Rarely do insurance commissioner bulletins warn insurance companies of paying too much or that consumers are not entitled to insurance benefits. Most departments of insurance only write bulletins because insurance company adjusters pay far too less to similarly situated consumers suffering from the same loss. Of course, insurance company lobbyists now go into overdrive to argue against the bulletin and to influence those in power to change the bulletin to favor payment of less money. Insurance companies essentially use policyholder premiums to pay the expense of their lobbyists to reduce payments to those paying for the insurance benefits. How ironic.
Missouri wrote the following bulletin which should be used by all hail damage victims:
Since the hailstorm. . . .the department has received more than 500 complaints. . .relating to the replacement of damaged siding under homeowner’s coverage – a truly overwhelming response from the public. Generally, these complaints concern the replacement of damaged siding on dwellings when the original siding is no longer manufactured.
Some companies have refused to replace the siding on such dwellings except on the side actually damaged by the impact of hail, leaving the policyholder with a house that has mismatched features. Many insureds cannot understand how essentially identical contract language and essentially identical damage can produce widely varying benefits, based on insurer, and that compels the department to clarify its position.
Companies that refuse to replace siding (or compensate for damage to siding where coverage is under a standard fire dwelling policy) except on the side actually damaged by hail may not have fully considered Section 375.1007(4), RSMo (2000). In this “good faith” provision, Missouri requires insurers to effectuate prompt, fair and equitable settlement of claims submitted in which liability is reasonably clear. Typical homeowners policies require insurers under certain circumstances to repair damaged dwellings with ‘like,’ ‘equivalent’ or ‘similar’ materials and/or construction. Some insurers have limited the meaning of ‘damage’ to include only the side of a house actually dented by hail. They contend they are required to replace only the dented side of the house with like, equivalent or similar siding – an interpretation that could result in mismatching of siding with the remainder of the house, especially in instances of older residences built with materials no longer manufactured.
Nothing in the policies forewarns consumers of such a potential result. Consumers have relied upon a more expansive and reasonable interpretation of the policy language: when siding is damaged, the siding as a whole is damaged and must be replaced with ‘similar’ or ‘like’ siding unless the original siding or a substitute of the same color, size, composition and quality is available and satisfactory to the insured.
Insurers who insist on the narrow interpretation of ‘damage’ may violate the good faith provision in Section 375.1007(4) and the false advertising provisions…. Continued resistance by an insurer may result in violations of…which prohibits insurers from compelling insureds to institute lawsuits to recover amounts due under their policies. . . .
The issue of like, similar or equivalent materials and construction may well grow as the thousands of Missouri subdivisions built during the post-WW II era mature, and the materials used become unavailable or extremely scarce. . . .
Why aren’t more insurance commissioners writing bulletins like this? The honest answer is because most insurance commissioners have ties to the insurance industry or they need them for election to other office. Does anybody disagree?
The sad part is the Missouri Department of Insurance repealed this bulletin for unknown reasons. I researched the issue while preparing for one of my recent seminars regarding “matching,” and the best I can figure is that insurance lobbyists convinced the Missouri Department of Insurance that a wholesale repeal of various favorable bulletins for policyholders was in the best interest of Missouri citizens.
Democracy requires constant vigilance by its citizens. This is something we should remember on any Inauguration Day.
Thought For The Day
Popularity should be no scale for the election of politicians. If it would depend on popularity, Donald Duck and The Muppets would take seats in senate.