product or to bundle home and auto policies. Price optimization makes loyalty a penalty for you when fees or other charges added to the cost of insurance results in higher costs to you. You may be wise to treat the offer to bundle or to pay an additional fee as a good reason to start some comparison shopping.
The National Association of Insurance Commissioners (NAIC) has been studying the issue of price optimization because consumer insurance advocacy groups believe that the use of price optimization in insurance policy prices may be unfairly discriminatory. For the technical definition, price optimization relies on consumers’ price sensitivity in determining the price paid for an insurance policy or the insurance rate for insurance coverage.
Translation: price optimization means that the insurance company has determined that you as the consumer will stay with the insurance company only if the price is at X, which may be significantly higher than what a similar new insurance policyholder with similar insurance coverage would pay. In simpler terms, your loyalty may not result in a bargain.
Insurance companies have their insurance rates approved by the respective state regulator where the company is doing business and have to use actuary calculations to support the rates. The rates are traditionally analyzed based on projected costs, i.e., what is being insured and what can happen to cause the insurance company to pay. Price optimization comes under scrutiny because the traditional calculations should result in all similar customers paying the same rate, rather than long term customers paying a higher rate.
The insurance industry believes that as long as rates meet the state requirements and the actuary models show the rates are sound, the discussion should end. Consumers may innocently believe that they are being rewarded for loyalty when just the opposite may be happening.
Some states have issued bulletins, policy statements and letters to put insurance companies on notice that price optimization practices will be closely monitored to see if consumers are being economically harmed. These states may seek corrective actions with those insurance companies found to be in violation of the identified practices.
The consumer response in reviewing insurance products should be more proactive and include a “shop around” experience. Once you have gathered the relevant information on insurance products, you can do some comparative shopping with your own insurance company. You may want to check with your state Insurance Department or Insurance Commissioner to determine how the insurance company handles claims and complaints, and whether the insurance company meets the state requirements for rates. All insurance consumers should take advantage of any price optimization so that it works to their benefit.
Yvonne R. Hunter is a licensed attorney and the Principal Consultant for YH Strategies, LLC, in Phoenix, Ariz. After a stint with the Arizona Department of Insurance, she learned that many consumers remain unaware of some of the issues associated with insurance products. This blog reflects her opinion and should not be regarded as legal advice. She encourages consumers interested in learning more about their own insurance experience to contact their state department of insurance or insurance commissioner or seek advice from an attorney. If you would like additional information on matters dealing with consumer insurance products, you can reach Yvonne at yrhunteraz@gmail.com.
by Yvonne R. Hunter | May 25, 2017 | News & Updates
This is the second of a two-part blog dealing with public adjusters and insurance claims. The first blog addressed the question of who is a public adjuster. The following identifies questions and issues to raise when deciding to use a public adjuster. Readers are encouraged to present any questions about their own situation to their state department of insurance or insurance commissioner or seek advice from an attorney.
Part 2
The public adjuster represents the person seeking a claim for an insurance loss. The public adjuster is not employed by a governmental entity, nor is the public adjuster allowed to be employed by an insurance company to assist in processing claims. Please note that insurance companies will have employees or contractors that work specifically for that company to help process claims. These individuals are not public adjusters.
The Code of Conduct for public adjusters states that public adjusters shall refrain from improper solicitation. This is not defined and each state may have its own definition of improper solicitation. From a general consumer perspective, you may want to consider the following as part of your decision to hire a public adjuster:
- Avoid the public adjuster who contacts you first, (think ambulance chaser);
- Avoid the public adjuster reluctant to leave a copy of his/her contract for you to review or have reviewed by the representative of your choice;
- Avoid the public adjuster who is not licensed in your state (NOTE: Every state does not require a public adjuster to be licensed. Arizona does require licensing);
- Avoid the public adjuster who offers to “know someone who can do the repair work at a lower price than the market requires” or who offers to do some of the repair work;
- Avoid the public adjuster who asks that insurance proceeds be paid directly to him/her;
- Avoid the public adjuster that does not clarify to your satisfaction, how he/she is paid or if the payment terms are not clear;
- Avoid the public adjuster who gives you legal advice when the public adjuster is not a lawyer or representing you as a lawyer, for example, suggesting that you sue a neighbor or the insurance company.
The public adjuster contract should clearly identify the work or service that the public adjuster will perform. Like all contracts, do not sign it if you do not understand it. You can take the contract to a lawyer or other representative to review with you before signing. If you have questions, the public adjuster should be able to clearly explain what he or she will do or not do if you agree to the contract. The industry has some important questions you may want to ask the public adjuster to help you understand the work involved and how the public adjuster will be paid.
In addition to the basic questions of whether the public adjuster is licensed to do business, additional questions may include confirming whether the public adjuster has a conflict of interest. This is especially important if the insurance claim comes from a situation that affects several property owners in your area. The public adjuster may be representing a neighbor that did or did not do something that contributed to your property loss. For example, the neighbor may have improperly stored chemicals that added to the spread of fire or changed landscaping that contributed to flood conditions. It would be difficult for a public adjuster representing both property owners to act in both parties’ best interest.
Finally, there are some little-known realities associated with hiring a public adjuster. In addition to any deductibles described in your insurance policy that may reduce the amount of payment from a claim, the public adjuster’s payment will usually be a percentage of the insurance proceeds paid by your insurance company. Insurance policies rarely if ever, allow for the insurance company to pay for the services of a public adjuster. Another point of clarification pertains to your ability to discuss your insurance claim directly with the insurance company’s own adjuster. Once the insurance company is notified that public adjuster represents your interests, all communications with the insurance company on processing the claim have to be between the public adjuster and the insurance company.
If you choose to terminate the relationship with the public adjuster before the claim process is completed, your contract should clearly state how this may occur. This may be a good time to consult with an attorney to better understand your rights. You may also seek the assistance of the Arizona Department of Insurance if you believe that the public adjuster is not fulfilling the terms of the contract.
Yvonne R. Hunter is a licensed attorney and the Principal Consultant for YH Strategies, LLC, in Phoenix, Ariz. After a stint with the Arizona Department of Insurance, she learned that many consumers remain unaware of some of the issues associated with insurance products. This blog reflects her opinion and should not be regarded as legal advice. She encourages consumers interested in learning more about their own insurance experience to contact their state department of insurance or insurance commissioner or seek advice from an attorney. If you would like additional information on matters dealing with consumer insurance products, you can reach Yvonne at yrhunteraz@gmail.com.
by Yvonne R. Hunter | May 17, 2017 | News & Updates
This is the first of a two-part blog dealing with consumer insurance issues and public adjusters. The information and issues raised are based on the personal opinion of the author. Readers are encouraged to present any questions about their own situation to their state department of insurance, insurance commissioner, or seek advice from an attorney.
Part I
A recent Arizona court decision dealing with the 2013 Yarnell Hill Fire and property owners seeking help from residential insurance carriers may prompt questions about residential insurance and how to process a claim. The role of a public adjuster raised many questions in court proceedings in which property owners sought relief from insurance carriers and the state of Arizona. Consumers and businesses with property and casualty insurance policies may ask about the role of a public adjuster and whether a public adjuster is necessary to help manage an insurance claim.
What is a public insurance adjuster?
In most states, public insurance adjusters are required to be licensed. For those states that require licensing, a property owner can check with the state insurance director or commissioner to confirm that the public insurance adjuster is licensed and in good standing in your state.
For example, Arizona requires public adjusters to be registered/licensed and will impose sanctions against those who fail to register.
Arizona law defines a public adjuster as “a person hired to adjust, investigate or negotiate insurance claim settlements on behalf of the insured.” (ARS § 20-321) The National Association of Public Insurance Adjusters describes a public insurance adjuster as “an authority on loss adjustments who you can retain to assist you in preparing, filing, and adjusting your insurance claims.”
When would an insured party benefit from the services of a public insurance adjuster? The following provides some reasons for using a public adjuster
- The property destroyed is unique or there is limited information available to support the claim;
- The property owner has limited capability for managing the day-to-day challenges of gathering the relevant information in support of the claim;
- The nature of the loss is complex, involving factors that require extensive research or coordination with third parties.
Once a person decides that a public adjuster is necessary, the next part of this article identifies some things to consider before hiring the public adjuster.
Yvonne R. Hunter is a licensed attorney and Principal Consultant for YH Strategies, LLC, in Phoenix, Ariz. After a stint with the Arizona Department of Insurance, she learned that many consumers remain unaware of some of the issues associated with insurance products. This blog reflects her opinion and should not be regarded as legal advice. She encourages consumers interested in learning more about their own insurance experience to contact their state department of insurance or insurance commissioner or seek advice from an attorney. If you would like additional information on matters dealing with consumer insurance products, you can reach Yvonne at yrhunteraz@gmail.com.
Yvonne R. Hunter is a licensed attorney and the Principal Consultant for YH Strategies, LLC, in Phoenix, Ariz. After a stint with the Arizona Department of Insurance, she learned that many consumers remain unaware of some of the issues associated with insurance products. This blog reflects her opinion and should not be regarded as legal advice. She encourages consumers interested in learning more about their own insurance experience to contact their state department of insurance or insurance commissioner or seek advice from an attorney. If you would like additional information on matters dealing with consumer insurance products, you can reach Yvonne at yrhunteraz@gmail.com.