Last year, I wrote a post, Insurance Apps & Insurer’s Use of Your Questions (see http://220.127.116.11/~wiseinsu/insurance-apps-insurers-use-of-your-questions/) where I outlined two insurance related bills the Texas Legislature passed. One bill allows Texas drivers to carry proof of insurance on their smart phone, the other bill barred insurance companies from using customer inquiries to cancel or non-renew, or to increase their premiums.
It turns out I was only partially correct on the second bill. As reported by Dallas Morning News columnist, Dave Lieber, aka “The Watchdog,” on August 24th, the bill was changed at the 11th hour after pressure was exerted by insurance lobbyists. Their efforts resulted in the bill being tweaked in one key way:
- Consumers can ask their insurance company a question related to their home insurance policy and they do not run the risk of being cancelled or non-renewed or having their premiums increased.
- What was deleted from the bill was the same protection for consumers when they ask a car insurance related question. Ask your question and what you say can be used against you.
The type of questions I’m referring to are the questions a client will ask me about whether something is covered by their policy or whether they should file a claim. Based on the revised law, even asking about something that could be construed as a car insurance claim, could be recorded as a claim by your company even if you do not go forward with filing the claim.
The reason insurance companies pushed to have the law changed is they believe that unless they are able to use this information they will be unable to accurately assess risk and charge the appropriate rate for that risk. By not accurately assessing risk some people will be charged more for their car insurance than they should, while others will be charged less than they should.
I understand the reasoning but disagree. If consumers can’t ask their insurance company questions for fear they will be turned into an actual claim which impacts future rates, they are unable to make informed decisions that are right for them and potentially the company too. Both parties miss out on the opportunity to build long term relationships built on a foundation of trust and respect.
One of the principles that continues to guide me and our agency is we are insurance advisors to our clients. Part of being an advisor is providing information to our clients so they can make decisions that are right for them. I believe this is what all insurance agents should do, although not all do.
In light of the change in legislation, consumers should freely ask their insurance companies questions about their home, condo, or renter’s policy without any fear of repercussions. When it comes to car insurance related questions, I would advise consumers to ask their agent what happens when they ask a question that could lead to a claim. Some agents will submit a claim, many will not. If your agent won’t answer your question without submitting a claim, find a new agent, one who’ll be an advisor.
What do you think? Share your questions, comments, and experiences with us in the comments section of our blog or on our Google + and Facebook pages. I’d love to hear from you!