June 18, 2009

Yesterday we talked a little bit about how the insurance companies use the news, including bad news, to justify rate increases. Today, I'd like to talk a little bit about the commercials we see on television from the insurance industry.

We have all seen the TV commercials where your local adjuster not only sells you insurance but, immediately takes care of your claim when bad things happen. In reality, the insurance adjusters have little to no ability to resolve any accident or claim issues. Almost all insurance agents, including agents for State Farm, Allstate and many other big companies are not even company employees. They are independent contractors who sell insurance. Nothing more.

Some of the television commercials act as though the company is doing you a favor by hiring an attorney if you cause an accident and get sued. This is part of your insurance contract. They have to provide you with legal representation. This is one of the types of propaganda insurance companies years to convince you they're taking special care of you when they're really just complying with the contract of insurance you have bought and paid for.

We could talk for hours about this; however, it is much easier to simply take everything you hear from any insurance company with a very large grain of salt.

Insurance Propaganda

Wednesday June 17, 2009

A recent round of newspaper articles and other media reporting claims that individuals are burning their automobiles and turning in false insurance claims in order to collect money because of the miserable state of the economy. Only three instances were cited where this may have actually been done. The articles went on to say that this will cost the insurance companies billions of dollars which the public will have to pay for through increased premiums.

This reminds me of the mold scare in the late 1990s which resulted in homeowners across the country having huge increases in their policy premiums because the insurance companies were theoretically going to be paying billions of dollars on mold claims. It never happened.

Once the insurance companies convinced the state regulators to allow increases of up to 60% for homeowners premiums, the companies then put exclusions into all of their policies eliminating any exposure to mold claims. Within two years the maximum amount most people could claim for mold was $5000 or less. Consequently, mold was one of the best things to ever happen to the insurance industry. Incidentally, the insurance companies never gave back the 60% increases.

Now the insurance companies are using the economy to justify rate increases because of alleged fraud. This goes to show that the insurance companies will use anything at any time, no matter how bad the economy is, or how much the rest of the country is suffering to increase their profits.

If you receive a premium increase for your automobile policy, go directly to your insurance agent and demand to know why. Remember, the insurance companies are not your good neighbor, they are not on your side and it is up to you to protect yourself.

Finally, don't believe what you read and do not believe what you see if an insurance company is sending the message.