Click to e-mail any question

WHAT YOU SHOULD KNOW ABOUT INSURANCE AGENTS, INSURANCE PREMIUMS, RATES AND CLAIMS, AND INSURANCE ADJUSTERS.

A Special Report

In addition to knowing about the three common mistakes that you are most likely to make, I would be short-changing you if I did not cover other issues that you must know about.

INSURANCE AGENTS

Insurance agents are the nicest people in the world.

They make their living by selling insurance coverages to people just like you; life insurance, homeowner's insurance, car insurance and hundreds of other kinds of insurance coverages that most people have never heard about.

Your insurance agent is paid on a commission basis. Simply, that means that he or she receives a percentage of the monies--which are called premiums--that you pay to the insurance company. So, it pays for insurance agents to be nice so they can sell you as much insurance coverage as possible and collect as much commissions as possible. The insurance agent is the nice side of the insurance business.

The insurance agent not only gets paid a commission, but he or she also gets paid an extra amount based on what is known as their loss ratio each year. Their loss ratio is determined by comparing the money that comes in to the insurance company as premiums and the money that goes out of the insurance company for various kinds of claims.

A claim is money that the insurance company has to pay out for an injury or a loss. An example would be a fire loss of your home. If your home burns down because of a short in your wiring, your own insurance company would pay a claim to you which would be for the loss of your home.

In a perfect world for an insurance agent, his or her insurance company or companies would collect all of the premiums that you, the customer, agreed to pay and you, the insured, would never do anything or have anything happen which would cause a claim to be made against your insurance company; no fires, no hail storms, no wrecks, no illness, etc.

The reason that your insurance agent wants this to be a perfect world with no claims is because, if there are no claims, your insurance agent is going to get extra compensation in the form of a bonus.

The more claims that are filed and/or paid on an insurance policy, then the less bonus there is for the agent.

What this means is that, when you have a claim which is covered by your paid-up insurance policy, your agent, depending on his or her character, may or may not tell you about the benefits that are available to you which you have paid for.

Let me give you an example:

A young, married, working woman, with a husband and children, was injured in a car wreck. They came to see me because of her injuries but primarily because they were having such a difficult time paying their every day living expenses, since she was out of work, and her medical bills from the wreck were piling up dramatically.

They brought with them a document which showed the different insurance coverages that they had on their own vehicle. That insurance paper showed that they themselves had paid their own insurance company a separate amount to pay her medical bills from the wreck and to pay her wages lost while she was unable to work after the wreck.

Their dismayed comment to me was: "My insurance agent never said anything about that." Their agent did not want them to collect the medical payment benefits and the lost income benefits because it would affect, or could affect, his or her loss ratio bonus at the end of the year.

You see, your insurance agent--if you have these additional coverages that you paid for by separate premiums--will always have a choice to make. And this choice may have bad financial consequences for him or her.

If he or she tells you about your different insurance benefits, then you will benefit by collecting them because you paid for those coverages. That may aversely affect his or her loss ratio bonus. If he or she does not tell you about the benefits that you are entitled to, then you do not know to obtain those benefits, and his loss ratio bonus is improved.

Your agent may not have enough character to tell you what your insurance benefits, under your own insurance policy, are.

In addition, the insurance company that he works for, or sells for, may have specific rules which prohibit him from giving you the information that you need so that you can claim these benefits that you paid for as part of your premium.

The point is that you may not get accurate and complete information from your insurance agent about your insurance benefits.

INSURANCE PREMIUMS, RATES AND CLAIMS

You should have a document from your car insurance company that lists your "declarations." That is, "declarations of coverages," "coverage," etc. This document should break down into the different kinds of coverages that you have on your vehicle or vehicles. The first item listed is liability for personal injury and for property damage. Liability is a coverage, which every vehicle is required to carry, which provides compensation if your vehicle causes personal injury to some other person, or damage to their vehicle or property. Newer cars' policies generally then list comprehensive or collision coverage with or without a deductible. Then the declarations page will list other coverages such as medical pay coverage, income disability coverage, wrongful death benefit, uninsured motorist, underinsured motorist, rental, emergency road service, towing, etc. The important point about these different coverages is that your insurance company charges for them, and you pay a separate amount for each one of these separate coverages. Let's suppose that your vehicle breaks down on the interstate and you have to have emergency road service and a towing bill. You have paid your own insurance company a premium to cover those charges. Obviously, you should have your insurance company pay them. You paid them the premium and they agreed to pay the charges if you break down on the highway and you have to be towed. In other words, you paid for the coverage and your insurance company should pay what the towing company charges you. In Arkansas an insurance company cannot raise your rates because of a wreck that was not your fault. You should receive the financial benefit of the insurance coverages that you have paid for.

INSURANCE ADJUSTERS

Just above I discussed insurance agents. They are the nice people who sell insurance and they make their living based on their success in persuading you to buy insurance from their company or through them from another company. Now, let's discuss insurance adjusters. Theyıre very different from agents. In fact, they are not so nice because their job is to close a file as cheaply and as quickly as possible. Insurance companies are very simple to understand. They take money in as premiums and they pay money out for salaries, buildings, advertising, utilities, etc. and for CLAIMS. Money in, money out. Insurance companies spend billions of dollars every year to tell you how nice their agents are. And they are. What they do not tell you is that on the claims end they have adjusters who are not so nice. An insurance adjuster is usually bright, articulate, well educated, well trained, personable and capable. They work as an employee of the insurance company or as a middleman for an insurance company to close your claim as cheaply and quickly as possible. They are not your friend. They are not my friends either. They know that my responsibility is to get you every dollar of compensation that I can that you are legally entitled to receive.

Why You Shouldnıt Talk To An Adjuster Yourself:

You should never attempt to resolve or settle a claim with an insurance adjuster by yourself for many reasons. The primary reason is that he or she knows exactly what they are doing and you don't have a clue.

Remember, his or her job is to get you to settle your claim as cheaply as possible. He or she is not interested in what is fair. His or her loyalty is to the company. The second reason is that the insurance adjuster settles claims based on values which are not compatible with your values. An adjustor is looking for weaknesses not virtues. If you are less educated, unemployed, elderly, a minority member, housed in a manufactured home (trailer), then your claim is worth less to him or her than if you are well educated, employed, middle aged, white or living in a brick home in suburbia. When you communicate with an adjuster by yourself you are making a potentially serious mistake. Because your tone, grammar, accent, choice of words, volume, etc., may provide him or her with information. The more information they have, the less valuable is your claim. Even if you are well educated, rich, self assured and live in a mansion, you still should not communicate with an adjuster. You may have a trace of arrogance, suspiciousness, impatience or other slight flaw which can be exploited by an insurance defense attorney and which, thus, reduces the value of your claim. The third reason that you should never talk to an insurance adjuster is because it is extremely difficult, both psychologically and emotionally, to insist on being compensated for injuries. It is similar to asking for help. The real difficulty to asking for help is within each one of us. Nearly all of us have family, friends, co-workers, members in our church, etc. who would be glad to help if they were only asked. The asking is the primary roadblock to help Speaking with an insurance adjuster about one's injuries or a family member's injuries is very similar to asking for help for oneself. There is no solid moral and/or psychological ground to stand on to ask for help. And, one should always be nice when asking for help or for compensation for injuries. There is something that is very powerful about having someone speak for you and for your benefit. Having an attorney to represent you regarding any kind of problem is powerful. There are two words in the English language that describe this power: synergistic and synergism. What they mean, essentially, is that something has greater power or impact than one would expect from simply looking at the relationship. The attorney / client relationship empowers the client to ask for help, which is compensation, and it empowers the attorney, who probably could not request help or compensation on his or her own behalf, to demand and obtain help, i.e. compensation, for the client. This entire attorney / client process empowers the client to be compensated and it empowers the attorney to obtain the compensation.