The impact of using unlicensed employees to sell insurance.
Written: Aug 31 '03 (Updated Sep 03 '03)
|
Product Rating:
|
|
| Customer Service: |
 |
|
| Response to Claims: |
 |
|
| Price Confidence: |
 |
|
|
Pros: Great Rates
Cons: Limited Elligibility and Questionable knowledge of coverages
The Bottom Line: I cannot recommend companies like USAA that use unlicensed personnel to take orders for insurance over the phone and do not offer comprehensive coverage reviews for their clients.
|
|
|
| jwimberley's Full Review: USAA Group - Home |
I am writing this review on behalf of a client of mine that just got handed a $3,000 bill and was told by USAA that it would not be paid because he had the wrong kind of homeowner’s coverage on his policy.
I handle Mr. Smith's financial investments and although I am also an insurance agent I have never been able to compete with USAA's rates on homeowners and auto coverage. It is a simple concept, they don't have agents that they have to pay a commission to, and therefore they can keep their rates a good 10-20% below the competition. However, I will be taking the policies from USAA after this renewal.
About three months ago we had a typical windstorm here in Houston, a little roof damage, some tiles flying away and a few fences blown down. That's what happened to Mr. Smith. His fence finally gave way to mother nature and it was gone with the wind so to speak. No big deal, it is standard practice here in Houston that when your fence disappears you call your insurance agent and they pay for a replacement. That is where the trouble started with USAA. It seems that when you call their 800 number to get your insurance you may or may not be talking to a licensed insurance agent. There are loopholes in the state that allow for unlicensed people to take orders for insurance but they are not allowed to explain what the different coverages do or make recommendations. Those duties are reserved for those of us that went to school and passed the tests demonstrating a working knowledge of state insurance law.
When Mr. Smith was talking to the Customer Service person at USAA a few years ago they placed an Actual Cash Value policy on his home instead of a Replacement Cost policy. Now because the Customer Service person was not a licensed agent she could not explain any maybe didn't even know the difference between the two policies.
ACTUAL CASH VALUE: Seems self-explanatory but what it comes down to is when there is a claim the adjuster is going to take depreciation into account based on the current age of the item damaged. I.e., your $5,000 roof with a 10-year warranty is worth about $1,500 after 6 1/2 years; or that 32" TV that you paid $1,000 for 4-years ago is worth about $200 today.
REPLACEMENT COST: Whatever it cost to replace your dwelling or property with like kind and quality at today's prices. I.e., your $5,000 roof is worth $5,000 if that is what it costs to replace it today. Your $1,000 32" TV is worth whatever it cost to replace it with a 32" TV today.
When Mr. Smith's adjuster came out to the house to look at the damage he told the family that the fence was over 10-years old and that he was taking 75% depreciation leaving them with coverage for $750 but that was before their $1,000 deductible leaving them with a zero pay claim. By the way, in Texas if you call your insurance company to open a claim number it doesn't matter if they pay you anything or not, you now have a claim on your record for the next three to five years depending on the company.
Had Mr. Smith had a Replacement Cost policy during that windstorm he would have received a check for $2,000, the full value of his fence minus his $1,000 deductible.
It is vitally important that people understand every detail of their insurance policy. For that reason I cannot recommend companies like USAA that use unlicensed personnel to take orders for insurance over the phone and do not offer comprehensive coverage reviews for their clients. Mr. Smith was saving about $250 per year by going with USAA right up until he had to come up with $3,000 for a new fence that they weren't willing to cover.
I want to clarify my reasons for giving USAA 2 out of 5 stars. It has very little to do with this incident. It has more to do with the fact that they choose to use unlicensed people to market insurance. These types of mistakes are more likely to happen when you use unlicensed telemarketers instead of agents. Not only do agents have to study for and pass a two-hour exam on Property & Casualty law before they can sell a homeowners policy, they must also take 20-hours of continuing education every year in order to keep that license. The problem that I have with USAA is repeated with companies like Geico, Progressive (although there are some Progressive agents) and AAA. Each of these companies uses unlicensed telemarketers to take insurance orders. Insurance is too complex and too important to leave it in the hands of someone without the proper training. I'm not saying that mistakes don't happen with licensed agents but in my experience these types of mistakes are few and far between because that agent knows that he can be held personally liable for making an unsuitable recommendation. If the savings are all that you are looking for then by all means go with the cheapest company but be sure that you do the research necessary to protect yourself because the person on the other end of that 800 number probably has not.
I hope that you feel that you have better information at your disposal when you go out to shop your insurance this year. If you have any questions or comments please post them here or feel free to e-mail me.
Joshua
Recommended:
No
|
|
|
|
Epinions.com ID:
jwimberley
|
|
Member: Joshua Wimberley
Location: Odessa, TX
Reviews written: 26
Trusted by: 0 members
About Me:
Always looking to improve my writing. Please leave comments if you think they will help!
|
|
|
- Add to My Yahoo!: 
- Add to Google Homepage: 
© 1999-2009 Shopping.com, Inc.