I have considered this blog for quite some time. After reading about some insurance company claim denials in our area (not our clients), this feels timely to discuss here!
Claim denials occur in many cases because incorrect information is submitted on an application. This blog will be a little heavier in tone. But I am wondering if the public understands what can happen to them if they don’t underwrite their home, auto or business (or any risk for that matter) without giving us or the insurance company correct information. Let me offer up this fictional scenario:
Sam contacts my insurance agency to secure insurance. He completes our required necessary information so we can offer him a quote. We offer him that quote. He likes the coverage and premium that we offer. We then complete the application for his risk. He gets a quote based on the information he first submitted to us, signs acceptance of that information on the application and then pays a premium to finalize/bind that coverage. He gets a policy from the insurance company a few days later. It shows my agency information on it and the best way to connect with the company or us if there is a claim.
Sam does not review the policy. He doesn’t look at the computer printed sheets to confirm his specific coverages that the policy will offer him. He puts the policy in a folder and rests easy that he is covered and all is well. He thinks: “if I have a problem or claim, my agent will handle that!”
Then, move ahead 10 months. Sam has a claim on this policy. During the claim process, the insurance company claim adjuster gets additional information that Sam didn’t tell my agency about. He signed the application and paid the premium knowingly omitting that information when the quote/application was completed. But Sam has a claim and knows – “I have insurance – it will be paid!”
The GIGANTIC PROBLEM now for Sam is that because my agency or the insurance company wasn’t completely informed about the risk, the insurance policy was not covering the full risk. There is a gap in coverage on that policy because information was left out. Therefore, the insurance company adjuster has the undesirable task of telling Sam insured: “YOU HAVE NO COVERAGE FOR THIS CLAIM!!!!”
You can imagine how unhappy Sam is, how uncomfortable the insurance adjuster is in having to tell Sam that and how Sam needs someone to blame for this problem. That someone becomes my agency. Then I’m not happy! ☹
NO ONE WINS! Why? Because Sam didn’t pay close enough attention through the quote, app and policy delivery process to be sure he gave us the right information that we sent to the insurance company. It would be hard for us or the insurance company to ever determine if Sam withheld that information on purpose or if he never meant for it to be excluded. That is the tough spot Sam is in. If Sam is buying coverage, it’s totally incumbent upon Sam to be sure that WHAT HE WANTS COVERED, HE TELLS US ABOUT IT. We do our very best to ask as many questions as Sam has time to answer but the burden of proof in insurance transactions is with Sam!!
Let me give you current day examples we have either had here in my office or other situations that I am familiar with from other agencies either locally or nationally.
- Applicant wants car insurance. That person doesn’t list for us all cars on the policy. “That 3rd car is never driven – so I don’t need to insure it!” WE HAVE TO KNOW THAT!
- Applicant wants car insurance. The person is one of 4 drivers in the household. But applicant only tells us about 3 of the 4. That 4th person wrecks one of the vehicles. That claim could be questionable. WE HAVE TO KNOW THAT!
- Applicant wants homeowner’s insurance. Applicant lists the home is 2200 square feet and only wants to insure it for $200,000 to save premium money. But the home has 3100 square feet and should be insured for $300,000. The house burns to the ground and the insurance company won’t settle for $300,000 – only $200,000. WE HAVE TO KNOW THAT!
- Applicant wants homeowner’s insurance. That person tells us that the home is a brick – two story home. The fact is that it is a 2.5 story – majority FRAME constructed home with brick at the bottom third of the structure. They have a claim and the company could pay the claim but most likely would non-renew the policy if they did on the basis of false information. WE HAVE TO KNOW THAT!
- Applicant wants commercial insurance on the business. Applicant tells us that their work is Supervisors of lawn care – most like contractors. At the one-year audit of that policy, handled by the insurance company, they learn from the insured that they are lawn and landscapers. The business was premium classified incorrectly at the beginning. The insurance company has the right to go back and CHARGE MORE PREMIUM for the prior year because the risk wasn’t insured correct OR deny a claim because of false information. WE HAVE TO KNOW THAT!
- And one final one: Applicant needs car insurance. We are told and the applicant signed the application stating that ALL VEHICLES ARE GARAGED at the Named Insured/Policyholders address. During a multi-car – at fault collision for a claim totaling more than $25,000, the insurance company learned that the vehicle in the accident was garaged at another address. Since that company WILL NOT INSURE that 2nd address location, the claim was DENIED and the insured had to pay the claim out of pocket. The insurance company would never have permitted my agency to BIND coverage on that if that ONE PIECE of information was submitted at quote time. There are ways to insure that risk but the insurance company the applicant signed their name on would have never insured them. WE HAVE TO KNOW THAT!
TRUTH MATTERS! Withholding information to save premium or not reviewing a policy to confirm the coverage is there that you want can cause multiple problems with a policy my agency or any other agency would write. TRUTH MATTERS!
So now that I have jumped off of my “insurance soapbox,” I’m very glad to say we don’t see much of this in my agency. Oh, we have seen it and we handled it the best way that we could. But fortunately, my great clients pay attention, care about the coverage they receive and the money they spend to get it.
I hope this will give you better insight to the ‘backdoor’ process of how you might inquire and purchase insurance. You could be like Sam if you don’t make sure at quote and application time that you’re getting what you paid for by giving information parallel to the insurance you are expecting.
We work hard to get it right. We know for our clients, TRUTH MATTERS from us to them! So we treat them like we would want to be treated. We do our very best to educate our clients along the way so there will not be gaps in coverage because of incorrect information.
Can we help you? TEXT or CALL us at 615.377.1212 or email us at info@BentonWhite.com. We are in our 43rd year of helping people like you get the insurance you need at the price that can be affordable for your budget! Give us a shout if we can serve you!
Please remember – TRUTH MATTERS!
