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No Exit

Phil Dawson  |  March 1, 2018

IN THE NEARLY 30 YEARS we’ve been married, Donna and I have used fewer than a handful of insurers for home, auto and umbrella liability coverage. The occasional changes we have made have been due to either the recommendations of an insurance agent or, in one case, an especially disagreeable claim experience. Fortunately, even though three of our four daughters are skilled at dispatching cars with stunning efficiency, claims have been few.

Indeed, my biggest insurance complaint has nothing to do with how a claim was handled. Rather, it rests with an obscure provision related to auto-renewal.

Since I am nothing if not polite, I won’t give the name of the insurer involved. We had an unremarkable period of coverage, during which premiums were paid faithfully and no claims were filed. In early 2016, we performed a routine evaluation of coverages and premiums, and also reviewed the insurance survey results in Consumer Reports. We then elected to replace our policies with equivalent products from State Farm when our coverage expired in May. The new coverage was agreed to and paid for, and the old policies passed their termination date without a passing thought from me.

Shortly thereafter, we began receiving dire warnings regarding our expired policies, with invoices for coverage and demands for details of any replacement coverage. I forwarded these demands to my new agent, who assured me it would all be handled, and that my new policies were in place and ready for whatever disasters lurked in my future. I retreated back into blissful ignorance.

In December 2016, I received a notice from Receivable Management Services Corp. stating that it had been employed to collect the balance due on my expired policies. I placed a call to my old agent, who advised brusquely that the insurer had a policy of auto-renewal and that the policies could only be terminated with 30 days’ written notice. Sure enough, it said as much somewhere near the bottom of the pile of disclaimers I had received when the policies were initially purchased. I had clearly failed to understand this condition and, due to my ignorance, I owned responsibility for my current predicament.

Feeling a bit hard done by, I composed a letter to the good people at the Maryland Insurance Administration, advising them of my experience and asking if they could advocate for me or offer any advice. I stressed that, as best we could tell from our experience with multiple Maryland insurers over a period measured in decades, this lack of scruples was unique to this one insurance company. I sent copies of all the relevant documents to show the chronology of our coverage. My case was responded to in short order by a gentleman at the Maryland Insurance Administration, who seemed nearly comatose during our brief phone conversations. He advised me to stand by, pending the outcome of his investigation.

My inquiry was indeed investigated, requiring the insurer to answer some uncomfortable questions regarding its compliance with Maryland insurance regulations.  It turns out that the insurer could not charge me for coverage beyond the policy expiration without my express knowledge and consent. Based on the speed with which the insurer responded, I would venture to guess that insurance companies don’t like to be on the radar of state regulators. The insurer very quickly dropped the unauthorized charges and apologized profusely for the “misunderstanding.”

It appears auto-renewal is becoming a “convenience” offered by other insurers. Planning to change insurance companies? Check the small print on your old policies—or you, too, could find yourself battling the downside of convenience.

When not paddling, biking or shooting, Phil Dawson provides technical services for a global auto manufacturer. He, his sweetheart Donna and their four extraordinary daughters live in and around Jarrettsville, Maryland. His previous blogs include A Most Morbid Game, DaveRamsey.com and Making Your Case. You can contact Phil via LinkedIn.

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