Insurance Companies Must do More to Educate Policyholders

Insurance companies have become infamous for not protecting the policyholders who pay them high monthly fees to represent them. It is always after a disaster or some horrid, untimely accident that the policy holder realizes their insurance company is actually working against them during a highly stressful time. Suddenly the fine print appears out of nowhere explaining why the policyholder is not covered for damages. The Oklahoma insurance commissioner possibly just pulled a fast one on their homeowner insurance policy holders and it has the state up in arms.

Oklahoma Policy Director Buddy Combs is instructing all Oklahoma homeowners to go back to read their contracts. With the recent rise in earthquakes in the state of Oklahoma, Combs wants policyholders to understand their contracts in regards to earthquakes. Combs reported to Channel 4 News that some policyholders will be covered for earthquake damages caused by wastewater injection and/or oil and gas induced earthquakes. Combs stated the problem lies in consumers not knowing how to read their contracts. If they wrote the contracts in a language that the average consumer could understand, instead of legal jargon that only those with law degrees can break down and understand fully, then consumers would not feel like they have been hustled by their insurance company.

The most horrific insurance scam was exposed after Hurricane Katrina hit New Orleans, Louisiana the morning of August 29, 2005. The Category 4 storm killed an estimated 1,833 people, destroying homes and businesses, causing a reported $108 billion in damages. The city was literally under water. Home owners who were unable to evacuate the city before the storm hit were found sitting on rooftops for several days dehydrated and injured, waiting to be rescued. Millions of people were left homeless. Those that survived returned to their homes to meet with their claims adjuster only to discover the insurance company they had been paying monthly for over 30 years would not cover damages because the water reached levels within their homes that were not covered. Families were devastated and enraged with tears.

Combs, taking a proactive approach to avoid another Katrina catastrophe, is making sure it has been documented that he has instructed Oklahoma consumers to read the sections of their contracts that cover earthquakes. He is requiring insurance companies to contact their policyholders to clarify what will be covered and what will not be covered if an earthquake occurs. Stillwater resident Angela Spotts expressed her concerns to Channel 4 News stating many of their homes had prior damage before they owned the home due to earthquakes. She reported her walls are splitting and the damage is becoming worse. Spotts does not believe she should be responsible for the damages. She went on to say she was told to purchase insurance on a home that already had damage. Now she is expected to pay a $10,000 deductible to have damages repaired. Spotts wants an investigation and believes the insurance company should be held accountable.

Many agree with and feel Spotts’ pain and frustration. Insurance companies across the country need to go back to the drawing board to figure out a better way to educate their consumers to avoid legal ramifications later. Policyholders should be required to initial each section as well as put an explanation in their own words as to what each section will cover and will not cover. At any time the consumer can refer back to their contract and have a full understanding of their coverage. Time consuming, yes. However, it will save millions of consumers’ uncertainty, worry, and stress if disaster ever strikes. And more importantly, the insurance companies will be covered as well.