Recognizing Methods Of Insurance Agent Malpractice
When any professional behaves in a way that is in-congruent with what is socially accepted, then damages ensue. When damages ensue, people begin to sue, and the whole thing gets ugly. With enough people impacted, class action suits can be filed in everything from medical to insurance agent malpractice.
There are a number of ways that agents might act contrary to ethical practices, and most of the time it is the ignorance of the insureds that they are counting on. The general public rarely understand the wording in policies and other contracts to which they are a part. This lack of understanding leaves the door wide open for individuals to act out of greed and self interest.
When the ignorance of the insureds has been artfully exploited, the cases can be nearly impossible to prosecute or file suit. There is always a question of what the agents intended to communicate versus what their customer actually understood, and this grey area is easily exploited. The name of the game for many agents is to increase their profit margin, or keep their claim payout amounts at a minimum in order to obtain other perks from the companies they represent.
Overcharging is one of the more common forms such fraud can take. These cases generally only come to light when the insureds follow up with their insurer directly. There have been cases where young people have been charged in excess of $200 a month for minimum coverage that should have only cost $50.
More often, agents simply misrepresent the policy being provided. For example, they might undergo an ad campaign that targets flood victims, yet sell their customers a policy that does not cover water damage. The only way the customer is likely to expose this is if they have them recorded, or they get something in writing that reveals their sketchy sales pitch.
Many residents in hurricane-torn regions discovered this form of fraud when they thought they had bought coverage for the risk of hurricane damage. Many named peril policies were sold wherein wind damage was a named peril, but water damage was not. In such contracts, if the peril is not specifically named as being covered, then it is not.
Another method unscrupulous agents might use to get around paying out on their most common losses is to send a policy amendment weeks or months after selling the policy. This amendment might name a new coverage exclusion. If the insured fails to give this random piece of plain mail the right attention, they may find their policy was updated to not include the very coverage they most need.
While inconsistencies are supposed to benefit the insureds, it can take a great deal of time to even establish that an inconsistency exists. Few homeowners or small business entrepreneurs are able to get back on their own feet in a total loss scenario. Simply getting through the legal process can leave them in financial ruin until their lawsuit is a success.
There are a number of ways that agents might act contrary to ethical practices, and most of the time it is the ignorance of the insureds that they are counting on. The general public rarely understand the wording in policies and other contracts to which they are a part. This lack of understanding leaves the door wide open for individuals to act out of greed and self interest.
When the ignorance of the insureds has been artfully exploited, the cases can be nearly impossible to prosecute or file suit. There is always a question of what the agents intended to communicate versus what their customer actually understood, and this grey area is easily exploited. The name of the game for many agents is to increase their profit margin, or keep their claim payout amounts at a minimum in order to obtain other perks from the companies they represent.
Overcharging is one of the more common forms such fraud can take. These cases generally only come to light when the insureds follow up with their insurer directly. There have been cases where young people have been charged in excess of $200 a month for minimum coverage that should have only cost $50.
More often, agents simply misrepresent the policy being provided. For example, they might undergo an ad campaign that targets flood victims, yet sell their customers a policy that does not cover water damage. The only way the customer is likely to expose this is if they have them recorded, or they get something in writing that reveals their sketchy sales pitch.
Many residents in hurricane-torn regions discovered this form of fraud when they thought they had bought coverage for the risk of hurricane damage. Many named peril policies were sold wherein wind damage was a named peril, but water damage was not. In such contracts, if the peril is not specifically named as being covered, then it is not.
Another method unscrupulous agents might use to get around paying out on their most common losses is to send a policy amendment weeks or months after selling the policy. This amendment might name a new coverage exclusion. If the insured fails to give this random piece of plain mail the right attention, they may find their policy was updated to not include the very coverage they most need.
While inconsistencies are supposed to benefit the insureds, it can take a great deal of time to even establish that an inconsistency exists. Few homeowners or small business entrepreneurs are able to get back on their own feet in a total loss scenario. Simply getting through the legal process can leave them in financial ruin until their lawsuit is a success.
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posted by Vittoria @ July 09, 2017
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