The State Insurance Department is not your enemy, they are your friend

When you have an insurance problem that your insurance agent or company can’t solve, call your State Insurance Department. They are knowledgeable and cheaper than hiring a lawyer. For some reason, consumers don’t believe that the State Insurance Department can help them. This is a big misconception. Agents occasionally refer clients to the State Insurance Department to settle disputes between customers and companies. The following are some examples of how the State Insurance Department assisted some consumers.

Scenario A

Ms. Martin was a client that had an increase in her auto insurance rates. At the time, the agency did not have a company to meet her budget. So, he is referred to Direct insurance company that might have cheaper rates.

It’s not important referring her to another company; she and her husband had been good clients for many years. Ms. Martin went to the company that she was suggested. Later, she called to thank Loyal insurance company for the referral.

The new company had saved her over $1,000 a year on her annual premium. She was asked about the initial application and what questions the agent had asked. She informed Loyola Insurance that she told the agent that Mr. Martin’s license was suspended because of health reasons. The agent said that was fine and binds her coverage. A month later, Ms. Martin received a notice that the policy had been canceled. Ms. Martin asked the new agent for an Exclusion Form; Loyola insurance informed Ms. Martin that they didn’t use them, and since Ms. Martin did not have coverage with them for at least one year, they could not cover her. Well, Ms. Martin called Loya Insurance company back and told them about the conversation. Loyola insurance informed Ms. Martin that the company could not deny her the Exclusion Form because she had informed the agent of her husband’s suspension at the time of application; therefore, they had to exclude him. Loyola Insurance asked Ms. Martin if she had a copy of her original application.

The reason Loyola insurance company asked about the application was in reference to a question about listing all licensed drivers. Ms. Martin gave the licensed drivers information to the agent, including her husband’s license suspension information. The copy of the application signed and dated would have been proof of Ms. Martin’s disclosure of the suspension.

One should always request a copy of your original auto insurance application for your records. Few consumers can remember every question on the application. Even though Ms. Martin did not have a copy of the application, Loya insurance encouraged her to file a complaint with the State Insurance Department. Ms. Martin laughed at the idea. She did not believe they could help.

She did not believe that the State Insurance Department had the “juice” to make a large insurance company lift the cancellation. About two weeks later, Ms. Martin called back and informed me that she had filed a complaint after all.

The State Insurance Department made the company reinstate her policy and give her an Exclusion Form. Ms. Martin thanked me for the advice and said she would tell her friends about the experience.

Scenario B

A few years ago, there was a Loyola insurance client that come into the office to make a payment on her insurance policy. The payment was made after the due date but before the cancellation date. The receptionist gave her a receipt and logged in the payment. About a month later, the client came back to the office worried because she received a letter stating her coverage had been canceled. A phone called was made to the company for an explanation of the Cancellation.

Notice.

The company representative said that the payment was received in their office two days after the cancellation date. The Loyola insurance’s representative was informed that the client had come into the office before the cancellation date and made the payment. The company representative said that did not matter and would not reinstate the policy. 

The client was instructed to go across the street (at that time the office was across the street from the PA. State Insurance Department) and file a complaint. A few days later, the client came back and informed that the company had reinstated her policy.

The State Insurance Department was called immediately to find out how they made the company reinstate the policy. The State Insurance Department representative said of a Pennsylvania insurance statute that states “making a payment to a company agent is like making a payment directly to the company”. Therefore, her payment date was the day she came into the Direct insurance office.

These two examples demonstrate the many functions of the State Insurance Department

Most State Insurance Departments have a division that specifically deals with consumer complaints. If the consumer division cannot solve the problem, it would be referred to the insurance enforcement division.  If you have an insurance problem that has not been satisfied by your agent or company, please contact your State Insurance Department. You can find them online at www.naic.org.