Beware of “Mutual” insurance companies. Policyholders are “owners” of the company and, as such, may benefit from the company’s profits. However, on the otherhand, in the event of a loss, or much worse yet, a bankruptcy, the policyholders are responsible for the company’s debts. Back in the 1960s three related Maryland mutual companies went bankrupt overnight, due to fraudulent mismanagement. Each and every policyholder, including myself, was sued and required to pay the company’s debts, including the lawyers’ fees. This amount was established as being six times each of the policyholders’ annual premiums, which would be equivalent to thousands of dollars in today’s dollars. Of course, this left us uninsured since the companies were no longer in business, so we then had to buy new policies from another company. It was a disaster.
Beware of “Mutual” insurance companies. Policyholders are “owners” of the company and, as such, may benefit from the company’s profits. However, on the otherhand, in the event of a loss, or much worse yet, a bankruptcy, the policyholders are responsible for the company’s debts. Back in the 1960s three related Maryland mutual companies went bankrupt overnight, due to fraudulent mismanagement. Each and every policyholder, including myself, was sued and required to pay the company’s debts, including the lawyers’ fees. This amount was established as being six times each of the policyholders’ annual premiums, which would be equivalent to thousands of dollars in today’s dollars. Of course, this left us uninsured since the companies were no longer in business, so we then had to buy new policies from another company. It was a disaster.