What Part of a Contract Do People Not Understand?

legion · 12-19-2005, 07:04 AM

It's official. Trent Lott is an idiot.

Well, idiot is too nice of a word, and kind of let's him of the hook. The word might imply that this is not his fault, which it is--completely. He is acting with malice and intent. This seems to me to be a case of "I am so important, that I can re-write the law to suit me after the fact". Anyone in bed with scum like Scruggs should be hung, publicly.

http://www.chron.com/disp/story.mpl/special/05/katrina/3531239.html

RallyJon · 12-19-2005, 07:12 AM

This is really simple:

If you live in an area that is susceptible to storm surge/floods--any occurance of water from a body of water touching your house--than you MUST buy flood insurance. Are people idiots? Surely Trent Lott is smart enough to read his policy and rich enough to buy appropriate coverage.

If you redefine the coverage of an insurance policy after the fact, you destroy the entire concept of insuring against risks. If non-flood insurance covered floods, then the rates would be higher and the insurance companies would have re-insured against that risk.

These lawsuits could make the whole system break down. What idiots. It's not like insurance companies exist in a vacuum.

Nathans_Dad · Nathans_Dad's Garage

I agree. If you live in a flood prone area, you should have flood insurance. No flood insurance=tough luck. Lott is way wrong here.

RallyJon · 12-19-2005, 07:23 AM

There is another important issue here, though. It's very likely that many of the people in the area had no idea they weren't covered.

Have you ever read your homeowners policy? What a pain in the ass. There ought to be some regulations that the policy's coverage be described in plain low-reading-level english in two pages or less. It should also be a requirement that any exclusions are highlighted. So many policies are written as to what they DO cover, as opposed to what they DON'T. This should be turned around and the insurance company should have to tell you of any likely risks that aren't covered. And I can't imagine a more likely risk than flood for property at low elevations in a flood zone.

Joeaksa · 12-19-2005, 07:28 AM

I for one am getting tired of rebuilding people's houses who live in hurricane areas and file a claim ever 2-3 years. They need to get insurance to cover it and if its not available then they pay the whole thing, and not ask for state/govt help.

I would love to live on a beach. I cannot afford it, so do not. They do not share this idea and need to face reality.

JoeA

RickM · RickM's Garage

I guess the fight is over wind damage as opposed to flood damage. The article is not clear on what specifically is being rejected.

Also, if you want flood insurance you have to be pretty darn clear when getting it. No standard insurance coverage is going to protect you.

legion · 12-19-2005, 07:39 AM

Quote:

Originally posted by RallyJon
There is another important issue here, though. It's very likely that many of the people in the area had no idea they weren't covered.

Have you ever read your homeowners policy? What a pain in the ass. There ought to be some regulations that the policy's coverage be described in plain low-reading-level english in two pages or less. It should also be a requirement that any exclusions are highlighted. So many policies are written as to what they DO cover, as opposed to what they DON'T. This should be turned around and the insurance company should have to tell you of any likely risks that aren't covered. And I can't imagine a more likely risk than flood for property at low elevations in a flood zone.

They are written that way so that they can't be parsed by lawyers to mean something different than what is intended. Also, the language is inclusive because some new risk could come out of nowhere (or, more likely, be invented by trial lawyer) that would turn every insurance policy into a lottery ticket. That's exactly what happened with the mold scare a few years ago.

As far as not knowing that your homeowners insurance doesn't cover flood damage, there are two likely causes for this:

1) You are an idiot.

2) Your agent misled you. Agents, like car saleman, sometimes stretch the truth to make a sale. Using this same analogy, this is like suing GM because your salesperson at the dealeship told you that your Geo Metro could do 0-60 in 8 seconds. GM never claimed that--and has made repeated statements to the contrary.

pbs911 · pbs911's Garage

Quote:

The issue is whether a wind-driven storm surge is the same as flooding.

Sounds like a reasonablee argument. You have to consider that the insurance companies have more money then god for legal advise when writing insurance policies. When is the last time anyone managed to get an insurance agent to redraft the language of their policy. I will not happen. If the insurance company wanted to specifically include "wind-driven storm surge" it should have included the specifica language in the policy. It did not. It should pay.

Quote:

If you redefine the coverage of an insurance policy after the fact, you destroy the entire concept of insuring against risks.

If this statement was taken to heart by defense counsel for insurance companies, the world would be a better place.

RallyJon · 12-19-2005, 07:48 AM

I don't have an agent. It's up to me to read my policy and ask for riders on anything I want extra. My homeowners insurance carrier (Amica) is more than happy to insure almost anything I come up with. Surprisingly the fee is usually very low. Which makes it even more important to know all of those exclusions so you can buy what you need.

So here's a question: Since the insurance company will only tell you what their policy DOES cover, how are you supposed to know what you're missing (like flood, or mold)? Is there some grand homeowners insurance boilerplate to compare with?

legion · 12-19-2005, 07:53 AM

Wow PBS, that's pretty ignorant.

1) Insurance companies have "a lot of money" (i.e. reserves) because they are required by law to do so.

2) Most agents are contractors, not employees. They have no power to change the agreement between insureds and insurers.

3) Flood damage, in any form, is specifically listed as an exclusion on every homeowners policy sold by every insurer in this country. This includes "wind-driven storm surge".

What Scruggs is trying to do is make himself richer. Nothing more.

Imagine if you sold a car to someone. You draw up a bill of sale, you get a check, you sign the title over. By your logic, the seller could sue you for your house, because that wasn't specifically excluded from the bill of sale on the car. IT IS EXACTLY THE SAME THING.

RallyJon · 12-19-2005, 07:55 AM

The more I think about this, the more I think the plaintiffs may have a case.

Once again--understanding that the insurance companies have all the lawyers and all the expertise in crafting and wording a policy to maximize their profits and minimize their risk, where's the consumer protection? Should every homeowner have to hire a "buyer's agent" insurance lawyer to parse the fine print?

Flood insurance may be obvious--even to an idiot. But what if the insured literally can't understand the document? (we are talking about MS, LA and AL here) I can imagine a local court not taking too kindly to clever policy wording that is beyond the understanding of the customer.

Shaun @ Tru6 · 12-19-2005, 07:55 AM

People have fire insurance. Why not just burn your house down?

legion · 12-19-2005, 07:56 AM

Quote:

Originally posted by RallyJon
So here's a question: Since the insurance company will only tell you what their policy DOES cover, how are you supposed to know what you're missing (like flood, or mold)? Is there some grand homeowners insurance boilerplate to compare with?

If it's not covered, then it is missing, right?

pbs911 · pbs911's Garage

Quote:

Originally posted by legion
Wow PBS, that's pretty ignorant.

I don't have the policy in front of me, but based on the article it sounds reasoanble. But, as an attorney who reads and interprets contractual rights for a living, I think I know what I'm talking about. So do my clients for whom I recovered over 10m this last year.

legion · 12-19-2005, 07:59 AM

Quote:

Originally posted by Shaun 84 Targa
People have fire insurance. Why not just burn your house down?

It's been happening in New Orleans.

And it is fraud.

I always find it curious how morality seems to go completely out the window when it comes to insurance.

RallyJon · 12-19-2005, 07:59 AM

Right. So it's up to me--a non-expert--to try imagine out of thin air anything that can go wrong vs a well-lawyered company with expertise in this very area?

Shaun @ Tru6 · 12-19-2005, 08:01 AM

Quote:

Originally posted by legion
It's been happening in New Orleans.

And it is fraud.

I always find it curious how morality seems to go completely out the window when it comes to insurance.

OK, OK, just kiddin.

Nathans_Dad · Nathans_Dad's Garage

This is why our country is going down the tubes. Lack of personal accountability. It is NOT the insurance company's job to hold your hand and tell you what insurance to get. It is their job to provide insurance for you to buy. It is your responsiblity to be an informed consumer and buy what you need. Everyone wants to run to a lawyer and "stick it to the man" when they screw up. Not having flood insurance, coffee that's too hot, whatever... The civil courts are not meant to be lottery tickets people.

If you think Lott has a case, then perhaps you also think that you could sue Porsche for the cost of your 911 because the car salesman didn't specifically tell you that a 911 is NOT an amphibious vehicle...

Shaun @ Tru6 · 12-19-2005, 08:05 AM

Quote:

Originally posted by Nathans_Dad
This is why our country is going down the tubes. Lack of personal accountability. It is NOT the insurance company's job to hold your hand and tell you what insurance to get. It is their job to provide insurance for you to buy. It is your responsiblity to be an informed consumer and buy what you need. Everyone wants to run to a lawyer and "stick it to the man" when they screw up. Not having flood insurance, coffee that's too hot, whatever... The civil courts are not meant to be lottery tickets people.

If you think Lott has a case, then perhaps you also think that you could sue Porsche for the cost of your 911 because the car salesman didn't specifically tell you that a 911 is NOT an amphibious vehicle...

Rick, I completely agree RE: personal accountability. Personally, I think a good business/businessman informs his customers. When I managed a custom media sales department for an IT magazine, half of our pitch was education, "this is what you need and why."

A good insurance person would/should upsell a flood policy.

gaijindabe · 12-19-2005, 08:06 AM

Quote:

Originally posted by pbs911
If the insurance company wanted to specifically include "wind-driven storm surge" it should have included the specifica language in the policy. It did not. It should pay.

Did they pay the last time a hurricane wiped out this region? Or the time before that?

"Wind driven storm surge" sounds like a fancy term for "flood" to me.

The reason the insurance forms can be archaic - is that they have been "tested" by courts and precedent. To create new definitions for the same old thing is to enter Wonderland with Alice as your underwriter.

Dont worry taxpayers - as insurance companies get hosed over this (even in legal fees) and pull out of this market - the Feds are sure to step in and subsidize the region..