Category: Insurance

Getting What You Pay For With Your Insurance Premiums

People frustrated dealing with their insurance company often wonder what they’ve been buying when they paid premiums for all those years. Insurance premiums buy you a whole host of benefits beyond just the possibility the insurer might someday pay you for a covered loss. Insurance premiums buy you the promise of peace of mind and fair treatment.

Even if the insurer thinks your claim might not be covered, or even if you yourself aren’t sure if you have a claim, the insurer can’t just throw you under the bus. The insurance policy is a contract that entitles the policyholder to non-coverage benefits such as a full and fair investigation, peace of mind, or the promise of fair treatment by the insurer.

In other words, besides just coverage, your premiums buy you the insurer’s promise to:

  • Fully, fairly and promptly investigate, evaluate, and adjust claims (or possible claims) at the insurer’s expense (not your own);
  • Explain all your potential coverages and benefits under the policy to help you identify potential claims;
  • Search for evidence to support your claim and assist you with your claim – not sit on their hands and make you prove your right to coverage;
  • Not deny claims based on speculation, a hunch, or biased information;
  • Keep an open mind and not pre-decide the outcome of the claim;
  • Tell the truth about the facts or policy provisions;
  • Comply with applicable Washington State claims-handling regulations;
  • Refrain from treating you like an adversary or opponent;
  • Treat your interests with equal regard as the company’s own interests; and
  • Apply the insurance policy provisions reasonably and fairly.

Even when the insurer accepts coverage, policyholders suffer harm if the insurer unreasonably denies them these benefits. For example, when an insurer fails to adequately investigate a policyholder’s claim, the policyholder must either perform their own investigation to determine if coverage should have been provided or take no action at all. In either situation, the policyholder does not receive the full benefit they paid for under their insurance contract. Or, where the insurer pays or offers to pay only a paltry amount that is far less than what you claimed, ignores the facts (as known or, in some cases, as would have been known had the insurer adequately investigated the claim), and would not compensate the you for the loss at issue, the benefits promised in the policy are effectively denied.

When the insurer denies benefits, the policyholder does not get what they paid for, faces delays, suffers emotional stress has to conduct and pay for the investigation themselves, and has to pay lawyers and experts. Under these circumstances, the policyholder has recourse under Washington’s Insurance Fair Conduct Act and Consumer Protection Act.

Court Ruling Emphasizes Tie Goes to the Policyholder When Interpreting Insurance Policies

Washington insurance law includes a principle that if an insurance policy is ambiguous, i.e., if it can reasonably be read in multiple ways, the court will adopt the reading that is most favorable to the policyholder.  This rule exists because insurance companies are sophisticated enough to draft their insurance policies the way they want, and have enough leverage over the consumer to offer their policies on a take it or leave it basis.  You typically can’t haggle with your insurance company over the fine print of the exclusions in your insurance policy.  Since the company can write the policy and has all the leverage compared to the policyholder, if the policy isn’t written clearly the court will read it to mean whatever a reasonable person buying insurance would expect as a matter of common sense.

The recent case Cheban v. State Farm found in favor of the policyholder by employing this rule.  Cheban made a claim under his auto insurance policy for damage to his car from an accident.  State Farm acknowledged there was coverage under Cheban’s auto policy’s Underinsured Motorist (UIM) coverage  But State Farm disputed whether the policy covered Cheban’s loss of use of his vehicle for the 47 days the car was being repaird in addition to the repair bills.

The insurance policy provided State Farm would pay “compensatory damages for property damage.”  State Farm argued this language limited State Farm’s obligation to only physical property damage, not loss of use.  Chaban argued the words “compensatory damages” expanded coverage beyond “property damage” to all resulting losses, including loss of use of the car while it was repaired.

The Washington Court of Appeals determined both State Farm’s and Cheban’s interpretations were reasonable.  Because the language was ambiguous, the court interpreted the policy consistent with Cheban’s expectations as the policyholder.  That meant Cheban was entitled to coverage for the loss of use while the car was repaired as well as the repair bill.

The Cheban v. State Farm decision is an important remind that ambiguous insurance policies will be construed in the policyholder’s favor.

Washington State Bans Surprise Medical Billing

We previously blogged about the push by Washington’s Insurance Commissioner to ban so-called surprise medical billing, i.e., where an insured gets hit with a huge bill for medical treatment despite going to an in-network provider or seeking emergency care.  In those circumstances, the insurer claims the hospital’s bill is too high and refuses to pay, and the hospital bills the patient for the difference.  This practice (known as “balance billing”) results in the policyholder getting a huge hospital bill for medical care that was covered by their insurance policy, even if the policyholder used an in-network provider and did everything right.  In these situations, the patient is stuck in the middle with the insurer and the hospital each blaming the other for the huge balance bill.

Washington’s surprise medical billing ban has now been signed into law by the Governor.  The new law is touted as one of the strongest legal protections for health insurance policyholders and patients in the country.

Among other things, the surprise medical billing ban includes the following:

  • Bans balance billing where you receive emergency medical treatment, even if it’s at an out-of-network facility – this includes seeking emergency medical treatment in a state bordering Washington State;
  • Bans balance billing where you obtain treatment from an in-network provider, regardless of whether it’s an emergency;
  • Requires insurers to pay out-of-network providers directly (as opposed to leaving the policyholder to fend for themselves.

One of the most significant reforms is that the new law requires insurers and medical providers to resolve billing disputes between themselves, rather than leaving the patient to deal with the excess bill from the provider.  This is a huge win for policyholders and patients because it means patients are no longer left holding the bag when the insurer and doctor disagree over the medical bills.  Insurers and hospitals have the resources to fight medical billing disputes and the bargaining power to keep them from happening in the first place – patients do not.  The new law fixes a major injustice by preventing insurers and providers from imposing on patients the burden of resolving medical billing disputes.

Washington’s surprise medical billing reform is a big step forward for patients and health insurance policyholders.

 

 

Insurance Tips for Wildfire Season

Washington is predicted to have a particularly severe wildfire season in 2019. Wildfires are increasing as development pushes further into wilderness areas and wildfire risk pushes into parts of Washington previously assumed to be too wet to be at risk.

Here are some tips to make sure your insurance coverage is ready for wildfire season:

  • Read your policy and confirm it covers wildfire damage.  Most homeowner’s insurance policies traditionally covered fire damage.  But some policies exclude wildfire or disaster related losses.  
  • Confirm your coverage limits are sufficient.  If you bought your home many years ago, rising property values and construction costs may render your existing coverage inadequate.
  • Make sure your policy covers your entire loss in the event of a wildfire.  For instance, confirm your policy will pay your living expenses in the event you need to relocate while your home is rebuilt (known as “Additional Living Expense” coverage).
  • Make an inventory of important and valuable contents to make sure the insurer covers the cost to replace these items in the event they are lost in a wildfire.

 

Finally, be ready to go to bat and make sure you get the coverage you are paying for.    .  After a big disaster like a wildfire, there are so many claims insurers can’t investigate them all properly, so they just stop trying.  Disaster-related insurance claims are notorious for shoddy investigating, unresponsive staff, and overworked, poorly-trained adjusters pressured to cut corners to close out claims fast.

Washington State Enacts “Public Option” Health Insurance Plan

This week, Washington State passed a new law designed to offer consumers a so-called “pubic option” for buying health insurance.  The general idea is that the state will launch its own health insurance program to compete with the marketplace.  Unlike Medicare or Medicaid, anyone would have the option to purchase coverage through the “public option.”

The public option is targeted at taking the pressure off of people who don’t receive health insurance through their employer, but make too much money to get subsidized coverage through the Affordable Care Act (a/k/a Obamacare).  Folks in this situation, often small business owners or the self-employed, have struggled with substantial premium increases in recent years.

The public option is not true insurance.  Instead, Washington State will contract with insurance companies to administer the system under the state’s control.  The main idea is that the public option caps the amount it will pay doctors, hospitals and other medical providers at 160% of the rate Medicare would pay for the same services.  Medicare rates are typically quite low compared to what an uninsured patient would pay.

The public option is hoped to avoid the steep premium increases that have become an annual routine for most health insurance.  Rates increased 13.8% in 2019; they increased 36% in 2018.

Other states, including Colorado and Connecticut, are considering similar legislation.