People like to blame us for everything that goes wrong rather we had anything to do with it or not. How many times have you had insureds who want to add coverage or lower deductibles after the fact?
I really have to wonder just how much $$$$$ Nationwide contributed to the Judges\’ re-election campaign fund or to the repairs of property owned by him or his relatives?????
Please read the judge\’s opinion. It is a \”quick read\”.
The couple\’s attorneys had asked for more than $158,000 for the damage to the house and its contents, plus interest and attorneys\’ fees and expenses. Senter, however, ruled that Nationwide only owed the Leonards about $1,228 more than what the company already has paid them for wind damage.
Both sides claimed victory in the wake of Senter\’s ruling.
\”The Leonards did not win as much money as I hoped they would have, but they won this case,\” said one of their attorneys, Richard \”Dickie\” Scruggs. \”It\’s always great to get a win in the first game of the season, whether it\’s by one point or 30 points.\”
Paul Leonard, a police lieutenant, acknowledged that an extra $1,228 only covers a fraction of the repair costs for his home, but he also considered Senter\’s ruling a victory.
As an agent, it is imperative that you present your products to the clients and the clients makes their own deciscion as to whether or not to pay a premium for coverage. If you live in an area that is known for wind and flood water damage potential why would not purchase flood insurance? Knowing the premiums would not be cheap but the peace of mind would have been worth the few thousand that the premiums would have cost them.
Case in point, in southern California when they had the October fires 3,000 homes were lost. Many had shake/wood roofs. Many homes were under insured. Is it not the responsibility of the homeowner to review their policies annually and to guard against potential fire hazards, i.e. 30 year hold shake roofs? As an agent when speaking with clients and counseling them on premium increases due to increased coverage many customers elected not to have that increased coverage and increased premium. That is not the fault of the agent. It\’s a buyer caveat and should be weighed heavily when deciding to under-insure yourself. Kudos to the judge for standing by the contract.
It will be interesting if Nationwide ever advertised Flood Insurance to their clients. I wonder if they have it in writing from their clients that they did not want to purchase the flood insurance coverage.
With all of the uproar about what policyholders think they have or need, it might be better to get a written rejection signed by the insured for all catastrophe covers like flood, earthquake, etc. As to be underinsured, CA requires companies to validate ITV periodically and so the burden isn\’t always just on the homeowner entirely. By the way, I agree with the decision in this case but the cost to the industry in terms of its reputation will suffer anyway.
They never want to pay the extra premium until it\’s too late. Then it\’s always someone else\’s fault. \”The coverage wasn\’t offered\” or \”the agent told me I didn\’t need it\”. Come on people, take responsibility for your own decisions. Fellow agents…protect yourself…get a signed declination, even if you have to type something up real quick. Unfortunately, because these people (or these lawyers, !## @$%^&*) Mr. Fletcher, well the agency, still had to fork out a sizely deductible on their E&O to defend his case. \’Course those people who refuse to accept responsibility don\’t think about that do they? or their lawyers either.
I did not see where the attorney received fees and costs in addition to the twelve hundred bucks. Did it say that in the ruling? Most all of these cases are taken on a contingency basis and I promise you that if all they got was the $1200, the attorney lost a bundle.
Please don\’t live on the waterfront if you can\’t afford to replace every time nature decides it\’s time to restore itself to it\’s virginal state.
The whole concept of morons building on a sandbar subject to both Hurricanes, storm surges and heavy wind and rain is totally out of control. What started out as \” inexpensive beachfront shacks\” made to be replaced whenever wiped out has now evolved into a cottage industy of rebuilding bigger and better every time a weather event occurs.
Common sense goes a long way here. Just as it\’s not prudent to build on flood plains, fault zones and sand bars it also makes sense that people who choose to build in unsound locations will either pay a lot, lot more for insurance or bare the risk themselves.
we will all get to pay for this stupidity when the federal goverment decides it has to reward these unsound development decisions with a federal cat plan.
Shame on all Insurance agents. I had a home in Gulf Breeze ,Florida. in late 1995 Was told that we did not need flood insurance that our policy would cover all damage from a hurricane. Sept 2004 when Ivan came ashore we had much damage from storm surge and went to court in a class action suit. We had about 700 to 800 people with this suit and all said the same thing that the agent said we did not need flood insurance that we were covered. We were laught out of court,now all of us heard the same thing, Shame on the three big insurance companies Allstate ,National and State Farm. We all paid our insurance on time and expected our just return for damage and put out of court. BIG MONEY TALKS. I am still out about $150,000.00.
Bob,
This suit was filed under a Civil Remedy notice. If the insurance carrier has to pay $1 more then all fees and costs are due the plaintiff attorney.
Agent: It said I had coverage…. so I stopped reading. I really don\’t care about my investment in my home so I depend on someone else to tell me what it says.
I may have misunderstood the whole insurance idea (as an insurance company you take a group of insurers with differing risk levels and lump them together thereby limiting the overall risk; as the consumer you have a risk that you can not afford to cover in a lump sum so you buy insurance from a compnay who has lumped you into a group of other consumers to spread the risk).
In the state of Miss the insurance commissioner Mr. George Dale(who has been in office for about 30 years, and who accepted more than $750k in campaigne contributions from the insurance companies, who he is suppose to be regulating) just recently allowed the insurance to be raised 268% on commercial business on the Miss coast (because he says the companies will pull out if he is too hard on them). In his 30 years in office as insurance commissioner did Mr. Dale ever think that if basic concept of spreading risk is not accomplished that there would have to be a 268% increase. Why with probably over 60% of the U.S. population living in a coastal state, has Mr. Dale not thought of making an allience with the other coastal states that says if you want to write in one state you must write in all the states and then Mr. Dale may not feel so threatened his campaigne contributors. There seems to be several basic problems. Mr. Dale said at the Neshoba County Fair \” the insurance companies think I am in the pocket of the consumer, and the consumer thinks I am in the pocket of the insurance companies\”. First I guess someone must remind Mr. Dale that he is an elected official there to serve the people, not the companies who gave him $750k. Who decided to let the insurance companies define risk. If I recall there was a pretty good flood in Jackson Miss on Easter of 1979, there was a pretty good little tornado in Madison Miss just 4 years ago, (not to just confine diasters to Miss) I recall the Mississippi River getting out of it\’s bank yearly and causing massive flooding, I could go on and on. Business is Business, the insurance companies will continue to write insurance for as much as they possibley can (showing the risk to be as high as they can when pricing it, with smaller risk pools, but they will continue to write insurance in as broad an area as they can so as to limit their overall risk) that is the name of the game, make as much money as possible. And the insurance companies have done this very well, look at their profits from last year. This will continue until the public stands up and ask their elected officials to control the situation. (The last problem) Once the officails are getting the insurance industries lobbying money and kick backs they are hooked, and it is to late! It is to late!!!!
Ed, sorry to hear that. But, as an insured, we have our most important duty & responsibility by going over the policies when we purchase insurance. Companies don\’t just send the policy for nothing. Think of it as a manual or instruction. When ever you purchase electronics, toys or any other items, you will read enclosed instruction as soon as when you open up the box. What is difference??? Don\’t blame on manufacture for not knowing how to operate because you failed to read the instruction.
The mantra \”I don\’t need flood, I am not in a flood zone\” is something you hear most often in an insurance agency. There\’s a fundamental unwillingness in the public to buy anything not forced-upon them by their mtg co or government.
How about a cheapskate homeowner who made a flood claim on his homeowners policy because he did not want to have comp&coll on his auto policy. Talk about a double exclusion.
According to the Judge\’s Order attached to his opinion, each party is to bear their own costs. That means that Mr. Scruggs will receive a fee, as negotiated, from the plaintiff. If you assume a 30% contingency, that comes to around $375 (+/-). Talk about losing money!!!
You guys should not comment without reading the details of the case. The Leonards did not live on the waterfront. They lived a half mile or so inland, not in a flood hazard area according to the pre-Katrina flood maps. They did not have flood insurance because their Nationwide agent told them they did not need flood insurance. The judge acknowledged that fact, but said it did not matter. The judge upheld the flood exclusion but he knocked down the concurrent causation clause. That means that where wind and water combined to cause damage, the insurers will not get away with stiffing the insured. They will have to pay a lot more than $1,200 because of this ruling.
Did something change in Florida? You mean that its open rating now on property???
The coastal wind rates and terms and conditions are obscenely inadaquate. When you do not allow the return on investment to offset the risk the market collapses.
You could also argue that the Florida DOI is not in business of regulating finanacial strength. They are nothing more than a demagogory and populist nonsense.
The situation in MS, while not desirable, is whole lot better than the Florida market and will continue to be that way.
I concur wholeheartedly! It\’s not just with the Dwelling and HO insurance customers that this happens, either.
The majority of my book is auto insurance. In PA, UM/UIM is optional. People being the cheapskates they are forever demanding the cheapest rock bottom rates are penny wise and dollar stupid. For a measly $13-$17 over the entire 6 months term of their auto policy for this valuable protection of UM/UIM, they b*tch and want me to chop that out. Then if they end up hurt in an accident caused by an uninsured driver with no income or assets to attach to pay for the hospital bills, they cry and moan that \”the insurance companies are crooks that don\’t cover nothin\’\”
Like flood insurance, earthquake coverage is also frequently declined. Although PA does not have earthquakes like California, it has been known to happen in the northwestern region ( there\’s a sizeable faultline running right under the middle of Lake Erie)and the tremors we have had, however rarely, are enough to cause structural damage to the foundations of homes. These same people who cry and moan over the cost of their HO\’s and dwelling policies and opt out of flood and earthquake insurance are the very first ones to raise a fit when their standard HO doesn\’t pay out on a flood or earthquake related loss.
It\’s mostly the middle to upper middle income people who can afford $100,000 – $200,000 homes (median home price in Erie, PA is $102,000) but want to harrass the agent over the cost of appropriate coverages, crying poor-mouth that they can\’t afford the insruance prices and demand cut throat rates. They are the very worst claimants as the poor agent referenced in the article found out, they are also the first to go running to the nearest ambulance-chasers \”Dewey, Screwum & Howe\” to sue the poor agent, the agency and the carriers.
I read in the decision that the Leonard residence was only 515 ft from the beachfront, and I mapped the address on Google, and that also shows that would be correct. This is far less than the \”half mile or so\” stated by jbm. The decision did state that this was not in Flood Zone A; not an expert in Flood, so I don\’t understand why, since it was so close to the water, but that is what the decision says. Just wanted to clarify for those who did not read the decision.
Sorry for the error. That doesn\’t change the point of my response to the posts ridiculing the homeowner for not having flood insurance. The fact is that Leonard asked his agent if he should buy flood insurance and the agent said, \”No.\”
Many times an agent or broker will suggest cetain coverages and only be declined by the client. So what happens is they in turn after a non-covered loss you then file suit against the agent or brokers E&O policy.
In this case, if they did in fact ask for coverage and the agent failed to go forward and sell ana dditional policy which included an additional commission that he should be held accountable.
As we all look at the way in which we do business, I do not anyone that would decline selling additional coverage when asked for because I don\’t want to make any extra money.
I do believe some facts may have been \”forgotten\”.
I do wonder how this will impact the reputation of Nationwide. Since there are several stand-up companies that just decided due to the severe devistation to just pay the claim.
The point of the judge\’s ruling is that flood damage is not covered under the homeowner\’s policy, and that the agent did not tell Mr. Leonard otherwise. This means that the burden of obtaining proper coverages lies with the homeowner.
What puzzles me is that Mr. Leonard and others on the Gulf Coast didn\’t feel the need to buy flood insurance when just one year earlier Hurricane Ivan struck Gulf Shores, Alabama with massive damage from storm surge. This was only 90 miles east of Pascagoula, Mississippi.
Mr. Leonard should have gone back to his agent and asked \”Why did you say I didn\’t need flood insurance; because I\’m hearing news from Gulf Shores, and the insurance companies are not paying for flood damage under the homeowner\’s policies?\” If the agent\’s response is simply \”You don\’t need it.\”, the homeowner should say \”Why not? Will my homeowner\’s policy cover flood damage? My house is 500 feet from the gulf and I want coverage for flood damage. Sell it to me.\”
But apparently that didn\’t happen, and now it\’s the big, bad insurance company\’s fault.
As for the lawyers, screw them all and the insureds they ride in on!!!
I have a very nice little country that my people and I would welcome you to. As leader I will assure you that no businesses will take advantage of you or my people. It is truly a utopia and your excellent reasoning skills would be very well received.
I\’ve been an licensed resident P&C agent for over 25 years in states such as MO, CO, MN, TN and MS. I\’ve also held (and used)non-resident P&C licenses in AL, AR, FL, IL, IN, IA, KY, WI, & TX. I\’ve taken claims for hail, wind, earthquake, flood, fire – you name it.
I moved to Diamondhead, MS in late 2004. My home is 1-1/2 miles from the back side of Bay of St. Louis. The house is at 24\’ elevation. According to the 1984 Flood maps – the most current at the time – the house was in a Zone C. I did insure my house for full replacement coverage – many here don\’t – even though RCC was well above market value. Moral hazard or responsible thinking????
I did not buy a Flood policy until 9-15-05. I bought my Flood policy from The Hartford (they insure my house, autos and umbrella). When I had finished making arrangements for the policy, the Hartford agent said \”you don\’t need this policy – you\’re in a Zone C\”. I told her that when I looked out my front door and saw (within 300) that ALL of the houses to the west and south of mine were flooded or gone, I decided to buy a policy.
I believe that the local agents on the Coast have said the same thing to their clients since 1969 when Camille hit. If Camille didn\’t get ya, nothing would, was the thinking. Now they say, Camille who?
Yes, people should read and understand their policies. They should also expect to get expert advise from their licensed agents. Too many of us fall down on the job. Shame on us.
I did not have time to read the whole ruling, but it seems as if the Judge only was saying that the agent did not have the authority to change what the policy does or does not cover. Is the agent and his E&O now free and clear, or is that another avenue that the homeowners could pursue?
Dan, the agent was dismissed from the litigation, and thus was not a defendant in the matter. The ruling states evidence indicated the agent told the Leonards they did not \’need\’ flood coverage, but that the Leonards inferred that they had coverage because the agent said they did not need it. The court indicated the Leonards inference was incorrect, and not based on any statements made by the agent.
Thank you, Jacqueline. Your right, it\’s everywhere. Unfortunately, they’ll sue us saying we didn\’t offer it or explain it. That\’s why we have to protect ourselves because even if you did offer or explain you have to be able to prove it. And even sometimes a signed refusal of coverage might not work.
In Alaska, UM/UIM is optional as well, but our agency has taken the position that we won\’t write a policy with less than state mins on UM/UIM as well as 5k on Med. If they want bare bones, they can get it from another agency willing to put their E&O on the line. Because even though they signed the refusal, they might argue that you didn\’t explain.
And what professional producer would ever tell an insured they don’t need coverage? Stupid call – you should never tell an insured they don\’t need coverage. If you do, you\’re negligent and should be sued and lose your license, too. You explain the situation putting the ball back in their court and, like Mark H said, put the burden on them to purchase. And document, document, document!
I\’m so sick and tired of people who won\’t take responsibility for their own actions – the coffee was too hot, the music or the commercials I allow my children to watch made him/her shoot that other kid, the bar allowed me to get drunk. Give me a break people…you made the choice! Buy the coverage or don\’t, but if YOU CHOOSE to \”don\’t\”, then \”don\’t\” complain (or lie) that \”you didn\’t know\” when you have an incident that\’s not covered with the coverage you CHOSE to purchase.
I feel bad for those people on the gulf coast – I really do. But it\’s not the insurance company\’s fault that mother nature happen and that the insured CHOSE not to purchase coverage that would have covered mother nature\’s rath. My parents were affected in Florida by Ivan, but they didn\’t go blaming anyone or sueing for damages. And yes, the consumers should be able to count on the professional insight of their agents, but, as Nancy said, they should know what they’re buying too and if your gut says something and your agent says “No” (how stupid!) then go get another opinion as you would for medical issues. And then call the DOI and report the agent. The owners and managers should be monitoring their producers. If they’re not, then they’re negligent.
It\’s a sad thing that happened along the gulf coast, but if you\’re gonna CHOOSE to live there, know that these events can happen and either buy coverage to protect yourself or self insure. It\’s just that simple.
Alaska Agent made the point in saying \”what professional insurance producer would ever tell an insured they don\’t need coverage\”…..especially since all independent agents as well as many captive agents are paid commissions-only, NOT salary and NOT hourly wage, it is in our own self-interests to sell as much coverage was possible, since we\’re all \”commission hungry\” and \”just out to make as big a sale as possible, like the greedy lawyers always claim, making us out to the public that we\’re all \”nothing but crooks out for the commission\”, right? What kind of lawyers even take these kinds of cases? Crooks that are just out to grab as much legal fees and lawsuit money as possible?
It is not worth the E&O hit to willingly sell a policy without adequate coverage just because Joe Public customer wants everything for nothing. Sorry but there\’s no free lunch.
If you can\’t afford to buy enough coverage to indemnify you against loss of your home, your car, your personal property, etc, then you have no business buying that home or that car, bottom line.
It is up to the policyholder – READ THE POLICY AND UNDERSTAND YOUR RESPONSIBILITY!!
As a Cat Adjuster, I see it over and over again – not just with regard to the Flood Exclusion in every standard Property Policy I have ever read – but also with regard to the limits they pay insurance on. People not only have to READ THEIR POLICY but have to keep tabs on increasing costs of rebuilding (something rarely done). It is truly heartbreaking to have to meet with an insured who has just lost their home and all their belongings to a fire or other insured loss and have to tell them that they are insured for only a fraction of what the replacement will be. Replacement cost endorsements (if you purchased one) sometimes covers the difference but usually for only a percentage on the building (ie – 20 or 30% extra) and rarely applies on the contents coverage.
The agent is always the first to be blamed but, for residential policies, it is extremely rare for an agent or insurer to send out someone to do the valuations. It is simply too expensive and the cost would be tacked onto premiums people are already complaining about.
In the future we may see requirements for policyholders to sign a waiver when they refuse additional coverages, such as Flood. This would be a good idea to protect the insurer and agent and to make the policyholder stop and think for a moment before he declines the coverage. Hopefully, the policyholder will realize the importance of these additional coverages. The agent cannot force someone to purchase coverage and it is ridiculous to think he would spend the time to try to talk them into it. His job is to simply offer it.
In any event, an insurance policy is a contract. Where else in business do people think they have the right to waive conditions on a contract that they have read and signed? What other business is there where, when handed a contract that they are supposed to read before signing, they feel that they can ignore reading and simply ask the agent what it means, and actually think they have a legal leg to stand on when something goes wrong?
As a police officer, Mr. Leonard should certainly be smart enough to read an understand the policy. When you live so close to the Gulf you have to expect the potential for flooding.
As far as \”winning\” the additional $1,200.00, I am sure the insurer would have been more than willing to look at additional wind damage costs. I suspect the judge allowed this so that the insurance company would end up paying for the Plaintiff\’s substantial legal costs, given what they were already out.
Finally, be thankful the ruling went the way it did. If the Leonard\’s were awarding the $158,000., how many insurers do you think would be left in this area of the U.S.?
Wow, \”Sassy\” that was completely uncalled for. You call yourself a professional? That wasn\’t in the least. Don’t attack your own pack â€â€Ŕ maybe some helpful ideas instead? Jacqueline can no more change bureaucracy than you or I. In Alaska, the state assistance programs have the same rules â€â€Ŕ there’s no “explaining” to the assistance specialist â€â€Ŕ he/she just works there. Don’t be a rude, boob â€â€Ŕ we’re all in this together.
But Jacqueline…you do sound a bit angry…I agree with “it’s never their fault” – after all, I started it. But if you’re this angry/disenchanted after 2 yrs, you’re going to be a basket case in 10. Enjoy the ride some. Yes, people take advantage of the system and yes, they don’t make the best choices with their money, but don’t let that affect your business. I remember the first couple years as a new owner â€â€Ŕ it’s not easy â€â€Ŕ getting policies on the books to pay bills is crucial, but at some point you have to draw a line between your risk and making money. That’s why we decided on minimum coverage we would write â€â€Ŕ you can do that (well, in AK you can) â€â€Ŕ the state might require less, but you decide how to operate as a business. Spend time on what’s profitable â€â€Ŕ if flood takes up too much time, then don’t sell it â€â€Ŕ if the non-profits won’t buy because of the coverage offered then don’t entertain. Or another approach, quote ballpark figures â€â€Ŕ not much time spent and you discover who’s really interested and who’s just spinning your wheels. By the way…it will get better â€â€Ŕ just be patient.
See “Sassy” just a few encouraging words and constructive ideas can go a long way. And “Caveat Emptor”, although I agree with your general point, I don’t agree with your choice. Will you (or can you) also bear the consequence and monetary loss if someone sues you? Do you let people ride in your car? Do you ask them for a certificate of health insurance? You may be covered, but your riders may not and when that uninsured drunk hits you and causes your rider a $100k doctor bill, he might sue you for not having adequate coverage for the riders in your vehicle. Maybe the coverage isn’t required, but a civil suit can still happen and you could still lose. Not a good idea to not have at least UMBI.
And to Dan’s comment/answer, I thought you were Ed â€â€Ŕ or were you not responding to my question? Because Ed is the one who says “shame on us” and felt screwed along with 700-800 people. Well, anyway, if you are Ed (Dan), whatever, and were answering my question…if you don’t care about your investment then what are pissed off about? “Shame on you” for not reading…if that’s the truth. Do you dismiss the deposit receipt from your bank teller too? 700-800 insurance agents told their customers “they didn’t need coverage” even though they would have made more money by selling it to them…come on, now.
Many of the other Katrina cases involve homeowners who did have flood insurance and received the full flood payment, but still are hundreds of thousands of dollars short of their losses. There are many slabs in areas that suffered hours of hurricane force winds followed by the storm surge. Insurers are not proving that water caused the damage. They are paying only where they cannot possibly blame the water. So, 40,000 wind claims paid in the Jackson Metro area, 150 miles inland, but no wind payment on coastal homes destroyed by the combination of wind and water. Many people who bought every policy available to them still have huge unpaid losses. Are you guys blaming the homeowners in those cases, too? That is a failure of the insurance market and a failure of government oversight and regulation.
jbm is correct. Nationwide won because they did not just rely on their \”concurrent causation\” policy language, but looked to the burden of proof required in MS under the Camille hurricane cases. They proved in court that all but the addl $1228 of damage was the result of excluded flood damage. Of the claimed $140k, they missed a single window and the cost of some cleaning to the exterior above the water line. Most carriers did not do the type of investigation necessary to meet that burden of proof and are about to find out about their mistake of relying on new, untested (at least in hurricanes) policy language.
I am in my second year in business as an independent agent who started her \”scratch\” agency from scratch – literally. I offer property and auto insurance by carriers with whom I have direct appointment and also workers comp as a sub-broker. Since I received my first appointment my my first carrier, I have gotten 5 requests for quotes for flood insurance from homeowners referred to me through the flood insurance program. All 5 of these homeowners were well-heeled and owned homes in the middle class to affluent areas. The time I took to process the flood quotes plus the postage to mail them the copies of these quotes was all time and money out of my pocket so essentially that was work that I did for free because not a single one of the 5 bought any flood coverage! After doing follow-up phone calls to these people, they ALL rank and file said basically the same thing, \”If the lender doesn\’t require it and we\’ve never had a flood or an earthquake so I can\’t see spending the money for it.\” So basically, those that can afford a nice home in the nicer areas of Erie and its surrounding suburbs, are too damn cheap and greedy to part with a dime to buy any additional coverage at all and what coverage they DO purchase, they wast so many agents\’ time with their \”rate shopping\” crap I feel like just throwing them the hell out of my office. When I explain someone\’s HO or Dwelling policy to them and advise that they can buy an additional rider to cover more than what the standard Contents provision will cover, they decline it because they want it for free and are not willing to pay for it. So if they have a loss that they feel should be covered to their expectations or liking, it\’s never their fault for being too cheap to buy the coverage – it\’s gotta be someone else\’s fault. Since their time is always more important than commission-only paid agent who offers them the policies, they can\’t be bothered to come in to the agent\’s office and go over their policy with the agent – you know, that legal document that they \”don\’t have time\” to read – that is somehow the agent\’s fault or the carrier\’s fault? Then there\’s the people who think that the contents coverage should entitle them to replace ALL their furniture at the most expensive furniture store in town because they think of insurance as \” The Principle of Enrichment\”, and NOT as \”The Principle of Indemnification\” and they do nothing but waste the agent\’s time – which the agent is NOT paid for – by b*tching at the agent that they pay premiums so that they can be made better or made new, not made whole, as if it\’s the agent\’s fault that the carriers offer their respective specified coverages which is not designed to enrich them. Then there\’s my favorite: the non-profits who pay for car insurance for the first six months for welfare mothers for whom welfare is buying their cars for them, going through job readiness training and job placement through PA\’s SPOC Program. These agencies will only provide this \”help\” with the car insurance that the welfare mothers can\’t afford on their own if their program participants get a written quote that is for Liability Only WITHOUT UM/UIM at the sate minimum liability limits of 15/30/5 with $5000 min for 1st party medical. When I questioned them on ther quote request requirements, I was told, \”Well as a non-profit, we have our guidelines. The quote we must have in writing must only be for what is mandatory to be legal and UM/UIM is not mandatory to be legal.\” Of course, these welfare mothers who are not paying for their cars OR the insurance do not want any coverage that is not totally paid for by these agencies. If the agent refuses to even quote such a ridiculous policy, then the agent is the heavy for \”looking down on welfare mothers and not serving them because they\’re too poor to pay for this additional $13-$17 worth of premium for UM/UIM \”. Of course, they\’re not too poor to buy their offspring expensive clothes and $180 sneakers or X-Boxes and Play Stations – something I couldn\’t afford myself as someone busting her *** to make a living as a self-employed independent P & C agent. I think that UM/UIM ought to be mandatory and I think that affluent homeowners who are too cheap and greedy to spend the extra $300-$1000 for adequate flood & earthquake insurance should be denied home equity loans, second mortgages or even the first mortgage to buy their homes to begin with. We may not be able to protect people from their own stupidity but we as agents should certainly should be able to protect ourselves from the stupidity of others by lobying lawmakers to make the purchase of flood and earthquake coverage madatory in addition to dwelling and Ho policies for homeowners and the same goes for UM/UIM, too! I am sick of seeing other hardworking agents get unjustly sued and blamed for the cheapness and stupiodity of others who refuse to take responsibility for their choices.
Jacqueline, boy are you in the wrong line of work. You need to reconsider your \’scratch\’ agency and do something else. You can\’t sell someone a policy that they need? Your technique must be pretty poor. You can\’t explain to the non-profits why they should purchase the coverage? You also sound like a racist to boot. Waa, Waa, Waa. If you can\’t cut the mustard as an agent why don\’t you try something else? There are plenty of good professional agents out there who can sell. Most really smart agents realize that everyone hates to spend their money on insurance and can get the clients past that and influence them to purchase what they need.
Normally I just read these comments (they amuse me) but today I had to jump in and say that the problem is NOT that insured\’s choose to purchase minimum coverage. This is THEIR (and ONLY THEIR) choice. I myself have no UM and no Med Pay because I have health insurance and no intention of pursuing a UM claim of any kind with my carrier ever under even the most catastrophic of circumstances (if the unthinkable happens, I will pick up and move on, as I have done in the past). The problem is that society indemnifies these insured\’s after they make their poor/uninformed choices. We indemnify them with low/no interest loans, free money for rental housing, relocation benefits, easy jobs, temporary shelters and entertaining their useless, worthless, pointless, endless lawsuits – anything to put the \”poor unfortunates\” back on their feet. I make a choice when I choose no UM/UIM (and if I had no loan on my car I wouldn\’t have comp/collision either) and no earthquake coverage (I live in CA) and I will bear the consequences of that choice – as would everyone have to if the government would stop stepping in with disaster aid at every turn.
Agents forcing insured\’s to go elsewhere for coverage only results in a loss of business for the agent and more governmental control in the form of forcing insured\’s to purchase ANYTHING is the VERY LAST THING ON EARTH that we need. The solution is in a simple cliche – you made your bed, now lie in it.
Jacqueline, I agree with you 100%. I have been working in the insurance agency for 20 years and ALL of insured do not purchase flood insurance unless mortgage require at the time of escrow. Also, by law, carriers in CA requires to offer earthquake coverage when purchasing any dwelling policy. Our agency write about 400 dwelling policies per year, but because of the extra premium, less than 2% of those insured purchase EQ coverage and we CAN NOT force them. Also, how about umbrella coverage? All those people who calls them self a victim, have to realize you may be able to get free ride, but there is no such free lunch.
Thank you, Jim. The other agents here in my area have had the same experiences that you have had, too.
So, unlike what Sassy claims in her insulting post, there are plenty of \”professional\” agents who obviously DO know how to sell policies but the bottom line is that people are just too damn cheap.
If the government wouldn\’t force their hand, they wouldn\’t buy auto insurance either. In the era of ridiculous lawsuits, people always look for a way to strike gold by finding a lawyer willing to take their case and sue for astronomical amounts of money. Just look at the McDonald\’s coffee incident. Ridiculous!
With the non-profits that I referenced who pay for the auto insurance of welfare mothers to help them as they transition from welfare to work:
If one of those women gets in an accident caused by an uninsured/under-insured motorist and they or their kids are in the car and get hurt and without the UM/UIM they end up stuck with exorbitant medical bills, guess who those welfare moms are going to go after once a lawyer gets a hold of them! And they will say in court (looking as pitiful as they possibly can), \”I didn\’t know….my agent didn\’t offer me that UM/UIM….\” even if that\’s a total lie because the lawyer will tell them it\’s their word against the agent\’s word, regardless of what forms were signed. The judge and jury will probably side with the poor welfare mom over you as the agent because as the \”licensed professional\”, they will say you should have known better than to allow the victim to be inadequately covered. You the insurance professional has the knowledge and expertise that the public customer does not. It will not matter that they chose NOT TO spend their own money for the appropriate coverage because that wasn\’t going to be paid for by the government (i.e. the working taxpayers). Like I said before, these are the same people who always find the money to buy their kids\’ expensive X-Boxes and Play Stations and $180 sneakers but can\’t find $2.83/mo for UM/UIM coverage.
If Sassy thinks I am being racist, too bad. I am not going to risk my license and livelihood and all I have worked to build thus far over inefficient welfare program guidelines and cheapskate customers who have several hundred dollars for satellite dish TV, X-Boxes and Play Stations but refuse to pay what amounts to less than $3/mo for UM/UIM at state minimum levels. Those welfare caseworkers will still receive their comfy salaries and bennies in their welfare department jobs whether that welfare mom with a bare-bones policy ends up devastated because of not having the appropriate coverage and whether or not the professional insurance agent working for an honest living gets the shaft for writing such a policy.
I myself am disabled. I am also a minority ( so much for the \”racist accusation). This is not a racist issue – it\’s a common sense issue and a defensive business practice issue. I KNOW the value of UM/UIM. I wasn\’t one of the lucky ones that had a good job when I was 24 where health insurance was offered. I couldn\’t afford it on my own back then when I was 24 and just starting out when an uninsured judgment-proof driver hit me and left me with permanent disabilities, taking me out of the workforce for over a decade. So UM/UIM was definitely worth every penny to me!
If a customer has health insurance that will cover them, fine. I request a copy of their health policy so I can make the appropriate documentation in addition to a plain language Rejection Of Coverage acknowledged and signed by the customer so that NO ONE can come back and sue me which would put me, a disabled middle-aged woman, out of business and unable to earn an honest living to support myself. I simply refuse to take that kind of foolish risk because I know I could never recoup after losing everything – and I am not counting on winning the Powerball Jackpot.
Hey Alaska,
I absolutely agree – it is DEFINITELY a risk not to carry UM/UIM. I choose to take it. I would not advise the same of others who do not have my resources. As far as a claim for someone in my car – that\’s what liability is for – I carry very high liability and since my family is all out of state there are no 1st party riders in my car, ever, only 3rd parties who can make a liability claim if I were to ever injure them.
My point is that it\’s not an agent\’s choice – it\’s mine. And we as insurance professionals can explain and can (and should) protect ourselves and our business by refusing, asking for waivers, etc but the bottom line is (as the last post states) until there are SERIOUS, FAR-REACHING financial repercussions to making poor choices, nothing will change. If we stop bailing them out, they\’ll stop doing stupid things (or they won\’t need homeowner\’s insurance anymore because they can\’t afford to rebuild). I feel sorry for people stuck in a bad situation but bailing them out only encourages them to do the same thing over and over again.
May I also say that I always enjoy reading your comments – well thought out, correct grammar and spelling, polite – very nice to see :-)
The sad part of all of this discussion is that most of the posters have been correct.
The true issue here is incredibly unsound development and socialistic solutions that just won\’t work. As insurance professionals we all know that the free market solution, while best, will never be allowed to happen. A free and competitive marketplace would solve this problem but how many of the homeowners in a coastal wind a flood zone will pay a $5 rate with a 20% wind deductible? At that rate structure there are carriers that would offer coverage and probably do OK over a spread of risk and period of time.
They don\’t offer coverage at a rate structure barely above what a carrier gets in a midwestern state without any of these broad cat risks.
The other issue here is that instead of the financial penalty that generally goes along with a poor economic decision we have consistently rewarded these clowns that choose to build in these unsound areas by giving them free government aid or by give them replacement cost coverage (whether intended by the underwriters / actuaries or not). Until the last couple of years most have upgraded every time a storm made landfall and they filed a claim. Many have much better property after a storm than they did before.
In a true capitalistic system these individuals would incur a severe financial penalty for the poor development or they would pay considerably more for insurance as a hedge to protect some of their investement. Right now they incur neither and complain that the insurance is cost prohibitive or not broad enough to eliminat all of the pain.
The obvious solution to every person that chooses to build in the ridiculous locations is to create a nation \”cat fund\” and have all of the rest of the US subsidize their poor decision.
As any poly sci 101 student will tell you… these type of programs that benefity a very small portion of the population at the expense of the majority can, and will cause govermental infrastructure issues. This is a nice way of saying if you want to push the silent majority into action this is a great way to do it.
See, this is the whole point. Although these past few years hurricane and tornado activity has been at record levels, it is no new phenomenon to anybody that coastal regions and areas along the rivers and creeks have had past floods and potential for future floods. It is not realistic to expect that you will never suffer any serious risk to your property or life (or both) due to an earthquake if you live near the San Andreas fault.
The problem is that everybody likes to think \”it can\’t happen to me\” when in fact, it can and often does. Then when it DOES happen, and those affected are under-insured or uninsured for such a calamity, everybody else is supposed to suffer higher insurance premiums as a consequence. Lawyers end up having a field day and the poor agent is always blamed for not offering the coverage when in fact, it is usually the case that the agent DOES offer but if the insured is not forced by law or lender to buy, they won\’t buy it and the agent cannot force them to buy it.
The old addage rings true: you can lead a horse to water but you can\’t make him drink.
If I seemed a tad angry, it is because I am angry and have every right to be because I am not only an agent, but I am also a homeowner, an autombile driver, and hence, I am an insured, too.
When my rates increase because of catastrophic claims plus lawsuits like the one referenced where the insureds were seeking $158,000 (which sounds like a case of someone seeking \”unjust enrichment\”)that affects the rates that I and every other insured must pay. Even when the carrier and the agent prevails, there are E & O deductibles and costly legal fees. All this is taken into account when carriers must examine their rates and taise them to compensate for these expensive legal defense fees, plus court awards.
As an agent, it affects affordable E & O coverage. Customers who suffer losses are not always willing to be honest when they are being told by an ambitious lawyer looking at the \”deep pocket\” point of view that they can get what they want, even if they are not legally or morally entitled to it, by suing their insurer and their agent claiming that the agent either failed to offer the policy or that the agent didn\’t educate them, I get an attitude because this is the kind of malady that adversely affects ALL agents and ALL insureds.
Lastly, I am a tad angry because it is downright stupid for anyone to buy or build McMansion homes near areas where there has been past incidents of catastrophic hurricane damage and decline flood insurance because they think \”Oh well, I have a homeowner\’s policy. Let the insurance company, the agent, FEMA, the public at large pay me for everything I lose.\” I feel bad for that poor agent who incurred steep legal costs by having to pay the high E & O deductible to defend himself in this case when he probably did offer the coverage or at least provide a referral to another agent who did, and the people probably did what most other insureds do, balk at paying the price and choose to forego the coverage.
Since the ruling by the Judge I wonder if the insurance companies will go back and readjust for the damage. They will probably just push it under the carpet. I also wonder how many of the insurance companies read any of this comments. It would sure be nice to hear from then.
ED
Of course we read this forum…I read the decision from Judge Senter the day it came out. I also made sure it was sent to every Claim Manager, Third-Party Administrator, and Litigation Manager in my company.
And just so you know, my company is not a defendant in any of these actions.
Since I am a relatively new start up independent agency, I am stuck going through MGA\’s for the types of products you mentioned and suggested offering, which has not worked out at all for us or for the potential insureds.
Although I have built an impressive personal lines book for being a scratch agency, the revenue we are generating is still not impressive enough for the competitively priced carriers who DO offer E & O, malpractice, and the other commercial products to even take a look at us for direct appointment.
In going through the MGA\’s, I have gotten nothing but excuses as to why they can\’t serve any given potential customer whose application and or quote request I sent in, and often had to hound them for weeks just to get a response only to be told, \”The premium doesn\’t mean the minimum guidelines, we don\’t offer a product for that type of customer, etc\” either that or if they DO actually have a program, the premiums are not competitve enough so I can\’t sell it. I have run into this whether trying to get a small BOP or for getting a small contractor\’s workers comp account.
So I have basically given up getting any commercial accounts or lucrative E&O/malpractice type of accounts until I am making enough money to get those carriers who are competitive and who will do direct appointment to accept our agency for appointment so we don\’t have to fool around with MGA\’s that talk the talk but don\’t walk the walk, if you know what I mean. The worst one has been that Appalachian Underwriters. They look good on the web and they tell you they can find a competitive program for your insured, then they turn around and say, \”sorry, we don\’t have a fit for so and so.\” Cluett for the workers comp seems pretty good, but unfortunately they do strictly workers comp, no other commercial insurance products, no malpractice and no E&O. Also, the lawyers who are not hurting and who have money (show me a poor lawyer and I\’ve got a bridge to sell you for a wooden nickel)are in a position to get their malpractice and E&O anywhere so a scratch agent like me can\’t possibly compete in getting their business because I have to go through MGA\’s which do not have the most competitive prices for those programs and products – even when they DO say they can find a fit……frustrating and maddening. It\’s like the same old catch-22 of you need experience to get the job/appointment/contract etc, but if nobody ever gives you a chance, how the hell are you supposed to get the experience? Same deal applies here. I needed to expand into the preferred/ultra-preferred but carriers like Travelers (which are very good in how they handle claims and are very competitive rate wise for the customer)won\’t look at small-time agents with less than 3 years into the independent agency business. I checked out the feasibility of going through one of those groups like Brooke and Iriquois Group, but there are commission pay issues plus high costs becuase they want you to basically finance an agency through them – WITHOUT an existing book, which is unrealistic and not do-able. So I just keep plugging away with the direct appointments I DO have for personal non-standard lines for auto, home etc until hopefully the bigger players will let me as a little person onto the playing field.
I doubt that any CEO\’s or execs are reading this and /or taking notes. It\’s not much different that the fact than the execs of oil companies probably aren\’t reading this. The fact is that the loudest and most irrational complainers tend to use forums like this.
The same Floridians that complain loudly about their insurance costs and want to figure out ways to have everone else in the country subsidize them so they pay less than the market are also the smae people that will not allow offshore drilling even though there are large reserves of the coastline.
Do you really believe that anyone would actually listen if someone were to get up and explain that the loss cost per hundred in valuation of insuring a home in coastal florida is much higher than insuring a a similar home in a non coastal state? Not likely as evidenced by the regulatory, legal and political enviroment of that state.
However, theres an old saying…\’you can lead a horse to water but you can\’t make him drink\”.
The morons who build in unsound areas such as sandbars, faultlines and flood plains are going to continue to do so. These people possess that trait known as stupidity and they are also brash and shameless enough to ask others to pay for their arrogance. These are the same clowns looking for national cat funds, government subsidies and free loans. They also sue alot and assume that they are smarter than everyone else.
I might suggest that rather than fighting city hall on this you might focus on selling products that will be needed as a result of this mindset. There will always be a brisk contracting business due to the constant reconstruction. Contractors need insurance. You could also target writing professtional cover on the legions of professionals that exist off this system. Lawyers, Artchitects, Surveyors. Since most of these shameless people have money they will also need extensvie medical treatment and financial institutions. Target some of these and you could do well.
Jaqueline,
Your comments should be mandatory reading for all applicants for insurance. I work for a PA company and I get to read claim denials where coverage was declined and they want to sue agents and the company! it is always the folks who have the assets that need protection, who have the ability to afford coverage who are the first to hire an attorney to cover their stupid mistakes; they have money for that but not the prudent purchase of protection. they always think someone else OWES them something, someone other than themselves. A recent PA court ruling basically supported agents/brokers; the ruling indicated that it is the insured who has the burden, not the agent/broker, to decide what needs to be covered and what coverage to select.
Please don\’t blame MGAs for ignoring apps for small bops and w/c\’s. 90% of these policies cancel for non-pay in less than a year. Both agent and MGA lose money on these deals. Submit a few large account apps; you will see faster response soon.
O.K. Bob but the carier had to spend a bundle on their defense. One more reason for reform, \”Loser pays\”.
People like to blame us for everything that goes wrong rather we had anything to do with it or not. How many times have you had insureds who want to add coverage or lower deductibles after the fact?
My sentiments exactly, Matt! The carrier and the agency are out a lot of $$$ too. Don\’t give me poor, poor defense attorney.
I really have to wonder just how much $$$$$ Nationwide contributed to the Judges\’ re-election campaign fund or to the repairs of property owned by him or his relatives?????
Please read the judge\’s opinion. It is a \”quick read\”.
The couple\’s attorneys had asked for more than $158,000 for the damage to the house and its contents, plus interest and attorneys\’ fees and expenses. Senter, however, ruled that Nationwide only owed the Leonards about $1,228 more than what the company already has paid them for wind damage.
Both sides claimed victory in the wake of Senter\’s ruling.
\”The Leonards did not win as much money as I hoped they would have, but they won this case,\” said one of their attorneys, Richard \”Dickie\” Scruggs. \”It\’s always great to get a win in the first game of the season, whether it\’s by one point or 30 points.\”
Paul Leonard, a police lieutenant, acknowledged that an extra $1,228 only covers a fraction of the repair costs for his home, but he also considered Senter\’s ruling a victory.
Where\’s honesty? People would do anything for even little extra $$$.
As an agent, it is imperative that you present your products to the clients and the clients makes their own deciscion as to whether or not to pay a premium for coverage. If you live in an area that is known for wind and flood water damage potential why would not purchase flood insurance? Knowing the premiums would not be cheap but the peace of mind would have been worth the few thousand that the premiums would have cost them.
Case in point, in southern California when they had the October fires 3,000 homes were lost. Many had shake/wood roofs. Many homes were under insured. Is it not the responsibility of the homeowner to review their policies annually and to guard against potential fire hazards, i.e. 30 year hold shake roofs? As an agent when speaking with clients and counseling them on premium increases due to increased coverage many customers elected not to have that increased coverage and increased premium. That is not the fault of the agent. It\’s a buyer caveat and should be weighed heavily when deciding to under-insure yourself. Kudos to the judge for standing by the contract.
It will be interesting if Nationwide ever advertised Flood Insurance to their clients. I wonder if they have it in writing from their clients that they did not want to purchase the flood insurance coverage.
We will see.
The plaintiffs may only get a few more dollars
but
the plaintiff attorney gets his fees…
That\’s why the plaintiff attorney is considering this a \”win\”…
With all of the uproar about what policyholders think they have or need, it might be better to get a written rejection signed by the insured for all catastrophe covers like flood, earthquake, etc. As to be underinsured, CA requires companies to validate ITV periodically and so the burden isn\’t always just on the homeowner entirely. By the way, I agree with the decision in this case but the cost to the industry in terms of its reputation will suffer anyway.
I agree with you Pat. Your email was right on point.
They never want to pay the extra premium until it\’s too late. Then it\’s always someone else\’s fault. \”The coverage wasn\’t offered\” or \”the agent told me I didn\’t need it\”. Come on people, take responsibility for your own decisions. Fellow agents…protect yourself…get a signed declination, even if you have to type something up real quick. Unfortunately, because these people (or these lawyers, !## @$%^&*) Mr. Fletcher, well the agency, still had to fork out a sizely deductible on their E&O to defend his case. \’Course those people who refuse to accept responsibility don\’t think about that do they? or their lawyers either.
I did not see where the attorney received fees and costs in addition to the twelve hundred bucks. Did it say that in the ruling? Most all of these cases are taken on a contingency basis and I promise you that if all they got was the $1200, the attorney lost a bundle.
Please don\’t live on the waterfront if you can\’t afford to replace every time nature decides it\’s time to restore itself to it\’s virginal state.
The whole concept of morons building on a sandbar subject to both Hurricanes, storm surges and heavy wind and rain is totally out of control. What started out as \” inexpensive beachfront shacks\” made to be replaced whenever wiped out has now evolved into a cottage industy of rebuilding bigger and better every time a weather event occurs.
Common sense goes a long way here. Just as it\’s not prudent to build on flood plains, fault zones and sand bars it also makes sense that people who choose to build in unsound locations will either pay a lot, lot more for insurance or bare the risk themselves.
we will all get to pay for this stupidity when the federal goverment decides it has to reward these unsound development decisions with a federal cat plan.
Shame on all Insurance agents. I had a home in Gulf Breeze ,Florida. in late 1995 Was told that we did not need flood insurance that our policy would cover all damage from a hurricane. Sept 2004 when Ivan came ashore we had much damage from storm surge and went to court in a class action suit. We had about 700 to 800 people with this suit and all said the same thing that the agent said we did not need flood insurance that we were covered. We were laught out of court,now all of us heard the same thing, Shame on the three big insurance companies Allstate ,National and State Farm. We all paid our insurance on time and expected our just return for damage and put out of court. BIG MONEY TALKS. I am still out about $150,000.00.
Did you read your policy documents when they arrived in the mail? Did you read the exclusions?
Bob,
This suit was filed under a Civil Remedy notice. If the insurance carrier has to pay $1 more then all fees and costs are due the plaintiff attorney.
Agent: It said I had coverage…. so I stopped reading. I really don\’t care about my investment in my home so I depend on someone else to tell me what it says.
I may have misunderstood the whole insurance idea (as an insurance company you take a group of insurers with differing risk levels and lump them together thereby limiting the overall risk; as the consumer you have a risk that you can not afford to cover in a lump sum so you buy insurance from a compnay who has lumped you into a group of other consumers to spread the risk).
In the state of Miss the insurance commissioner Mr. George Dale(who has been in office for about 30 years, and who accepted more than $750k in campaigne contributions from the insurance companies, who he is suppose to be regulating) just recently allowed the insurance to be raised 268% on commercial business on the Miss coast (because he says the companies will pull out if he is too hard on them). In his 30 years in office as insurance commissioner did Mr. Dale ever think that if basic concept of spreading risk is not accomplished that there would have to be a 268% increase. Why with probably over 60% of the U.S. population living in a coastal state, has Mr. Dale not thought of making an allience with the other coastal states that says if you want to write in one state you must write in all the states and then Mr. Dale may not feel so threatened his campaigne contributors. There seems to be several basic problems. Mr. Dale said at the Neshoba County Fair \” the insurance companies think I am in the pocket of the consumer, and the consumer thinks I am in the pocket of the insurance companies\”. First I guess someone must remind Mr. Dale that he is an elected official there to serve the people, not the companies who gave him $750k. Who decided to let the insurance companies define risk. If I recall there was a pretty good flood in Jackson Miss on Easter of 1979, there was a pretty good little tornado in Madison Miss just 4 years ago, (not to just confine diasters to Miss) I recall the Mississippi River getting out of it\’s bank yearly and causing massive flooding, I could go on and on. Business is Business, the insurance companies will continue to write insurance for as much as they possibley can (showing the risk to be as high as they can when pricing it, with smaller risk pools, but they will continue to write insurance in as broad an area as they can so as to limit their overall risk) that is the name of the game, make as much money as possible. And the insurance companies have done this very well, look at their profits from last year. This will continue until the public stands up and ask their elected officials to control the situation. (The last problem) Once the officails are getting the insurance industries lobbying money and kick backs they are hooked, and it is to late! It is to late!!!!
Federal judges are appointed for life and never run for election or re-election. therefore your hypothesis is idiotic.
Ed, sorry to hear that. But, as an insured, we have our most important duty & responsibility by going over the policies when we purchase insurance. Companies don\’t just send the policy for nothing. Think of it as a manual or instruction. When ever you purchase electronics, toys or any other items, you will read enclosed instruction as soon as when you open up the box. What is difference??? Don\’t blame on manufacture for not knowing how to operate because you failed to read the instruction.
The mantra \”I don\’t need flood, I am not in a flood zone\” is something you hear most often in an insurance agency. There\’s a fundamental unwillingness in the public to buy anything not forced-upon them by their mtg co or government.
How about a cheapskate homeowner who made a flood claim on his homeowners policy because he did not want to have comp&coll on his auto policy. Talk about a double exclusion.
According to the Judge\’s Order attached to his opinion, each party is to bear their own costs. That means that Mr. Scruggs will receive a fee, as negotiated, from the plaintiff. If you assume a 30% contingency, that comes to around $375 (+/-). Talk about losing money!!!
You guys should not comment without reading the details of the case. The Leonards did not live on the waterfront. They lived a half mile or so inland, not in a flood hazard area according to the pre-Katrina flood maps. They did not have flood insurance because their Nationwide agent told them they did not need flood insurance. The judge acknowledged that fact, but said it did not matter. The judge upheld the flood exclusion but he knocked down the concurrent causation clause. That means that where wind and water combined to cause damage, the insurers will not get away with stiffing the insured. They will have to pay a lot more than $1,200 because of this ruling.
of interest
Did something change in Florida? You mean that its open rating now on property???
The coastal wind rates and terms and conditions are obscenely inadaquate. When you do not allow the return on investment to offset the risk the market collapses.
You could also argue that the Florida DOI is not in business of regulating finanacial strength. They are nothing more than a demagogory and populist nonsense.
The situation in MS, while not desirable, is whole lot better than the Florida market and will continue to be that way.
I concur wholeheartedly! It\’s not just with the Dwelling and HO insurance customers that this happens, either.
The majority of my book is auto insurance. In PA, UM/UIM is optional. People being the cheapskates they are forever demanding the cheapest rock bottom rates are penny wise and dollar stupid. For a measly $13-$17 over the entire 6 months term of their auto policy for this valuable protection of UM/UIM, they b*tch and want me to chop that out. Then if they end up hurt in an accident caused by an uninsured driver with no income or assets to attach to pay for the hospital bills, they cry and moan that \”the insurance companies are crooks that don\’t cover nothin\’\”
Like flood insurance, earthquake coverage is also frequently declined. Although PA does not have earthquakes like California, it has been known to happen in the northwestern region ( there\’s a sizeable faultline running right under the middle of Lake Erie)and the tremors we have had, however rarely, are enough to cause structural damage to the foundations of homes. These same people who cry and moan over the cost of their HO\’s and dwelling policies and opt out of flood and earthquake insurance are the very first ones to raise a fit when their standard HO doesn\’t pay out on a flood or earthquake related loss.
It\’s mostly the middle to upper middle income people who can afford $100,000 – $200,000 homes (median home price in Erie, PA is $102,000) but want to harrass the agent over the cost of appropriate coverages, crying poor-mouth that they can\’t afford the insruance prices and demand cut throat rates. They are the very worst claimants as the poor agent referenced in the article found out, they are also the first to go running to the nearest ambulance-chasers \”Dewey, Screwum & Howe\” to sue the poor agent, the agency and the carriers.
of interest,
I think that you 100% right. In looking at property rates in the coastal area it is obvious that the prolitereat are being taken advantage of.
I read in the decision that the Leonard residence was only 515 ft from the beachfront, and I mapped the address on Google, and that also shows that would be correct. This is far less than the \”half mile or so\” stated by jbm. The decision did state that this was not in Flood Zone A; not an expert in Flood, so I don\’t understand why, since it was so close to the water, but that is what the decision says. Just wanted to clarify for those who did not read the decision.
Sorry for the error. That doesn\’t change the point of my response to the posts ridiculing the homeowner for not having flood insurance. The fact is that Leonard asked his agent if he should buy flood insurance and the agent said, \”No.\”
Many times an agent or broker will suggest cetain coverages and only be declined by the client. So what happens is they in turn after a non-covered loss you then file suit against the agent or brokers E&O policy.
In this case, if they did in fact ask for coverage and the agent failed to go forward and sell ana dditional policy which included an additional commission that he should be held accountable.
As we all look at the way in which we do business, I do not anyone that would decline selling additional coverage when asked for because I don\’t want to make any extra money.
I do believe some facts may have been \”forgotten\”.
I do wonder how this will impact the reputation of Nationwide. Since there are several stand-up companies that just decided due to the severe devistation to just pay the claim.
Let\’s see how time will judge this whole mess.
The point of the judge\’s ruling is that flood damage is not covered under the homeowner\’s policy, and that the agent did not tell Mr. Leonard otherwise. This means that the burden of obtaining proper coverages lies with the homeowner.
What puzzles me is that Mr. Leonard and others on the Gulf Coast didn\’t feel the need to buy flood insurance when just one year earlier Hurricane Ivan struck Gulf Shores, Alabama with massive damage from storm surge. This was only 90 miles east of Pascagoula, Mississippi.
Mr. Leonard should have gone back to his agent and asked \”Why did you say I didn\’t need flood insurance; because I\’m hearing news from Gulf Shores, and the insurance companies are not paying for flood damage under the homeowner\’s policies?\” If the agent\’s response is simply \”You don\’t need it.\”, the homeowner should say \”Why not? Will my homeowner\’s policy cover flood damage? My house is 500 feet from the gulf and I want coverage for flood damage. Sell it to me.\”
But apparently that didn\’t happen, and now it\’s the big, bad insurance company\’s fault.
As for the lawyers, screw them all and the insureds they ride in on!!!
of interest
I have a very nice little country that my people and I would welcome you to. As leader I will assure you that no businesses will take advantage of you or my people. It is truly a utopia and your excellent reasoning skills would be very well received.
I\’ve been an licensed resident P&C agent for over 25 years in states such as MO, CO, MN, TN and MS. I\’ve also held (and used)non-resident P&C licenses in AL, AR, FL, IL, IN, IA, KY, WI, & TX. I\’ve taken claims for hail, wind, earthquake, flood, fire – you name it.
I moved to Diamondhead, MS in late 2004. My home is 1-1/2 miles from the back side of Bay of St. Louis. The house is at 24\’ elevation. According to the 1984 Flood maps – the most current at the time – the house was in a Zone C. I did insure my house for full replacement coverage – many here don\’t – even though RCC was well above market value. Moral hazard or responsible thinking????
I did not buy a Flood policy until 9-15-05. I bought my Flood policy from The Hartford (they insure my house, autos and umbrella). When I had finished making arrangements for the policy, the Hartford agent said \”you don\’t need this policy – you\’re in a Zone C\”. I told her that when I looked out my front door and saw (within 300) that ALL of the houses to the west and south of mine were flooded or gone, I decided to buy a policy.
I believe that the local agents on the Coast have said the same thing to their clients since 1969 when Camille hit. If Camille didn\’t get ya, nothing would, was the thinking. Now they say, Camille who?
Yes, people should read and understand their policies. They should also expect to get expert advise from their licensed agents. Too many of us fall down on the job. Shame on us.
I did not have time to read the whole ruling, but it seems as if the Judge only was saying that the agent did not have the authority to change what the policy does or does not cover. Is the agent and his E&O now free and clear, or is that another avenue that the homeowners could pursue?
Are we gonna go through this same crap when these people dont have earthquake insurance? I cant predict the future.
Dan, the agent was dismissed from the litigation, and thus was not a defendant in the matter. The ruling states evidence indicated the agent told the Leonards they did not \’need\’ flood coverage, but that the Leonards inferred that they had coverage because the agent said they did not need it. The court indicated the Leonards inference was incorrect, and not based on any statements made by the agent.
Thank you, Jacqueline. Your right, it\’s everywhere. Unfortunately, they’ll sue us saying we didn\’t offer it or explain it. That\’s why we have to protect ourselves because even if you did offer or explain you have to be able to prove it. And even sometimes a signed refusal of coverage might not work.
In Alaska, UM/UIM is optional as well, but our agency has taken the position that we won\’t write a policy with less than state mins on UM/UIM as well as 5k on Med. If they want bare bones, they can get it from another agency willing to put their E&O on the line. Because even though they signed the refusal, they might argue that you didn\’t explain.
And what professional producer would ever tell an insured they don’t need coverage? Stupid call – you should never tell an insured they don\’t need coverage. If you do, you\’re negligent and should be sued and lose your license, too. You explain the situation putting the ball back in their court and, like Mark H said, put the burden on them to purchase. And document, document, document!
I\’m so sick and tired of people who won\’t take responsibility for their own actions – the coffee was too hot, the music or the commercials I allow my children to watch made him/her shoot that other kid, the bar allowed me to get drunk. Give me a break people…you made the choice! Buy the coverage or don\’t, but if YOU CHOOSE to \”don\’t\”, then \”don\’t\” complain (or lie) that \”you didn\’t know\” when you have an incident that\’s not covered with the coverage you CHOSE to purchase.
I feel bad for those people on the gulf coast – I really do. But it\’s not the insurance company\’s fault that mother nature happen and that the insured CHOSE not to purchase coverage that would have covered mother nature\’s rath. My parents were affected in Florida by Ivan, but they didn\’t go blaming anyone or sueing for damages. And yes, the consumers should be able to count on the professional insight of their agents, but, as Nancy said, they should know what they’re buying too and if your gut says something and your agent says “No” (how stupid!) then go get another opinion as you would for medical issues. And then call the DOI and report the agent. The owners and managers should be monitoring their producers. If they’re not, then they’re negligent.
It\’s a sad thing that happened along the gulf coast, but if you\’re gonna CHOOSE to live there, know that these events can happen and either buy coverage to protect yourself or self insure. It\’s just that simple.
Alaska Agent made the point in saying \”what professional insurance producer would ever tell an insured they don\’t need coverage\”…..especially since all independent agents as well as many captive agents are paid commissions-only, NOT salary and NOT hourly wage, it is in our own self-interests to sell as much coverage was possible, since we\’re all \”commission hungry\” and \”just out to make as big a sale as possible, like the greedy lawyers always claim, making us out to the public that we\’re all \”nothing but crooks out for the commission\”, right? What kind of lawyers even take these kinds of cases? Crooks that are just out to grab as much legal fees and lawsuit money as possible?
It is not worth the E&O hit to willingly sell a policy without adequate coverage just because Joe Public customer wants everything for nothing. Sorry but there\’s no free lunch.
If you can\’t afford to buy enough coverage to indemnify you against loss of your home, your car, your personal property, etc, then you have no business buying that home or that car, bottom line.
It is up to the policyholder – READ THE POLICY AND UNDERSTAND YOUR RESPONSIBILITY!!
As a Cat Adjuster, I see it over and over again – not just with regard to the Flood Exclusion in every standard Property Policy I have ever read – but also with regard to the limits they pay insurance on. People not only have to READ THEIR POLICY but have to keep tabs on increasing costs of rebuilding (something rarely done). It is truly heartbreaking to have to meet with an insured who has just lost their home and all their belongings to a fire or other insured loss and have to tell them that they are insured for only a fraction of what the replacement will be. Replacement cost endorsements (if you purchased one) sometimes covers the difference but usually for only a percentage on the building (ie – 20 or 30% extra) and rarely applies on the contents coverage.
The agent is always the first to be blamed but, for residential policies, it is extremely rare for an agent or insurer to send out someone to do the valuations. It is simply too expensive and the cost would be tacked onto premiums people are already complaining about.
In the future we may see requirements for policyholders to sign a waiver when they refuse additional coverages, such as Flood. This would be a good idea to protect the insurer and agent and to make the policyholder stop and think for a moment before he declines the coverage. Hopefully, the policyholder will realize the importance of these additional coverages. The agent cannot force someone to purchase coverage and it is ridiculous to think he would spend the time to try to talk them into it. His job is to simply offer it.
In any event, an insurance policy is a contract. Where else in business do people think they have the right to waive conditions on a contract that they have read and signed? What other business is there where, when handed a contract that they are supposed to read before signing, they feel that they can ignore reading and simply ask the agent what it means, and actually think they have a legal leg to stand on when something goes wrong?
As a police officer, Mr. Leonard should certainly be smart enough to read an understand the policy. When you live so close to the Gulf you have to expect the potential for flooding.
As far as \”winning\” the additional $1,200.00, I am sure the insurer would have been more than willing to look at additional wind damage costs. I suspect the judge allowed this so that the insurance company would end up paying for the Plaintiff\’s substantial legal costs, given what they were already out.
Finally, be thankful the ruling went the way it did. If the Leonard\’s were awarding the $158,000., how many insurers do you think would be left in this area of the U.S.?
Wow, \”Sassy\” that was completely uncalled for. You call yourself a professional? That wasn\’t in the least. Don’t attack your own pack â€â€Ŕ maybe some helpful ideas instead? Jacqueline can no more change bureaucracy than you or I. In Alaska, the state assistance programs have the same rules â€â€Ŕ there’s no “explaining” to the assistance specialist â€â€Ŕ he/she just works there. Don’t be a rude, boob â€â€Ŕ we’re all in this together.
But Jacqueline…you do sound a bit angry…I agree with “it’s never their fault” – after all, I started it. But if you’re this angry/disenchanted after 2 yrs, you’re going to be a basket case in 10. Enjoy the ride some. Yes, people take advantage of the system and yes, they don’t make the best choices with their money, but don’t let that affect your business. I remember the first couple years as a new owner â€â€Ŕ it’s not easy â€â€Ŕ getting policies on the books to pay bills is crucial, but at some point you have to draw a line between your risk and making money. That’s why we decided on minimum coverage we would write â€â€Ŕ you can do that (well, in AK you can) â€â€Ŕ the state might require less, but you decide how to operate as a business. Spend time on what’s profitable â€â€Ŕ if flood takes up too much time, then don’t sell it â€â€Ŕ if the non-profits won’t buy because of the coverage offered then don’t entertain. Or another approach, quote ballpark figures â€â€Ŕ not much time spent and you discover who’s really interested and who’s just spinning your wheels. By the way…it will get better â€â€Ŕ just be patient.
See “Sassy” just a few encouraging words and constructive ideas can go a long way. And “Caveat Emptor”, although I agree with your general point, I don’t agree with your choice. Will you (or can you) also bear the consequence and monetary loss if someone sues you? Do you let people ride in your car? Do you ask them for a certificate of health insurance? You may be covered, but your riders may not and when that uninsured drunk hits you and causes your rider a $100k doctor bill, he might sue you for not having adequate coverage for the riders in your vehicle. Maybe the coverage isn’t required, but a civil suit can still happen and you could still lose. Not a good idea to not have at least UMBI.
And to Dan’s comment/answer, I thought you were Ed â€â€Ŕ or were you not responding to my question? Because Ed is the one who says “shame on us” and felt screwed along with 700-800 people. Well, anyway, if you are Ed (Dan), whatever, and were answering my question…if you don’t care about your investment then what are pissed off about? “Shame on you” for not reading…if that’s the truth. Do you dismiss the deposit receipt from your bank teller too? 700-800 insurance agents told their customers “they didn’t need coverage” even though they would have made more money by selling it to them…come on, now.
Many of the other Katrina cases involve homeowners who did have flood insurance and received the full flood payment, but still are hundreds of thousands of dollars short of their losses. There are many slabs in areas that suffered hours of hurricane force winds followed by the storm surge. Insurers are not proving that water caused the damage. They are paying only where they cannot possibly blame the water. So, 40,000 wind claims paid in the Jackson Metro area, 150 miles inland, but no wind payment on coastal homes destroyed by the combination of wind and water. Many people who bought every policy available to them still have huge unpaid losses. Are you guys blaming the homeowners in those cases, too? That is a failure of the insurance market and a failure of government oversight and regulation.
jbm is correct. Nationwide won because they did not just rely on their \”concurrent causation\” policy language, but looked to the burden of proof required in MS under the Camille hurricane cases. They proved in court that all but the addl $1228 of damage was the result of excluded flood damage. Of the claimed $140k, they missed a single window and the cost of some cleaning to the exterior above the water line. Most carriers did not do the type of investigation necessary to meet that burden of proof and are about to find out about their mistake of relying on new, untested (at least in hurricanes) policy language.
I am in my second year in business as an independent agent who started her \”scratch\” agency from scratch – literally. I offer property and auto insurance by carriers with whom I have direct appointment and also workers comp as a sub-broker. Since I received my first appointment my my first carrier, I have gotten 5 requests for quotes for flood insurance from homeowners referred to me through the flood insurance program. All 5 of these homeowners were well-heeled and owned homes in the middle class to affluent areas. The time I took to process the flood quotes plus the postage to mail them the copies of these quotes was all time and money out of my pocket so essentially that was work that I did for free because not a single one of the 5 bought any flood coverage! After doing follow-up phone calls to these people, they ALL rank and file said basically the same thing, \”If the lender doesn\’t require it and we\’ve never had a flood or an earthquake so I can\’t see spending the money for it.\” So basically, those that can afford a nice home in the nicer areas of Erie and its surrounding suburbs, are too damn cheap and greedy to part with a dime to buy any additional coverage at all and what coverage they DO purchase, they wast so many agents\’ time with their \”rate shopping\” crap I feel like just throwing them the hell out of my office. When I explain someone\’s HO or Dwelling policy to them and advise that they can buy an additional rider to cover more than what the standard Contents provision will cover, they decline it because they want it for free and are not willing to pay for it. So if they have a loss that they feel should be covered to their expectations or liking, it\’s never their fault for being too cheap to buy the coverage – it\’s gotta be someone else\’s fault. Since their time is always more important than commission-only paid agent who offers them the policies, they can\’t be bothered to come in to the agent\’s office and go over their policy with the agent – you know, that legal document that they \”don\’t have time\” to read – that is somehow the agent\’s fault or the carrier\’s fault? Then there\’s the people who think that the contents coverage should entitle them to replace ALL their furniture at the most expensive furniture store in town because they think of insurance as \” The Principle of Enrichment\”, and NOT as \”The Principle of Indemnification\” and they do nothing but waste the agent\’s time – which the agent is NOT paid for – by b*tching at the agent that they pay premiums so that they can be made better or made new, not made whole, as if it\’s the agent\’s fault that the carriers offer their respective specified coverages which is not designed to enrich them. Then there\’s my favorite: the non-profits who pay for car insurance for the first six months for welfare mothers for whom welfare is buying their cars for them, going through job readiness training and job placement through PA\’s SPOC Program. These agencies will only provide this \”help\” with the car insurance that the welfare mothers can\’t afford on their own if their program participants get a written quote that is for Liability Only WITHOUT UM/UIM at the sate minimum liability limits of 15/30/5 with $5000 min for 1st party medical. When I questioned them on ther quote request requirements, I was told, \”Well as a non-profit, we have our guidelines. The quote we must have in writing must only be for what is mandatory to be legal and UM/UIM is not mandatory to be legal.\” Of course, these welfare mothers who are not paying for their cars OR the insurance do not want any coverage that is not totally paid for by these agencies. If the agent refuses to even quote such a ridiculous policy, then the agent is the heavy for \”looking down on welfare mothers and not serving them because they\’re too poor to pay for this additional $13-$17 worth of premium for UM/UIM \”. Of course, they\’re not too poor to buy their offspring expensive clothes and $180 sneakers or X-Boxes and Play Stations – something I couldn\’t afford myself as someone busting her *** to make a living as a self-employed independent P & C agent. I think that UM/UIM ought to be mandatory and I think that affluent homeowners who are too cheap and greedy to spend the extra $300-$1000 for adequate flood & earthquake insurance should be denied home equity loans, second mortgages or even the first mortgage to buy their homes to begin with. We may not be able to protect people from their own stupidity but we as agents should certainly should be able to protect ourselves from the stupidity of others by lobying lawmakers to make the purchase of flood and earthquake coverage madatory in addition to dwelling and Ho policies for homeowners and the same goes for UM/UIM, too! I am sick of seeing other hardworking agents get unjustly sued and blamed for the cheapness and stupiodity of others who refuse to take responsibility for their choices.
it will cost more than that tp pay Dickie
Jacqueline, boy are you in the wrong line of work. You need to reconsider your \’scratch\’ agency and do something else. You can\’t sell someone a policy that they need? Your technique must be pretty poor. You can\’t explain to the non-profits why they should purchase the coverage? You also sound like a racist to boot. Waa, Waa, Waa. If you can\’t cut the mustard as an agent why don\’t you try something else? There are plenty of good professional agents out there who can sell. Most really smart agents realize that everyone hates to spend their money on insurance and can get the clients past that and influence them to purchase what they need.
Normally I just read these comments (they amuse me) but today I had to jump in and say that the problem is NOT that insured\’s choose to purchase minimum coverage. This is THEIR (and ONLY THEIR) choice. I myself have no UM and no Med Pay because I have health insurance and no intention of pursuing a UM claim of any kind with my carrier ever under even the most catastrophic of circumstances (if the unthinkable happens, I will pick up and move on, as I have done in the past). The problem is that society indemnifies these insured\’s after they make their poor/uninformed choices. We indemnify them with low/no interest loans, free money for rental housing, relocation benefits, easy jobs, temporary shelters and entertaining their useless, worthless, pointless, endless lawsuits – anything to put the \”poor unfortunates\” back on their feet. I make a choice when I choose no UM/UIM (and if I had no loan on my car I wouldn\’t have comp/collision either) and no earthquake coverage (I live in CA) and I will bear the consequences of that choice – as would everyone have to if the government would stop stepping in with disaster aid at every turn.
Agents forcing insured\’s to go elsewhere for coverage only results in a loss of business for the agent and more governmental control in the form of forcing insured\’s to purchase ANYTHING is the VERY LAST THING ON EARTH that we need. The solution is in a simple cliche – you made your bed, now lie in it.
Jacqueline, I agree with you 100%. I have been working in the insurance agency for 20 years and ALL of insured do not purchase flood insurance unless mortgage require at the time of escrow. Also, by law, carriers in CA requires to offer earthquake coverage when purchasing any dwelling policy. Our agency write about 400 dwelling policies per year, but because of the extra premium, less than 2% of those insured purchase EQ coverage and we CAN NOT force them. Also, how about umbrella coverage? All those people who calls them self a victim, have to realize you may be able to get free ride, but there is no such free lunch.
But like most people who think they\’re hot ****, she\’s probably just cold diarreah.
Thank you, Jim. The other agents here in my area have had the same experiences that you have had, too.
So, unlike what Sassy claims in her insulting post, there are plenty of \”professional\” agents who obviously DO know how to sell policies but the bottom line is that people are just too damn cheap.
If the government wouldn\’t force their hand, they wouldn\’t buy auto insurance either. In the era of ridiculous lawsuits, people always look for a way to strike gold by finding a lawyer willing to take their case and sue for astronomical amounts of money. Just look at the McDonald\’s coffee incident. Ridiculous!
With the non-profits that I referenced who pay for the auto insurance of welfare mothers to help them as they transition from welfare to work:
If one of those women gets in an accident caused by an uninsured/under-insured motorist and they or their kids are in the car and get hurt and without the UM/UIM they end up stuck with exorbitant medical bills, guess who those welfare moms are going to go after once a lawyer gets a hold of them! And they will say in court (looking as pitiful as they possibly can), \”I didn\’t know….my agent didn\’t offer me that UM/UIM….\” even if that\’s a total lie because the lawyer will tell them it\’s their word against the agent\’s word, regardless of what forms were signed. The judge and jury will probably side with the poor welfare mom over you as the agent because as the \”licensed professional\”, they will say you should have known better than to allow the victim to be inadequately covered. You the insurance professional has the knowledge and expertise that the public customer does not. It will not matter that they chose NOT TO spend their own money for the appropriate coverage because that wasn\’t going to be paid for by the government (i.e. the working taxpayers). Like I said before, these are the same people who always find the money to buy their kids\’ expensive X-Boxes and Play Stations and $180 sneakers but can\’t find $2.83/mo for UM/UIM coverage.
If Sassy thinks I am being racist, too bad. I am not going to risk my license and livelihood and all I have worked to build thus far over inefficient welfare program guidelines and cheapskate customers who have several hundred dollars for satellite dish TV, X-Boxes and Play Stations but refuse to pay what amounts to less than $3/mo for UM/UIM at state minimum levels. Those welfare caseworkers will still receive their comfy salaries and bennies in their welfare department jobs whether that welfare mom with a bare-bones policy ends up devastated because of not having the appropriate coverage and whether or not the professional insurance agent working for an honest living gets the shaft for writing such a policy.
I myself am disabled. I am also a minority ( so much for the \”racist accusation). This is not a racist issue – it\’s a common sense issue and a defensive business practice issue. I KNOW the value of UM/UIM. I wasn\’t one of the lucky ones that had a good job when I was 24 where health insurance was offered. I couldn\’t afford it on my own back then when I was 24 and just starting out when an uninsured judgment-proof driver hit me and left me with permanent disabilities, taking me out of the workforce for over a decade. So UM/UIM was definitely worth every penny to me!
If a customer has health insurance that will cover them, fine. I request a copy of their health policy so I can make the appropriate documentation in addition to a plain language Rejection Of Coverage acknowledged and signed by the customer so that NO ONE can come back and sue me which would put me, a disabled middle-aged woman, out of business and unable to earn an honest living to support myself. I simply refuse to take that kind of foolish risk because I know I could never recoup after losing everything – and I am not counting on winning the Powerball Jackpot.
Can\’t we all just get along?
Hey Alaska,
I absolutely agree – it is DEFINITELY a risk not to carry UM/UIM. I choose to take it. I would not advise the same of others who do not have my resources. As far as a claim for someone in my car – that\’s what liability is for – I carry very high liability and since my family is all out of state there are no 1st party riders in my car, ever, only 3rd parties who can make a liability claim if I were to ever injure them.
My point is that it\’s not an agent\’s choice – it\’s mine. And we as insurance professionals can explain and can (and should) protect ourselves and our business by refusing, asking for waivers, etc but the bottom line is (as the last post states) until there are SERIOUS, FAR-REACHING financial repercussions to making poor choices, nothing will change. If we stop bailing them out, they\’ll stop doing stupid things (or they won\’t need homeowner\’s insurance anymore because they can\’t afford to rebuild). I feel sorry for people stuck in a bad situation but bailing them out only encourages them to do the same thing over and over again.
May I also say that I always enjoy reading your comments – well thought out, correct grammar and spelling, polite – very nice to see :-)
The sad part of all of this discussion is that most of the posters have been correct.
The true issue here is incredibly unsound development and socialistic solutions that just won\’t work. As insurance professionals we all know that the free market solution, while best, will never be allowed to happen. A free and competitive marketplace would solve this problem but how many of the homeowners in a coastal wind a flood zone will pay a $5 rate with a 20% wind deductible? At that rate structure there are carriers that would offer coverage and probably do OK over a spread of risk and period of time.
They don\’t offer coverage at a rate structure barely above what a carrier gets in a midwestern state without any of these broad cat risks.
The other issue here is that instead of the financial penalty that generally goes along with a poor economic decision we have consistently rewarded these clowns that choose to build in these unsound areas by giving them free government aid or by give them replacement cost coverage (whether intended by the underwriters / actuaries or not). Until the last couple of years most have upgraded every time a storm made landfall and they filed a claim. Many have much better property after a storm than they did before.
In a true capitalistic system these individuals would incur a severe financial penalty for the poor development or they would pay considerably more for insurance as a hedge to protect some of their investement. Right now they incur neither and complain that the insurance is cost prohibitive or not broad enough to eliminat all of the pain.
The obvious solution to every person that chooses to build in the ridiculous locations is to create a nation \”cat fund\” and have all of the rest of the US subsidize their poor decision.
As any poly sci 101 student will tell you… these type of programs that benefity a very small portion of the population at the expense of the majority can, and will cause govermental infrastructure issues. This is a nice way of saying if you want to push the silent majority into action this is a great way to do it.
See, this is the whole point. Although these past few years hurricane and tornado activity has been at record levels, it is no new phenomenon to anybody that coastal regions and areas along the rivers and creeks have had past floods and potential for future floods. It is not realistic to expect that you will never suffer any serious risk to your property or life (or both) due to an earthquake if you live near the San Andreas fault.
The problem is that everybody likes to think \”it can\’t happen to me\” when in fact, it can and often does. Then when it DOES happen, and those affected are under-insured or uninsured for such a calamity, everybody else is supposed to suffer higher insurance premiums as a consequence. Lawyers end up having a field day and the poor agent is always blamed for not offering the coverage when in fact, it is usually the case that the agent DOES offer but if the insured is not forced by law or lender to buy, they won\’t buy it and the agent cannot force them to buy it.
The old addage rings true: you can lead a horse to water but you can\’t make him drink.
If I seemed a tad angry, it is because I am angry and have every right to be because I am not only an agent, but I am also a homeowner, an autombile driver, and hence, I am an insured, too.
When my rates increase because of catastrophic claims plus lawsuits like the one referenced where the insureds were seeking $158,000 (which sounds like a case of someone seeking \”unjust enrichment\”)that affects the rates that I and every other insured must pay. Even when the carrier and the agent prevails, there are E & O deductibles and costly legal fees. All this is taken into account when carriers must examine their rates and taise them to compensate for these expensive legal defense fees, plus court awards.
As an agent, it affects affordable E & O coverage. Customers who suffer losses are not always willing to be honest when they are being told by an ambitious lawyer looking at the \”deep pocket\” point of view that they can get what they want, even if they are not legally or morally entitled to it, by suing their insurer and their agent claiming that the agent either failed to offer the policy or that the agent didn\’t educate them, I get an attitude because this is the kind of malady that adversely affects ALL agents and ALL insureds.
Lastly, I am a tad angry because it is downright stupid for anyone to buy or build McMansion homes near areas where there has been past incidents of catastrophic hurricane damage and decline flood insurance because they think \”Oh well, I have a homeowner\’s policy. Let the insurance company, the agent, FEMA, the public at large pay me for everything I lose.\” I feel bad for that poor agent who incurred steep legal costs by having to pay the high E & O deductible to defend himself in this case when he probably did offer the coverage or at least provide a referral to another agent who did, and the people probably did what most other insureds do, balk at paying the price and choose to forego the coverage.
Since the ruling by the Judge I wonder if the insurance companies will go back and readjust for the damage. They will probably just push it under the carpet. I also wonder how many of the insurance companies read any of this comments. It would sure be nice to hear from then.
ED
Of course we read this forum…I read the decision from Judge Senter the day it came out. I also made sure it was sent to every Claim Manager, Third-Party Administrator, and Litigation Manager in my company.
And just so you know, my company is not a defendant in any of these actions.
Since I am a relatively new start up independent agency, I am stuck going through MGA\’s for the types of products you mentioned and suggested offering, which has not worked out at all for us or for the potential insureds.
Although I have built an impressive personal lines book for being a scratch agency, the revenue we are generating is still not impressive enough for the competitively priced carriers who DO offer E & O, malpractice, and the other commercial products to even take a look at us for direct appointment.
In going through the MGA\’s, I have gotten nothing but excuses as to why they can\’t serve any given potential customer whose application and or quote request I sent in, and often had to hound them for weeks just to get a response only to be told, \”The premium doesn\’t mean the minimum guidelines, we don\’t offer a product for that type of customer, etc\” either that or if they DO actually have a program, the premiums are not competitve enough so I can\’t sell it. I have run into this whether trying to get a small BOP or for getting a small contractor\’s workers comp account.
So I have basically given up getting any commercial accounts or lucrative E&O/malpractice type of accounts until I am making enough money to get those carriers who are competitive and who will do direct appointment to accept our agency for appointment so we don\’t have to fool around with MGA\’s that talk the talk but don\’t walk the walk, if you know what I mean. The worst one has been that Appalachian Underwriters. They look good on the web and they tell you they can find a competitive program for your insured, then they turn around and say, \”sorry, we don\’t have a fit for so and so.\” Cluett for the workers comp seems pretty good, but unfortunately they do strictly workers comp, no other commercial insurance products, no malpractice and no E&O. Also, the lawyers who are not hurting and who have money (show me a poor lawyer and I\’ve got a bridge to sell you for a wooden nickel)are in a position to get their malpractice and E&O anywhere so a scratch agent like me can\’t possibly compete in getting their business because I have to go through MGA\’s which do not have the most competitive prices for those programs and products – even when they DO say they can find a fit……frustrating and maddening. It\’s like the same old catch-22 of you need experience to get the job/appointment/contract etc, but if nobody ever gives you a chance, how the hell are you supposed to get the experience? Same deal applies here. I needed to expand into the preferred/ultra-preferred but carriers like Travelers (which are very good in how they handle claims and are very competitive rate wise for the customer)won\’t look at small-time agents with less than 3 years into the independent agency business. I checked out the feasibility of going through one of those groups like Brooke and Iriquois Group, but there are commission pay issues plus high costs becuase they want you to basically finance an agency through them – WITHOUT an existing book, which is unrealistic and not do-able. So I just keep plugging away with the direct appointments I DO have for personal non-standard lines for auto, home etc until hopefully the bigger players will let me as a little person onto the playing field.
I doubt that any CEO\’s or execs are reading this and /or taking notes. It\’s not much different that the fact than the execs of oil companies probably aren\’t reading this. The fact is that the loudest and most irrational complainers tend to use forums like this.
The same Floridians that complain loudly about their insurance costs and want to figure out ways to have everone else in the country subsidize them so they pay less than the market are also the smae people that will not allow offshore drilling even though there are large reserves of the coastline.
Do you really believe that anyone would actually listen if someone were to get up and explain that the loss cost per hundred in valuation of insuring a home in coastal florida is much higher than insuring a a similar home in a non coastal state? Not likely as evidenced by the regulatory, legal and political enviroment of that state.
Jacqueline,
your points are well taken and largely correct.
However, theres an old saying…\’you can lead a horse to water but you can\’t make him drink\”.
The morons who build in unsound areas such as sandbars, faultlines and flood plains are going to continue to do so. These people possess that trait known as stupidity and they are also brash and shameless enough to ask others to pay for their arrogance. These are the same clowns looking for national cat funds, government subsidies and free loans. They also sue alot and assume that they are smarter than everyone else.
I might suggest that rather than fighting city hall on this you might focus on selling products that will be needed as a result of this mindset. There will always be a brisk contracting business due to the constant reconstruction. Contractors need insurance. You could also target writing professtional cover on the legions of professionals that exist off this system. Lawyers, Artchitects, Surveyors. Since most of these shameless people have money they will also need extensvie medical treatment and financial institutions. Target some of these and you could do well.
Jaqueline,
Your comments should be mandatory reading for all applicants for insurance. I work for a PA company and I get to read claim denials where coverage was declined and they want to sue agents and the company! it is always the folks who have the assets that need protection, who have the ability to afford coverage who are the first to hire an attorney to cover their stupid mistakes; they have money for that but not the prudent purchase of protection. they always think someone else OWES them something, someone other than themselves. A recent PA court ruling basically supported agents/brokers; the ruling indicated that it is the insured who has the burden, not the agent/broker, to decide what needs to be covered and what coverage to select.
Please don\’t blame MGAs for ignoring apps for small bops and w/c\’s. 90% of these policies cancel for non-pay in less than a year. Both agent and MGA lose money on these deals. Submit a few large account apps; you will see faster response soon.