Lack Of Control

By Author: Norris Rios
Total Articles: 572
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The Insurance Commissioners have noted a national trend. It seems the insurance companies are increasing the premium rates for insuring your home while reducing the extent of the cover. It's good to have someone in an official capacity confirm what we've all known for years. When challenged, the insurers get all defensive. The poor things. It seems their costs are rising, so the only way they can maintain their profits is to hike the charges to us customers. More realistically, the reason for the squeeze is that, in many states, insurers can gouge the policyholders without serious penalty. Yes, yet again, we're caught between the rock and the hard place. Let's start off with the rock.

The majority of owners have a mortgage or some other loan secured on their homes. Without exception, the lenders insist we borrowers all hold an approved insurance policy. Even if it burns to the ground, the home can be rebuilt. This maintains the home as collateral. Indeed, there's another standard term in loan agreements that empowers lenders to put their own insurance in place and send us the bill. Needless to say, the lenders have no ...
... interest in searching out the cheapest policies. All they want is a good night's sleep, confident their capital is safe. So, if you find you cannot afford to renew the insurance, the lender will send you a bill. When you fail to pay that bill, the premium gets added to the loan and the repayments increase. If you default, the lender forecloses. . . The hard place is the lack of sympathy in the insurance industry. Decision-makers don't care whether we can afford to pay or the policies are good value-for-money. All they care about is hitting their profit target and picking up their annual bonus.

Every state has an Insurance Commissioner and, in theory, these are watchdogs whose job it is to bark whenever the insurers infringe consumer rights. But their actual power all comes back to the local state to decide. In Democrat states, Commissioners can act proactively to protect consumers and limit the operations of the insurers. In the Republican states, Commissioner are encouraged to soft-pedal oversight. Perhaps it should not surprise us that Texas, home of the presidential hopeful Rick Perry, has the highest premium rates in the country for insuring the home. Worse, insurers have recently limited claims for wind damage and, in the coastal areas, removed cover for storm damage. Many are also abandoning a fixed deductible and moving to a percentage of the value of the home's insured value. For the most part, all the Texan Commissioner can do is look on or offer advice.

In the states run with a policy of protecting the consumer, Commissioners have the power to refuse rate increases unless the insurers produce a properly audited justification for the increase. This means you pay a higher premium rate for the privilege of living in a GOP state. Not that everyone should up and move just because their home insurance rates are higher. That's never going to be cost-effective. But it should raise questions for voters as the next elections come into view. Talking about home insurance, do you expect value-for-money? If so, vote for the candidates that promise to deliver better control over the insurance industry.