Accident & Injury Law in Texas

Posts Tagged ‘insurance’

The Texas attorney general on Thursday ordered insurer the Travelers Cos. Inc. to stop running a television advertisement that he called deceptive.
In a news release announcing a cease and desist order, Attorney General Greg Abbott said that the Travelers ad improperly tells Texas homeowners that they should buy additional automobile insurance to prevent losing their homes.

“Texans are protected by robust homestead laws that insulate homeowners from the losses depicted in Travelers’ advertisements,” Abbott said in the release.

If Travelers continues to air the ad, the company will face legal action by the state, Abbott said.

Abbott’s action comes two days after Texas Watch, a consumer advocacy group, asked Abbott and Texas Insurance Commissioner Mike Geeslin to take action against the company.

A television commercial advertising insurer the Travelers Cos. Inc. is deceptive and should be stopped, a Texas consumer advocacy group said Tuesday.

Texas Watch Executive Director Alex Winslow has written to both Texas Attorney General Greg Abbott and Texas Insurance Commissioner Mike Geeslin, seeking a cease and-desist order to keep the ad off the air in Texas.

In the advertisement, titled “Driving Your House,” a man is seen driving through the desert in what appears to be a wall-less house on wheels. The man gets into an accident, which spreads the house’s contents across the desert roadside.

As the homeowner-driver flies through the air — along with furniture and a cat — a voiceover says: “Without the right auto insurance, a crash might impact more than your car. Make sure you’re properly covered, so when you’re driving your car, you’re not risking your house.”

The ad concludes with the tagline: “Travelers. Take the scary out of life.”

Winslow said the message implies that if homeowners don’t carry adequate automobile insurance, then they could lose their homes. But the Texas Constitution has homestead protections that prevent the forced sale of a home in most circumstances, Winslow said.

“What’s particularly troubling about this ad is that it is preying on the fears that many people have about losing their home in our current economic crisis,” Winslow said. “Insurance companies shouldn’t be allowed to deceive their customers into buying more overpriced insurance.”

The state insurance department and attorney general each have the authority to demand that a company stop running an ad.

In 2005, Abbott issued a cease and desist order to the Allstate Corp. after the company ran an ad that featured a family that lost its home and savings because it didn’t carry enough automobile insurance. In a letter, Abbott’s office told Allstate that the ad violated the state’s Deceptive Trade Practices-Consumer Protection Act and the state’s insurance code.

Allstate pulled the ad, so no lawsuit was necessary, Kelley said.

Source: Austin American-Statesman

The Texas Department of Insurance officially proposed a rule Tuesday that would ban the use of certain policy clauses that make it easier for insurance companies to deny benefits to some policyholders.

The move is the first step in a potential ban on so-called discretionary clauses — which often exist in disability, life, accident and health policies.

Discretionary clauses give insurance companies the sole authority to interpret the terms of their policies. In other words, the clauses effectively give companies the authority to decide who gets paid and who doesn’t.

In a filing to propose the rule change, the Insurance Department said: “Discretionary clauses are unjust, encourage misrepresentation, and are de- ceptive because they mislead consumers regarding terms of the coverage.”

Deeia Beck, who represents consumers in insurance issues for the state, asked Insurance Commissioner Mike Geeslin to ban the clauses in October.

And in March, Geeslin made an informal posting of the pro posed rule change to gauge public sentiment. Now, he has taken the next step by formally proposing the change.

The deadline for written comments to the department is June 28, and there will be a public hearing on July 12.

“This is the next step in getting a permanent rule in place,” Beck said. “This is an excellent development to help rid the state of these unfair clauses.”

The insurance industry objected to the proposed change in March.
Jared Wolfe, head of the Texas Association of Health Plans, said the push for a ban is driven by plaintiffs’ lawyers – and shoddy evidence.

Almost two dozen other states have taken steps to reel in discretionary clauses.

Discretionary clauses, which are the subject of a recent public debate between insurers and consumer advocates, give insurance companies the authority to interpret the terms of their policies. They also provide the legal  cover to win most lawsuits in which policyholders sue over unpaid claims.

In other words, the clauses effectively give companies the authority to decide who gets paid and who doesn’t.

Insurers say the clauses are necessary to keep premiums low and to help them fight off frivolous lawsuits.

But Deeia Beck, the state’s public insurance counsel, has asked Insurance Commissioner Mike Geeslin to ban the clauses. Geeslin has solicited preliminary comments from the public and the insurance industry and will decide whether to formally recommend a rule change, which would trigger a formal public comment period before a decision is made.

“The use of these types of , clauses is inherently unfair. to consumers,” Beck said. “These clauses allow insurers to make patently unfair decisions, and consumers will have very little judicial recourse to have those decisions overturned.”

Beck has chosen to follow the lead of almost two dozen other states that have taken steps to reel in discretionary clauses, which are most comonly found in long-term disability policies, though Beck said some health care policies contain them, too. She said the new federal health care law would have no effect on discretionary clauses.

Not surprisingly, the insurance industry is fighting back.

Jared Wolfe, head of the Texas Association of Health Plans, said the push for a ban is driven by plaintiffs’ lawyers and shoddy evidence.

The insurance industry also has questioned the commissioner’s authority to ban the clauses.

Beck has responded to the industry’s claims of spiking premiums by pointing to a 2005 industry study, by Milliman Inc., a consulting and actuarial firm.

The study said that the prohibition of discretionary clauses would lead to a cost increase of 3 to 4 percent in disability policies, and that may be on the high side.

Beck added that the insurance industry has had several years to show that banning the clauses in other states has led to high premiums and increased litigation, but they haven’t produced any evidence to demonstrate their claims.

If Beck and other advocates manage to persuade Geeslin to make a policy change, it could take awhile before policies in Texas cease to contain discretionary clauses.

If other states’ experiences are any indication, the fight will end up in court.

Michigan and Montana, which have banned the clauses, were sued by insurance companies. Both states, however, eventually won appeals after lengthy court fights.

Even if a ban were to lead to a lawsuit, Beck said, pursuing it is still the right thing to do for the countless number of people negatively affected by discretionary clauses.

You can also read our Questions and Answers about discretionary clauses.

We’ve all seen the Geico gecko and All State’s Dennis Haysbert on TV. They say we can save money on car insurance and maybe we can. It depends.
Prices are determined by factors such as your credit score, one of the top three factors in pricing, along with where you drive, how much you drive, your age and your gender. Your driving record is among the top ten factors calculated in the price but unless it’s terrible, it’s not as important as the others.

It pays to get five or six quotes. In some cases, you could save money buying over the Internet, but allow plenty of time to fill out a lengthy application with all sorts of questions. If you are an ultimate winner in the Web application process, you could save 15 percent over the price of buying from an agent, but not always.

Internet sellers include Geico Direct, Amica, Ameriprise, USAA and 21st Century.

In addition to your credit score, the price may also be influenced by your insurance score. Reed Elsevier sells the Choice Point Attract auto insurance score. It ranges from 200 to 997 and costs $12.95.

If you have been insured by a company for five years or more, you might get a better deal because of the loyalty discount. Having a home insured by the same company brings the multiline discount. Accident-free brings a nice discount as well.

If you have a teen driver, you will pay a high price, but could get discounts for driver training and good school grades.

Service is an important matter to consider. That is, if your agent is located a short distance away, you could get faster service for a car accident than you would from an Internet insurance provider who is a thousand miles away.

The City of Dallas has begun in earnest with the new policy of towing the vehicles of uninsured motorists. I hope the Austin Police copy this tactic and that word spreads quickly and greatly reduces the number of drivers who don’t carry the mandatory auto liability coverage. This would be a great benefit to our personal injury clients, and to motorists in general. On New Year’s Day Dallas police towed 20 vehicles.

I’ve written many times about the problems Texas has with uninsured motorists. More than 25% of Texas drivers have no auto insurance, even though it’s required by state law. This new policy of towing uninsured cars will disproportionately affect poor people, who find it harder to afford insurance. But the law is the law – even poor people are required to carry insurance, and poverty is not a good excuse to drive uninsured.

If you drive in Dallas and you either haven’t bought insurance or you have let your insurance lapse, you better take care of that soon or you could be facing very expensive costs to get your car out of the pound.

A criminal flees the police at speeds topping 100 mph, crosses into oncoming traffic and smashes into a car.  Sounds like a nightmare?  It gets worse.  His insurance company doesn’t want to pay up on his $300,000 auto insurance policy.

The Texas Supreme Court will soon decide who deserves the law’s protection – the family whose car was in the wrong place at the wrong time (the 1999 wreck left 7-year old Roney Tanner comatose for a week, in the hospital for a month and in physical therapy for five years) or an insurance company (Nationwide) with a reckless and irresponsible client.

Nationwide has taken the position that the fleeing driver (Richard Gibbons) violated his insurance contract by leading police on a wild chase all but guaranteed to end in a horrific wreck, relying on a starndard “intentional acts exclusion” clause to void coverage – and two courts have agreed with them so far.  Welcome to Texas where the insurance companies rarely pay for their insured’s mistakes.

Nationwide argues that Gibbons ought to have known that disregarding stop signs, traffic signals and lane markings during a protracted high-speed police chase would eventually lead to the type of accident that critically injured Roney Tanner.

But Don Cotton, the Tanners’ lawyer, said the accident was not inevitable. ,
The most dangerous parts of the chase were over by the time Gibbons hit the Tanners on lightly traveled roads surrounded by farmland, he said.

Significantly, Cotton said, pursuing police officers noted that Gibbons slammed on his brakes in an attempt to avoid hitting the Tanners’ 17-yearold Honda Accord with his Ford F-350.

“It is nonsensical to say that somebody intentionally caused harm when the only evidence in the record is that he was trying to avoid causing that harm,” Cotton told the nine justices. “The test is not reckless (acts). The test is ‘intentional.’ ”

If this isn’t a good reason not to carry Nationwide insurance than I don’t know what is.  It’s also all the more reason (as I always say) to carry high uninsured/under-insured coverage.

A Dallas-based company is offering Texans auto insurance by the mile.

MileMeter, which is targeting people who drive fewer than 12,000 miles a year, is the only company offering mileage-based insurance in Texas despite a law passed in 2001 that encourages such a plan.

MileMeter charges from 3 to 20 cents per mile, depending on coverage options chosen, and it takes the driver’s word on the odometer reading.  The policies are for six months, whether or not the driver has reached the mileage limit.

The company can offer low rates for low-mileage drivers because “it’s very difficult to get into an accident when your car is parked,” said MileMeter chief executive Chris Gay.  “The less you drive, the less risk you’re exposed to.”

Federal statistics put the average number of miles driven in 2006 at 14,768, but many Americans have driven less this year because of higher gas prices.  According to Gay, roughly half the population drives around 12,000 miles a year.

Progressive is planning to introduce a mileage-based plan in 2009 which uses GPS technology to track usage.

The problem, though, is that MileMeter’s limits top out at $50,000 per person and $100,00 per accident which is not nearly enough.  Also, the insurance automatically ends when the odometer has registered the number of miles purchased or six months have elapsed, whichever comes sooner.

To reduce the number of drivers without auto insurance, the state of Texas has launched a database that allows law enforcement officials to tell which drivers have insurance and which don’t.

The program, known as TexasSure, began in the Austin area on June 2, and is being tested for about 60 days before it is expected to go statewide.

Texas drivers are required by law to have auto insurance, but one in five is uninsured, according to the Texas Department of Transportation.

Drivers will still be required to carry proof of insurance, but the database was created to counter those who purchase an, insurance policy, get an insurance card and then cancel their policy.

The $7 million program is a joint effort among DPS, the Transportation Department, the Texas Department of Insurance and the insurance industry. It is being financed by vehicle registration fees. TexasSure requires all Texas insurance providers to supply a list of customers with up-to-date policies. The state then matches those policies to a driver’s license number, license plate number and vehicle identification number.

Under current law, drivers pulled over fora traffic violation who are found to be uninsured are ticketed $350 for the first offense, plus fees. Repeat offenders face fines of up to $1,000 and a two-year license suspension.

Yikes!  I’m not the only one.  Texas families saw their health insurance premiums soar 40 percent in five years – 10 times faster then their incomes increased, according to a report released today by the Robert Wood Johnson Foundation in Princeton, N.J., a national foundation that promotes health care improvement.

The foundations report, “Squeezed: How Costs for Insuring Families are Outpacing Income” was prepared by University of Minnesota researchers, did not study why premiums increase almost 30 percent nationally to an average of $10,728 in 2005.  In Texas, premiums jumped to an average $11,533.

Nationally, Texas ranked third behind Oklahoma and Idaho in premium increases from 2001 to 2005.  At the same time, Texas ranked No. 1 in the percentage of residents without insurance.  In 2005-2006 that figure was 27 percent and the state had 5.5 million of the nation’s 47 million uninsured people.

People without coverage often get expensive emergency room care, and those costs get passed on as higher premiums to people with insurance, says Regina Rogoff, the executive director of People’s Community Clinic which treats uninsured people in the Austin area.

Taxpayers also share the tab when hospitals and governments do more to help the uninsured according to Clarke Heidrick, a member of the Travis County Healthcare District Board.