Articles Posted in Insurance Issues

I have said it many times before, but it bears repeating: insurance companies are businesses, not charities. Careful attention to the fine print is important.

An obvious example of this is car insurance. All drivers need to carry it, and the law lays out in great detail what that insurance has to cover and at what level. I want to focus today on Personal Injury Protection, or PIP, insurance. Unlike many states, Washington does not require drivers to carry PIP coverage, though insurance companies are required to offer it as an option. If a Washington driver opts for PIP coverage the legal minimum level is $10,000 (in Oregon, at least $15,000 in PIP coverage is a requirement).

Though many Clark County, Washington drivers may be tempted to waive it, PIP coverage can offer essential financial help in the event of an accident. Washington law requires PIP claims to be paid within a few weeks of being filed. As an analysis by BikePortland explains “few are aware that after a collision an injured person’s automobile insurance pays medical bills first – before health insurance and before the at-fault driver’s auto insurance. The injured party’s own Personal Injury Protection coverage pays these bills.”

Nearly four years ago I first wrote about the obscure, but critically important, issue of “subrogation.” This legal doctrine allows insurance companies to reimburse themselves out of settlements their clients receive for covered injuries.

The incident I wrote about back in 2015 was a classic example of the problem. A baseball fan who was savagely beaten in a stadium parking lot and who now faces a lifetime of medical expenses won an $18 million settlement. His ongoing medical expenses mean that he will need that money. But his insurance company went to court to try to claim a significant portion of the settlement.

Now the Oregon legislature is set to consider a bill that would limit the practice. According to a recent article in Willamette Weekly, SB 421 “would match the laws in many other states, where the injured party can be ‘made whole’ for all damages, including pain and suffering, from the at-fault party’s insurance before the injured party’s medical insurer gets paid.” According to the legislature’s website (see link below) the bill, which has bi-partisan sponsorship, has been referred to the Judiciary Committee, though a hearing on it has not yet been scheduled.

This summer saw some of the largest and most dangerous wildfires ever recorded here in the West. The fall has brought two of the most destructive hurricanes in modern US history to South Carolina and Florida. So, it is with a kind of grim resignation that I return to the subject of insurance companies.

As I have written in the past – most recently in this post from last February – it is essential to look past the insurance industry’s warm and soothing slogans about how they’re always there when you need them. Insurance companies are businesses and their profitability is inversely related to the number and size of the claims they actually pay. That shouldn’t need to be said but, sadly, it does.

This goes well beyond a simple case of ‘always read the fine print.’ Insurance policies are contracts like any other. But it is one thing for a company to inform a policyholder that they are not covered for something and quite another thing for companies to actively seek ways to get out of paying claims that any reasonable policyholder should expect to be paid.

A recent article in the Los Angeles Times (see link below) details the struggles that many people in northern California have faced in the wake of devastating fires that swept through the area late last year. Thousands of homes were destroyed in counties across the state. As the newspaper reports, 44 people died. Sadly, in the wake of this tragedy has come the inevitable reminder: in the words of the LA Times headline ‘your insurance company is not your friend.’

I wrote about this issue six months ago after hurricanes hit Florida and Texas. In the wake of the California wildfires the core issues are similar: an industry that will use the fine print to its advantage whenever possible, blithely ignore rules and regulations and do everything it can to do as little as possible for its customers, all while assuring them that it is there to ‘help’.

According to the LA Times the specific issue in California has been an influx of “adjusters who poured in from other states to help companies process claims” and who then “misinformed policyholders about their rights.” The paper reports that many of the out-of-state adjusters came from the South and were clearly unfamiliar with California law, which provides far stronger consumer protections than are in effect in many other parts of the country. Many of the out-of-state adjusters also appear not to have been properly registered to work in California, the paper reports. In the wake of lawsuits filed by victims, the paper quotes a spokesperson for the California Department of Insurance saying that “the agency is already investigating whether unregistered and unsupervised adjusters worked the Northern California fires.”

People throughout the Southeast are struggling to put their lives back together after the damage caused by hurricanes Harvey and Irma over the last few weeks. More trouble, however, is on the way. Most immediately this takes the form of Hurricane Maria. This latest storm is already hitting a number of Caribbean islands hard (some of which were also hit by the earlier storms) and may also strike the US mainland in the coming days.

Some of the trouble, however, will be completely man-made. Over the coming weeks and months many homeowners struggling to rebuild are likely to discover that the policies they counted on are written more with a mind to protecting insurers than helping the insured.

Most media attention concerning hurricanes and insurance focuses on flood insurance. Few private companies are willing to underwrite flood insurance for anyone living in a flood-prone area so it is offered by the federal government instead. At times like these we see many newspaper and television stories about people who should have bought flood insurance but didn’t or, in the wake of massive storms like Harvey and Irma, people who didn’t think they needed flood insurance in the first place and are now discovering that their policies do not cover the damage to their property.