The Good, the Bad & the Ugly
Posted on behalf of RizkLaw on Sep 15, 2010 in Consumer Alerts
Little Johnny held a dime in his small hand hard earned from his lemonade stand. “Daddy, daddy I want to spend my dime on candy.”, pleaded Johnny. “No, Johnny, let me teach you a lesson handed down to me by my own Pa when I was a little youngster like you. Take that dime to the First Bank of Trust, place it in a savings account and when you are older… your dime will be a dollar.”
Taking dad’s advice, Johnny rode his shiny red scooter, as fast as he could, to the First Bank of Trust. Johnny gleefully handed the pretty friendly teller his dime. The teller smiled…”what a cute little boy”, she thought. Then Johnny waited and waited and waited in hopes that one day the dime would become a crisp new dollar bill.
Little Johnny trusted the First Bank of Trust. He believed that the First Bank of Trust would not co-mingle his dime with other accounts, steal or lose or his dime. The First Bank of Trust owed little Johnny a fiduciary duty. Plus, the First Bank of Trust was highly regulated by federal law.
Years later, Big Johnny waddled into the First Bank of Trust, receipt in hand. The pretty teller would retire the next day, she smiled and handed Big Johnny his dime plus interest. “I’m not rich, but Pa was right…rest his soul.…” Johnny thought.
Seeking to protect yourself against the possibility of a potential tragic event (disability fire, theft, water loss, death …who knows what could happen??) you become insured. An insurer produces a booklet of papers in legal ease you don’t understand (this is your policy) but the agent, gecko or caveman assures you…. “You are in good hands”. You believe, and trust that if a triggering tragic event occurs, the insurer will do the right thing… pay claim, promptly and without hassle. Like the First Bank of Trust owed Johnny, the insurer owes you, a fiduciary duty.
Then one dark and stormy day it happens: The tragic event. “At least I am insured!” you think. But rather than claim payment, you get red tape, excuses and delays from your insurer.
Your claim is transferred from examiner to examiner. Faxes and letters you send are mysteriously not received. You are placed on “black hold”. You lose money, time and patience…perhaps much more.
While banks are regulated and insured federally, insurance companies are not. Instead, insurance companies are governed by a mish mash of inconsistent state laws. Some states, like California and Washington recognize punitive damages when an insurer places its interests ahead of the interests of its insured (you). Other states, like Oregon, award contract damages (those damages foreseeable at the time of the breach of contract / policy) to its insured when the insurer wrongfully defends a suit and in other circumstances. All states have insurance agencies which set out insurance regulations for insurers to follow. Some states vigorously enforce insurer violations of state insurance regulations, others such as Oregon…not so much.
Good insurers see the tragic event as an opportunity to develop a good reputation. But perhaps you discover, that in spite of all the advertising, your insurer does not have honorable motives. You may realize your insurer is quite ugly. (An insurer who advertises 5 times an hour on prime time TV is not spending its money on paying claims!)
Ugly insurers know that folks suffering from the consequence of a tragic event don’t have energy, expertise or patience to fight low ball offers or claim denials. These ugly insurers see a perfect opportunity to kick its’ insured (you)… while already down.
Sadly, the days of trusting corporate institutions based on a slogan or catchy commercials are long gone. Before choosing an insurer, go to your state insurance commissioners’ web site and check out the complaints against that insurer as well as its financial strength. Request a certified copy of your policy. Then, read your policy. Compare your policy to the risks you wish to insure. Document your assets.
And, when and if a loss occurs don’t wait, and wait like little Johnny. Document any loss immediately. Your insurance policy may require you to take certain prompt action in order to preserve you rights. You may need to promptly notify your insurance company of the loss, provide your insurer with a “proof of loss”, cooperate with your insurer’s investigation, attend an examination under oath and sue your insurer within a certain amount of time if your claim is denied or not paid in full. (Look for a “suit limitation” clause in your policy; a suit limitation is not the same as a statue of limitation).