As you can see if you read the post directly under this one I’ve said my piece on speaking in absolutes or making statements about insurance products (or any products for that matter) sold using words such as “always” or “never” or “total” or “absolute…” but don’t just take my word for it, take a look at what Florida Statutes say about it.
Florida Statute 817.4(5) states:
The phrase “misleading advertising” includes any statements made, or disseminated, in oral, written, or printed form or otherwise, to or before the public, or any portion thereof, which are known, or through the exercise of reasonable care or investigation could or might have been ascertained, to be untrue or misleading, and which are or were so made or disseminated with the intent or purpose, either directly or indirectly, of selling or disposing of real or personal property, services of any nature whatever, professional or otherwise, or to induce the public to enter into any obligation relating to such property or services.
626.9541 Unfair methods of competition and unfair or deceptive acts or practices defined.—
(1) UNFAIR METHODS OF COMPETITION AND UNFAIR OR DECEPTIVE ACTS.—The following are defined as unfair methods of competition and unfair or deceptive acts or practices:
(a) Misrepresentations and false advertising of insurance policies.—Knowingly making, issuing, circulating, or causing to be made, issued, or circulated, any estimate, illustration, circular, statement, sales presentation, omission, comparison, or property and casualty certificate of insurance altered after being issued, which:
4. In any other way, an advertisement, announcement, or statement containing any assertion, representation, or statement with respect to the business of insurance, which is untrue, deceptive, or misleading.
(e) False statements and entries.—
1. Knowingly:
a. Filing with any supervisory or other public official,
b. Making, publishing, disseminating, circulating,
c. Delivering to any person,
d. Placing before the public,
e. Causing, directly or indirectly, to be made, published, disseminated, circulated, delivered to any person, or placed before the public… any false material statement.
Again, I am not making a specific legal determination here but I am suggesting that using certain words in advertising could lead to a reasonable person expecting something that a product cannot deliver. And in insurance, saying a policy will “always” pay is not "always" true – and saying as much could be misleading, at best.
Monday, February 24, 2014
Sunday, February 16, 2014
Insurance Is A Conditional Promise, Not An Absolute Obligation
I have received two emails from an insurance broker advertising boat insurance with the following claim:
“If your insured’s boat burns or sinks is it always covered by insurance? With our boater’s assistance program YES.”
Now, as an amateur wordsmith and a moderately informed insurance agent with fully paid-up E&O coverage, I can say – with a reasonable amount of certainty – there is no policy in existence that will guarantee it will “always” cover a loss. Upon further examination of this agent’s claim I found the fine print which included the following:
Boater's Assistance is available for pleasure boats only; boats used for charter, commercial, rental or other use do not have consequential loss. Personal watercraft (jet skis) do not have consequential loss.Consequential Loss does not apply to boats that are unseaworthy. Unseaworthy includes boats left unattended (abandoned), neglected, not reasonably fit for intended use, lack of reasonable state of repair to maintain the boat against loss or damage from ordinary weather conditions. The loss must be a direct and sudden event.
This particular agent/broker was trying to explain a fairly technical insurance concept (consequential loss) in as few words as possible then he/she was trying to use that concept to attract clients by making a promise that no policy can keep – using a literary “absolute” to convince them that their insurance company would “always” pay a loss.
The theory of consequential loss is tedious at best. It is considered an indirect loss or a loss that comes about as a result of direct damage to property. Having consequential loss coverage can be handy if a direct loss results in an event that causes a more severe loss or a total loss or causes you to continue to experience a loss after the direct loss. See? It’s a bit tricky and can’t be explained in an advert – or even my blog.
This advert is making a fairly significant claim about "always" paying claims which makes me think, "if it sounds too good to be true it probably is." As an example: in this instant consequential loss would not “always” pay if you: chartered your boat, rented your boat, commercially registered your boat, set fire to your own boat, sank your own boat, paid someone to destroy your boat, hired someone to steal your boat, sold your boat for cash or parts then reported it lost/stolen/missing, etc…
Nor would it “always” pay in the event of gross negligence, fraud, or in the event that the actions of the owners constituted a breach of contract between owner and insurer or obligated the insurance company outside the scope and terms of the insurance contract.
Point being, insinuating that consequential loss coverage (or any insurance coverage) will “always” cover a loss is misleading at best, and while this particular advert tried to "fine print" its way out of the corner it was painted into, in using the word "ALWAYS" it walks a fine line between what is right under the law and what is allowed under the law. I will defer official determinations to our esteemed legal professionals and the various state insurance regulatory authorities.
Over all, as an insurance professional I understand what this advert was trying to do but as a responsible insurance professional I understand that in this industry making guarantees is dangerous and speaking in absolutes is just plain foolish.
Folks, don’t buy insurance based upon the promises of an advert, and be sure you ask questions any time you think something seems even the slightest bit out of the ordinary. And if you don't understand something, call a professional and buy insurance from someone who takes the time to explain to you not only the benefits of the policy terms but the most important concept you need to know about your policy: when it WON’T pay.
And always remember: never speak in absolutes.
“If your insured’s boat burns or sinks is it always covered by insurance? With our boater’s assistance program YES.”
Now, as an amateur wordsmith and a moderately informed insurance agent with fully paid-up E&O coverage, I can say – with a reasonable amount of certainty – there is no policy in existence that will guarantee it will “always” cover a loss. Upon further examination of this agent’s claim I found the fine print which included the following:
Boater's Assistance is available for pleasure boats only; boats used for charter, commercial, rental or other use do not have consequential loss. Personal watercraft (jet skis) do not have consequential loss.Consequential Loss does not apply to boats that are unseaworthy. Unseaworthy includes boats left unattended (abandoned), neglected, not reasonably fit for intended use, lack of reasonable state of repair to maintain the boat against loss or damage from ordinary weather conditions. The loss must be a direct and sudden event.
This particular agent/broker was trying to explain a fairly technical insurance concept (consequential loss) in as few words as possible then he/she was trying to use that concept to attract clients by making a promise that no policy can keep – using a literary “absolute” to convince them that their insurance company would “always” pay a loss.
The theory of consequential loss is tedious at best. It is considered an indirect loss or a loss that comes about as a result of direct damage to property. Having consequential loss coverage can be handy if a direct loss results in an event that causes a more severe loss or a total loss or causes you to continue to experience a loss after the direct loss. See? It’s a bit tricky and can’t be explained in an advert – or even my blog.
This advert is making a fairly significant claim about "always" paying claims which makes me think, "if it sounds too good to be true it probably is." As an example: in this instant consequential loss would not “always” pay if you: chartered your boat, rented your boat, commercially registered your boat, set fire to your own boat, sank your own boat, paid someone to destroy your boat, hired someone to steal your boat, sold your boat for cash or parts then reported it lost/stolen/missing, etc…
Nor would it “always” pay in the event of gross negligence, fraud, or in the event that the actions of the owners constituted a breach of contract between owner and insurer or obligated the insurance company outside the scope and terms of the insurance contract.
Point being, insinuating that consequential loss coverage (or any insurance coverage) will “always” cover a loss is misleading at best, and while this particular advert tried to "fine print" its way out of the corner it was painted into, in using the word "ALWAYS" it walks a fine line between what is right under the law and what is allowed under the law. I will defer official determinations to our esteemed legal professionals and the various state insurance regulatory authorities.
Over all, as an insurance professional I understand what this advert was trying to do but as a responsible insurance professional I understand that in this industry making guarantees is dangerous and speaking in absolutes is just plain foolish.
Folks, don’t buy insurance based upon the promises of an advert, and be sure you ask questions any time you think something seems even the slightest bit out of the ordinary. And if you don't understand something, call a professional and buy insurance from someone who takes the time to explain to you not only the benefits of the policy terms but the most important concept you need to know about your policy: when it WON’T pay.
And always remember: never speak in absolutes.
Saturday, February 8, 2014
If I Paid You $250,000 Would You Read Your Insurance Policy?
In an article published in Bloomberg Business Week, Congressman Mike Quigley (D-Ill) is backing a bill that would eliminate tax breaks for mortgage interest on what he calls “luxury yachts” used as second homes, saying the interests of owners of second homes are of no concern to him.
Over the next ten years this cutting edge piece of sh… legislation could radically slash the $8 billion second-home mortgage deductions taken in the US each year by – hold on to your hats - $150million… a staggering number for anyone who doesn't know how to divide 150,000,000 by 8,000,000,000.
So, with more than $100,000,000,000 in insurance fraud taking place each year, Quigley is more bent on going after people who put money into the economy as opposed to going after those who steal money from it. Hey Mike - don't forget to renew your MENSA membership.
With more than 12 million boats registered in the US (and the average mortgage running right at $50,000) this deduction is available to roughly 600,000 boat owners. This deduction is also available for owners of second homes, cabins, condos, townhomes, recreational vehicles, etc… so long as it has a place to eat, sleep, and go potty and the person spends 14 nights there per year. Quigley and the dems want the deduction gone for any piece of property that could be classified as a second home. This is yet another attempt at economic parity by his party that will have little effect on the wealthy and will end up penalizing the "average Joe" boat owner.
Sticking with his party's “since the majority of the people can’t use this loophole we’re going to close it” mentality, Quigley said, “There is no reason taxpayers should subsidize luxury yachts.” Obviously Quigley doesn’t understand the difference between a tax deduction and a subsidy - and he certainly doesn't understand what a "luxury yacht" is. That's okay - I'm here to help.
I’ll go slowly so Mike and his colleagues can understand… A subsidy is when the government gives you other people’s money to spend and a tax deduction is when they don’t take as much of your money from you after a year of spending it... but for people like Quigley who don’t know any better, the quote has legs, baby!
And if you want to know what a luxury yacht is, come visit us in Florida and we'll show you around. I'm sure you can deduct your travel expenses.
Here’s the deal: The "luxury yacht" mortgage interest deduction is only available to 5% of owners of all registered boats in America. Five percent. So, apparently, 11,400,000 American boat owners are either paid-in-full or they don’t own what Quigley woiuld consider a “luxury yacht.”
Thank you Mike Quigley for supporting a piece of legislation that would take away a deduction readily available to all boat owners (and owners of second homes of all varieties) that have a mortgage on a boat with a head, a hot plate and a place to sleep - regardless of value - while accounting for a less than 2% reduction in total second home mortgage deductions over a 10 year period – whether the second home floats or not.
While you're busy fighting for pennies you're costing taxpayers dollars and creating what could amount to an economic disincentive to purchase "second homes." Now stop screwing around and get to work on legislation that makes a difference!
Over the next ten years this cutting edge piece of sh… legislation could radically slash the $8 billion second-home mortgage deductions taken in the US each year by – hold on to your hats - $150million… a staggering number for anyone who doesn't know how to divide 150,000,000 by 8,000,000,000.
So, with more than $100,000,000,000 in insurance fraud taking place each year, Quigley is more bent on going after people who put money into the economy as opposed to going after those who steal money from it. Hey Mike - don't forget to renew your MENSA membership.
With more than 12 million boats registered in the US (and the average mortgage running right at $50,000) this deduction is available to roughly 600,000 boat owners. This deduction is also available for owners of second homes, cabins, condos, townhomes, recreational vehicles, etc… so long as it has a place to eat, sleep, and go potty and the person spends 14 nights there per year. Quigley and the dems want the deduction gone for any piece of property that could be classified as a second home. This is yet another attempt at economic parity by his party that will have little effect on the wealthy and will end up penalizing the "average Joe" boat owner.
Sticking with his party's “since the majority of the people can’t use this loophole we’re going to close it” mentality, Quigley said, “There is no reason taxpayers should subsidize luxury yachts.” Obviously Quigley doesn’t understand the difference between a tax deduction and a subsidy - and he certainly doesn't understand what a "luxury yacht" is. That's okay - I'm here to help.
I’ll go slowly so Mike and his colleagues can understand… A subsidy is when the government gives you other people’s money to spend and a tax deduction is when they don’t take as much of your money from you after a year of spending it... but for people like Quigley who don’t know any better, the quote has legs, baby!
And if you want to know what a luxury yacht is, come visit us in Florida and we'll show you around. I'm sure you can deduct your travel expenses.
Here’s the deal: The "luxury yacht" mortgage interest deduction is only available to 5% of owners of all registered boats in America. Five percent. So, apparently, 11,400,000 American boat owners are either paid-in-full or they don’t own what Quigley woiuld consider a “luxury yacht.”
Thank you Mike Quigley for supporting a piece of legislation that would take away a deduction readily available to all boat owners (and owners of second homes of all varieties) that have a mortgage on a boat with a head, a hot plate and a place to sleep - regardless of value - while accounting for a less than 2% reduction in total second home mortgage deductions over a 10 year period – whether the second home floats or not.
While you're busy fighting for pennies you're costing taxpayers dollars and creating what could amount to an economic disincentive to purchase "second homes." Now stop screwing around and get to work on legislation that makes a difference!
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