When any professional behaves in a way that is in-congruent with what is socially accepted, then damages ensue. When damages ensue, people begin to sue, and the whole thing gets ugly. With enough people impacted, class action suits can be filed in everything from medical to insurance agent malpractice.
There are a number of ways that agents might act contrary to ethical practices, and most of the time it is the ignorance of the insureds that they are counting on. The general public rarely understand the wording in policies and other contracts to which they are a part. This lack of understanding leaves the door wide open for individuals to act out of greed and self interest.
With their ability to hide behind the assumed ignorance of their insureds, these cases can be complicated to sue, and nearly impossible to prosecute. Assessing the true intent of the agents is a grey area that the insureds might not even know to pay attention to. It is not ill advised to suggest that conversations with their agents be recorded for this reason.
Overcharging is one of the more common forms such fraud can take. These cases generally only come to light when the insureds follow up with their insurer directly. There have been cases where young people have been charged in excess of $200 a month for minimum coverage that should have only cost $50.
More often, agents simply misrepresent the policy being provided. For example, they might undergo an ad campaign that targets flood victims, yet sell their customers a policy that does not cover water damage. The only way the customer is likely to expose this is if they have them recorded, or they get something in writing that reveals their sketchy sales pitch.
Many residents in hurricane-torn regions discovered this form of fraud when they thought they had bought coverage for the risk of hurricane damage. Many named peril policies were sold wherein wind damage was a named peril, but water damage was not. In such contracts, if the peril is not specifically named as being covered, then it is not.
The two forms of policies most people would encounter are either named peril or named exclusion policies. Crooked agents have been known to submit exclusions months or years after the original product is written, knowing full well that their insureds will probably overlook that piece of mail. Often they will send these in very generic-looking envelopes that lack the corporate logo of the company they represent, leaving their customers believing they are covered for risks that had been later added to the list of named exclusions.
While inconsistencies are supposed to benefit the insureds, it can take a great deal of time to even establish that an inconsistency exists. Few homeowners or small business entrepreneurs are able to get back on their own feet in a total loss scenario. Simply getting through the legal process can leave them in financial ruin until their lawsuit is a success.
There are a number of ways that agents might act contrary to ethical practices, and most of the time it is the ignorance of the insureds that they are counting on. The general public rarely understand the wording in policies and other contracts to which they are a part. This lack of understanding leaves the door wide open for individuals to act out of greed and self interest.
With their ability to hide behind the assumed ignorance of their insureds, these cases can be complicated to sue, and nearly impossible to prosecute. Assessing the true intent of the agents is a grey area that the insureds might not even know to pay attention to. It is not ill advised to suggest that conversations with their agents be recorded for this reason.
Overcharging is one of the more common forms such fraud can take. These cases generally only come to light when the insureds follow up with their insurer directly. There have been cases where young people have been charged in excess of $200 a month for minimum coverage that should have only cost $50.
More often, agents simply misrepresent the policy being provided. For example, they might undergo an ad campaign that targets flood victims, yet sell their customers a policy that does not cover water damage. The only way the customer is likely to expose this is if they have them recorded, or they get something in writing that reveals their sketchy sales pitch.
Many residents in hurricane-torn regions discovered this form of fraud when they thought they had bought coverage for the risk of hurricane damage. Many named peril policies were sold wherein wind damage was a named peril, but water damage was not. In such contracts, if the peril is not specifically named as being covered, then it is not.
The two forms of policies most people would encounter are either named peril or named exclusion policies. Crooked agents have been known to submit exclusions months or years after the original product is written, knowing full well that their insureds will probably overlook that piece of mail. Often they will send these in very generic-looking envelopes that lack the corporate logo of the company they represent, leaving their customers believing they are covered for risks that had been later added to the list of named exclusions.
While inconsistencies are supposed to benefit the insureds, it can take a great deal of time to even establish that an inconsistency exists. Few homeowners or small business entrepreneurs are able to get back on their own feet in a total loss scenario. Simply getting through the legal process can leave them in financial ruin until their lawsuit is a success.
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