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FIVE, SIX, SEVEN, EIGHT
Between a Rock and a Hard Place
Want to try living without insurance? Good luck!

by Rita Ayers
February 7, 2007

We got another of those notices in the mail last week. You know, the ones that say your insurance is being "non-renewed." Just once, I wish the company had the guts to tell it like it is and say, "We're canceling you because we've gotten a lot of money out of you so far and if we keep pressing our luck, we just may have to pay a claim."
 
I guess we should count ourselves fortunate this time – the company actually provided a reason: "The reason for nonrenewal is risk no longer fits underwriting guidelines." That's a fancy way of saying exactly what I just said. We've paid them $12,000, they've paid us nothing, so it's time for them to move on to a new venture which will also be afraid to make a claim for fear of cancellation.
 
It isn't always the case that the good folks at the insurance company even see fit to tell you why you're being cancelled. Our homeowners insurance was canceled last year for no given reason, although we know it was because of the ordeal we went through after Hurricane Katrina. You see, the first adjuster saw no damage worthy of filing a claim over. The FEMA agent who came next saw plenty of damage – nearly $20,000 worth – but said that FEMA could not help us because we carried homeowners insurance. Three adjusters later, each with a different opinion, and after months of fighting for the company to do the right thing, we finally were forced to settle for substantially less than our damages were worth because the agent had failed to check the proper box covering our exterior structures.  He managed to find this other little checkbox, though, that said our deductible was raised from 1% to 3% if the damages were hurricane related.  This was done during a renewal contract issued nine days before the storm and which we had yet to receive.  We were not surprised to learn they no longer wanted to do business with us; the feeling was mutual.  Apparently, our failing was that we actually expected the insurance policy to safeguard our belongings.
 
We were able to find another company to insure our home, but only if we agreed to let them also insure our vehicles. I did not want to do this because I was happy with the auto insurance company I had, but we had no alternative. You are not allowed to just take your chances and say "I just don't want insurance at all" – unless, of course, you are one of those few fortunate souls who has no mortgage.
 
And so it goes. Somehow, the insurance industry has worked itself into the very fabric of our lives to the point that the average American carries policies on everything they own. The rates continue to go up and up, with the insurance companies blaming lawyers for the huge civil awards in recent years depleting their reserves. My husband is fond of saying that the insurance companies are the only ones that can count on getting their money one way or the other. You may have insurance for thirty years with no claims whatsoever, but your rates will still increase to pay for all of those claims that went to other people. In a bad year, like 1992 when Hurricane Andrew wiped out the Miami area, the insurance companies may be able to say, "Oh, woe is me… we had to pay so much." But their losses are recouped quickly by distributing those payments out among the masses of their other insureds.
 
I absolutely hate to over-legislate anything, but in this case, I believe an overhaul in the whole system is necessary. My next door neighbor, Florida, has recently imposed a moratorium on cancellations and rate increases. That's a step in the right direction, one that Alabama, Mississippi, and Louisiana needs to take as well. There are huge numbers of Mississippi Gulf Coast residents battling their insurance companies still today. The insurance company's viewpoint is that the house was lost to a flood and the homeowner had no flood insurance. The homeowner says that it was not a flood but a tidal surge brought on by high winds, which the policy does cover. I say that insurance should be insurance, and there should be no checkboxes for omitting damage caused by any natural act. My poor grandmother paid premiums on her home for 45 years with no claims; a spate of lightning one summer caused her to lose two televisions in a row. They cancelled her policy over two televisions; I can't even calculate the net profit the insurance company made from her over nearly half a century.
 
Life insurance policies should not be allowed to be written in larger sums than the insured would be able to earn in their normal expected life span. Maybe I watch too much Court TV, but in my opinion, that's just a murder waiting for a place to happen on many, many occasions. One of the clever things the insurance companies created years ago, realizing that they would eventually have to pay on all life insurance claims (after all, death is one of those two certain things, along with taxes – ah, but that's for another day and another column), was term life insurance. In this way, a young person can outlive the term of their life insurance policy and the company never has to pay a dime – after the insured has paid thousands of dollars in premiums for fifteen years or more. They then find themselves having to pay higher premiums for whole life policies with lower dollar values, which don't expire, because they are now older and have less time to live to pay premiums before they die. Why would young adults fall for this? Because, typically, the payouts for term life insurance seem astronomical in comparison to the values for the whole life policy.
 
I have been most fortunate to not have a great need for my auto insurance. If I chose to just take my chances and drop this coverage as a cost-saving measure, I risk an expensive fine if I were to be stopped for a traffic violation and found to not have proof of insurance in the vehicle. That's because my state is on the honor system, assuming that I have liability insurance until I am caught red-handed without it. Other states require this insurance before the vehicle can even be registered.  Indeed, 45 states require automobile insurance. The remaining five have approached the issue in three different ways. South Carolina and Virginia require drivers to register as uninsured motorists while Tennessee requires proof of financial responsibility. Only New Hampshire and Wisconsin have steered clear of forcing their citizens to carry auto insurance.
 
Those who have read my column for any length of time know that I am more a slice-of-life kind of gal, one who rarely delves into the political arena if it is at all possible to avoid. But the older I get, the more I see that the land of the free is legislating away my dollars without any input from me. If I were able to recover all the premiums I've paid in for health, life, auto, home, liability and boat insurance over these last thirty years, I would be quite comfortable and could be considered self-insured. The problem is, there are too many citizens who cannot be trusted to do that and thus, our government feels the need to force us to protect ourselves. Is there some kind of test I can take to prove I'm worthy? Let me at it…


About the Author:
Rita Ayers is considering a move to New Hampshire or Wisconsin, but the amount of warm clothing she would have to purchase may offset the cost of required auto insurance. She is still looking for other ways of beating the system and eagerly accepts all suggestions.


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