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H. Dennis Beaver: Only pay for what you need
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You and the Law

H. Dennis Beaver: Only pay for what you need

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Dennis Beaver

Dennis Beaver

Thomas, a reader in Chicago, wrote:

“Liberty Mutual Insurance television commercials which state, ‘Only Pay for What You Need’ appear to suggest that other insurance companies will sell you coverages you don’t need. I’ll bet a lot of people wonder what they mean.”

This column has received similar comments and to find out what ‘Only pay for what you need” means, I contacted Media Relations at Boston-Based Liberty Mutual, asking them that very question.

That was weeks ago and I am still waiting for a response.

Perhaps LM’s board of directors should look at their shocking one star Better Business Bureau reviews, and close to 1,000 complaints alleging some pretty shady business practices.

For some reason I can’t fathom, the Better Business Bureau gives them – and almost of all huge insurance companies who advertise like mad - an A+ despite thousands of complaints from customers.

The BBB website tells us, “Customer reviews are not used in the calculation of BBB ratings.” Are you kidding? Not used?

BBB Chief Communications Officer Katherine R. Hutt confirmed that statement in a 30 minute phone call, explaining, “Many factors go into the letter grade assigned, but not customer reviews.”

This left me completely dumbfounded! Customer reviews matter everywhere else today, but apparently not to the Better Business Bureau.

Instead of paying claims properly

The millions of dollars Liberty Mutual spends yearly on advertising, just like other huge insurance companies, “Is money they are not paying to deserving accident victims,” strongly maintains Los Angeles-based trial attorney Shant Karnikian, whose law practice concentrates on insurance company bad faith.

“When they say you will only pay for what you need, they are implying that other insurance companies will automatically sell you coverages that you do not need, which is complete nonsense.”

He’s right. I asked several Liberty Mutual agents what that advertising phrase meant and was told, “We allow you to customize your coverage. Most other companies just say, ‘Here is our policy, take it or leave it as is.’

The truth is that all insurance companies allow the customer to customize their policy.

Insurance agents not required to advise what coverages you need

Karnikian is also quick to point out, “Auto and property insurance companies let you accept or decline various types of coverage, and today especially, the public needs to be aware that, with some very limited exceptions, insurance agents are not required to counsel their customers as to what they should be purchasing.”

That’s right. Insurance agents are typically not required to tell you what coverages are available or what you need. “In most instances, insurance agents are mere order takers, and unless you tell them what you want, they are generally under no obligation of advising you to obtain certain types of coverage,” he observes.

Customer must insist on more than minimums

“The insurance industry wants to minimize exposure to future customer losses, and plaintiff lawyers are already seeing this reflected in their marketing practices where they only want to sell minimum limits of auto or homeowners insurance, reducing pay outs in the event of a claim. If you buy more coverage, they are exposed to paying more for the loss.

“Even if you need it, they don’t want to sell it! But if you ask for more coverage they are obligated to sell it to you. This means consumers must become educated and learn the coverages they absolutely must have.”

He gives these recommendations:

(1) Auto Insurance: Never buy just the minimum amounts that are required by your state. Buy 50/100,000 liability limits or more, and always purchase medical payments coverage and uninsured/under-insured coverage in limits no less than $100,000.

(2) Homeowners/Commercial Property Insurance: Overestimate the cost of rebuilding your home or office and include coverage to bring the property current with building codes. In a major loss – such as a wildfire – material and labor costs will be far greater than at normal times. Inadequate coverage means you will have to pay out of pocket the difference in price.

(3) Ask In Writing: “What is the most coverage that I can possibly get for my home, car, liability and business?” The difference between the basic policy and a much larger one will not shock the conscience. It is definitely worth it.

(4) Consider a Broker instead of an Agent: A broker is not limited to selling policies from just one company and works for you. Agents are limited to selling only the policies of the company they work for which may not have the best policy for your needs.

Karnikian concluded our discussion with this advice:

“Imagine the cost of your worst case scenario and buy insurance in limits high enough to cover it.”

Dennis Beaver Practices law in Bakersfield and welcomes comments and questions from readers, which may be faxed to (661) 323-7993, or e-mailed to Lagombeaver1@gmail.com. And be sure to visit dennisbeaver.com.

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