While the insurance companies may want you to believe the strategies of “take or leave it”, “deny, delay, defend”, and “deny, delay, confuse and refuse” are to eliminate cases involving insurance fraud, these strategies, implemented in the mid 1990′s per recommendations from the consulting giant McKinsey & CO., are in reality, tactics to boost the insurance compaines profits at the expense of consumers.

In November of 2008, The American Association for Justice published their report Deny, Delay, Confuse and Refuse, which uncovered strategies that included consistently denying claims and delaying claims in some cases until the insured had died. Other tactics include confusing consumers with incomprehensible contracts, discriminating by credit score, canceling policies of those whose medical conditions become expensive to treat and canceling their policy when a policy holder files a claim.

So, when it comes to Insurance, its buyer beware. Your insurance company may not have your best interest in mind when it comes to settling your claim. Your best defense is to become an educated consumer.

What Should You Do?
Call your insurance company today! This act takes effect January 1, 2008, and it applies to any policy issued or renewed on or after January 1, 2008. It does not automatically update or retro activate an existing policy. You must notify your insurance company and write a new policy or renew your existing policy.

What Else Do I Need to Know?
The new law requires insurance companies to provide consumers with the option of carrying equal limits of UM/UIM as up to the bodily injury liability limits. So, what that means is; if your liability coverage is $100,000 then you are eligible for $100,000 in UM/UIM coverage.

Saving Money by Dropping the Premiums on Additional Cars is Not a Good Idea.
Your insurance agent may try to talk you into dropping coverage on additional cars is not a good idea and here

Could “Set-off” and “Anti-Stacking” be Used Together?
Prior to January 1, 2008, insurance companies could reduce your compensation by “setting off” and “anti-stacking” your compensation at the same time. The law now prohibits that practice.

Example:
Tony ran a red light and hit Connie, causing $250,000 in medical expenses and lost wages. Tony’s liability coverage was $50,000. Connie carried $100,000 in UM insurance and additional $100,000 UM coverage on her second car.

Conclusion Before January 1, 2008:
Because he was found at fault, Tony’s insurance company paid Connie his policy limits of $50,000. Connie’s UM insurance company then “setoff” or reduced their payment by the $50,000 paid by Tony’s insurance to $50,000. Because of “anti-stacking” language included in her own UM policy Connie’s insurance company would not pay the additional $100,000 UM coverage from her second car. Connie’s total compensation was $100,000 ($50,000 from Tony’s policy and $50,000 from her UM policy) leaving Connie $150,000 short.

Conclusion After January 1, 2008:
Tony’s insurance company paid Connie his policy limits of $50,000. Connie’s insurance company was not allowed to “setoff” this $50,000 and because Connie’s injuries were so severe, paid the additonal $100,000 in policy limits under the first UM policy paid to Connie. In addition, her insurance company is prohibited from using “anti-stacking” language in her policy and must pay her the additional $100,000 UM/UIM coverage from her second car. Connie’s total compensation is $250,000.

To be continued. Next up: What should you do?

What is “Anti-Stacking”?
Another change in the law stops insurance companies from using “anti-stacking” language when writing a policy. Prior to the new law, insurance companies could collect premiums for UM/UIM coverage on multiple policies covering multiple cars in the same household. However, they would not allow the policy holder to use these multiple coverages at the same time.

Example:
Andrew and Samantha were both driving on the interstate when Samantha rear-ended Andrew’s car because she was distracted while talking on her cell phone. Samantha was uninsured. As a result of the accident Andrew had medical expenses and lost wages totaling $250,000. In addition to his liability coverage, Andrew had purchased and paid premiums on three separate $100,000 UM/UIM policies for each of his three cars for a total of $300,000.

Conclusion Before January 1, 2008:
Andrew’s insurance policy contained anti-stacking language which allowed the insurance company to limit Andrew’s coverage to only $100,000 of UM/UIM benefits on one car policy despite the fact that Andrew paid for UM coverage on 3 different vehicles, paying premiums for $300,000. His coverage was $150,000 short.

Conclusion After January 1, 2008:
Under the law change, Andrew was able to combine or “stack” his three policies for a total of $300,000 which was more than enough to cover his $250,000 in medical expenses and lost wages.

To be continued. Next up: Can “Set-off” and “Anti-Stacking Be Used Together?

What is “Setoff”?
Prior to January 1, 2008, your insurance company would be able to “setoff” or reduce the amount of UM coverage they would have to pay you by the amount of liability insurance available from the at fault driver.

Example:
Kendra was driving home from work and was hit by Josh after a night out drinking with his buddies. His blood alcohol level was above the legal limit and he was cited for driving under the influence. Kendra was severely injured and spent many months in the hospital and in rehab. She was unable to work during her recovery time and her medical expenses and lost wages totaled $250,000. Josh had insurance but his bodily injury liability policy limit was only $50,000. Kendra had purchased $200,000 in UM/UIM safety net coverage on her own policy.

Conclusion Before January 1, 2008:
After Josh’s insurance company paid Kendra the $50,000 per Josh’s policy limits, Kendra’s insurance company was then able to deduct or “setoff” that $50,000 from her UM/UIM coverage, leaving her with only an additional $150,000 in coverage. Her total compensation was $200,000 and she was left to pay the remaining $50,000 out of her own pocket.

Conclusion After January 1, 2008:
Josh’s insurance company paid Kendra the $50,000 per Josh’s policy limits. Kendra’s insurance company was legally obligated to pay her the total of her UM/UIM policy limits of $200,000. Her total compensation was $250,000 which covered all of her medical expenses and lost wages.

To be continued. Next up: “What is Anti-Stacking”?

What is Liability Insurance?
Property damage liability coverage pays for the physical damage to the vehicle damaged in the accident by the at-fault driver. Bodily injury liability coverage provides compensation for injuries sustained in a motor vehicle collision. The State of Colorado requires that every owner of an car have at least $25,000.00 in bodily injury liability insurance coverage.

What is Uninsured (UM) or Under-Insured (UIM) Insurance?
Despite the fact that Colorado law requires every automobile owner in Colorado to maintain insurance on their vehicle, many drivers who cause accidents do not have car insurance and are therefore “uninsured motorists.” In other cases, the driver who caused an accident may be insured but may not have enough coverage to pay for all of the injuries caused in the accident and is “under-insured.” We are frequently asked, “What happens to my case if the person who caused the accident is uninsured or doesn’t have enough insurance?”

If the at-fault driver doesn’t have insurance, or does not have enough insurance, we look to your automobile insurance policy for compensation for injuries and losses. Under Colorado law, insurance companies selling automobile insurance in Colorado are required to sell Uninsured/Under-Insured Motorist Insurance as part of every policy sold unless the coverage is specifically refused in writing. Uninsured or under-insured (UM/UIM) coverage is a separate coverage that provides coverage to you and your passengers if injured in an accident caused by an uninsured or under-insured driver. This coverage “steps into the shoes” of the at-fault driver and pays you the same kind of damages you could have recovered from the at-fault driver’s insurance had the driver been insured. Uninsured motorist insurance coverage may be available to pay your claim if any resident in your household owns a car that has uninsured motorist coverage regardless of whether you were occupying the car at the time of the accident. In fact your uninsured motorist coverage will even cover you if you are a pedestrian hit by an uninsured driver.

To be continued. Next up: “What is Set-Off”?