We are all familiar with the normal ways in which insurance companies try to get us to pay more for coverage. There are fees for 24-hour service, fees for adding another car to your plan, and fees for just about anything.
According to a new law, if you happen to call your insurance agent with a question about a potential claim on your automobile policy in Texas, you could face an increase in your premium when your policy is renewed. This fun bit of Texas legislature makes it easier for the insurance companies to take more money out of your pocket, even if you don’t end up filing a claim. Texas Legislature passed a law that made it illegal for insurance companies to charge Texas insurance customers who ask questions about their homeowners policy, but insurance lobbyist pressured legislators to remove the part that protects your automobile policy.
State Senator Kirk Watson, Austin D, had originally written the bill to protect Texas insurance customers. However, he knew if he did not remove the part including automobile insurance, the entire bill would not have passed. During the proceedings to pass the bill, the insurance industry kept their opposition quiet in order to keep customers from discovering the bill. According to the legislative record, the insurance industry claimed, “Limiting the types of information that insurance companies can take into account could hinder operations and unfairly shift premium costs among policyholders.”
Many Texans are unaware of this “quirk” in the system. If the insurance company gathers enough information from your inquiry, they can register it as a claim, even if no money is ever exchanged. Most insurance companies will say they do not penalize customers who ask questions about their automobile policy. But since it is allowed under the current law, there is nothing to stop insurance companies form finding a way to benefit from their customers’ curiosity.
Certainly, not all insurers use innocent inquiries as an excuse to raise rates. But it’s among the tricks of the trade detailed in a report by the American Association for Justice, an advocacy group of lawyers who often represent policyholders in disputes with insurance companies.
The Insurance Industry Institute, the industry’s trade group, has said most companies only submit a loss-history report if a claim is opened, so inquiries usually don’t count. However, some companies treat all inquiries as reportable because from their perspective, you typically don’t call with a hypothetical question.
The best way to sidestep this trap is to not call your insurer’s toll-free number at all. If you have an insurance agent, you should ask that commissioned rep any policy questions. The agent will want to keep your business and is less likely to automatically assign a claim number than an unknown employee at insurance company headquarters. Policyholders without agents should first pull out their policy documents and see whether their question is answered there.
But if you must phone the toll-free number, know that your call is likely being recorded and anything you say may be used against you. Repeatedly say that you are “calling with a hypothetical question — and not to file a claim.”
It’s also a good idea to tape the call — though in several states you are legally required to have the other person’s consent — and to keep the recording for possible later use.
In subsequent weeks, watch for a letter from your insurer. And get a copy of your CLUE (comprehensive loss underwriting exchange) report. Available for free once a year to consumers, it comes from an industry-wide database that details home and auto insurance claims listed under your name over the past seven years.
If your call was interpreted as a claim, you should see a notation of that on your report.
If your premium rises or you suspect it might, first write a letter to your insurer, detailing the specifics of your call, This should include the questions asked to whom, when and why, the answers received, and how you expect the company to correct your record.
Mail copies to the rep with whom you spoke and the company’s homeowner claims office, and copy your state’s insurance commissioner and the Better Business Bureau. You may also be able to file an online complaint with your insurance commissioner.
Follow up until the company does what you want. Don’t assume it will automatically happen.
The insurance industry has always been good at finding loopholes that allow them to add more charges to their customers. That’s why it is always important to have an experienced attorney who can help you when your curiosity kills your premium. An attorney with experience dealing with insurance companies will know what it takes to get your insurance company to remove any unnecessary charges or increases on your premium.
In most cases, our insurance policies do help protect us from wrong doing by other drivers. However, in a world where insurance companies will raise your rates just for asking a simple question, having an experienced attorney to represent you can help show the insurance industry that they can’t get away with this unfair treatment of their customers.