Chip Merlin | Property Insurance Coverage Law Blog | March 11, 2019
Insurance companies and insurance agents know that their customers do not read their insurance policies. Proof is found by the Squaremouth Insurance Company offering a prize which could only be found if a policyholder read the insurance policy and won a secret contest. Here is the story:
A self-proclaimed ‘nerd’ from Georgia read the often-ignored fine print on an insurance contract — and it ended up winning her $10,000. Donelan Andrews recently bought travel insurance from a Florida-based company, Squaremouth. Andrews and six of her closest friends are traveling to London together in September, and the high school teacher wanted to secure their trip, she told CBS News.
Andrews says as nerdy as it sounds, she always reads the fine print on contracts, policies and agreements. This time, her diligence paid off. Hidden deep within the text of her Squaremouth insurance policy was a contest to win $10,000. The company buried instructions for claiming the grand prize in the fine print of every Tin Leg Travel Insurance contract.
‘If you’ve read this far, then you are one of the very few Tin Leg customers to review all of their policy documentation,’ the fine print read. It included an email address and said the first person who replied would win the prize.
. . . .
Squaremouth explained the secretive contest on their website after Andrews won. ‘We understand most customers don’t actually read contracts or documentation when buying something, but we know the importance of doing so,’ the company wrote. ‘We created the top-secret Pays to Read campaign in an effort to highlight the importance of reading policy documentation from start to finish.’
‘Over the past 16 years, we’ve learned that many travelers buy travel insurance and just assume they’re covered if anything goes wrong, without actually reading the details of their policy,’ Squaremouth wrote. ‘However, this often leads to claims for losses that are not covered. This lack of understanding is one of the biggest reasons travel insurance claims are denied.’
In, When Words Collide: Resolving Insurance Coverage and Claims Disputes, Bill Wilson agrees that virtually nobody reads their insurance policy:
Who reads rental agreements at the counter when renting a car? Pretty much no one. Who reads 78-page software or phone app licensing agreements? Almost certainly no one. Did YOU read the Copyright and Disclaimer page of this book? (That’s a rhetorical question.) Who reads insurance policies? Virtually no insureds and far too few insurance professionals like agents, underwriters, and adjusters. Why? In the case of insureds, one reason might be that the actual policy forms are not provided for days or weeks after coverage is bound. A presumption of an insured might be that, if the insurer doesn’t see a need for the insured to read the policy before entering into the insurance contract and perhaps weeks afterwards, is there really any need to read it when received? Would whether or not an insured reads the policy make any difference in how a claim is resolved?
So, how do customers of the insurance product know what they are insured for? I would suggest that they learn from their insurance agents and from advertising. If Wilson is correct, it is certainly a very precarious proposition because then even the agents who customers rely on are not reading the policies and the often-comedic advertising of insurers.
Policyholders do not read their policies. If they did, few would fully understand what they are covered for. The reality is that most people “hope” they have coverage. After a loss happens, that “hope” is a lot more nervous than at the point of purchase.
Insurance agents are extraordinarily important. Policyholders should select truly professional agents, as I discussed in, Choose Insurance Agents Wisely to Avoid Insurance Coverage Gaps:
Educated, hardworking and professional insurance agents play an important role in the insurance industry. They recognize their obligations to customers extend far beyond being mere order takers and providing the cheapest insurance premium. Instead, they are the agents who procure insurance policies which provide the “peace of mind” the insurance industry promises and advertises to those who purchase its products.
Imitation is the greatest form of flattery, as I have been told, and as such, we will imitate what Squaremouth has done. If you are reading this – you have won free admission for you and up to four others to our 4th Annual Midwest Construction Defect & Dispute Conference in Chicago on May 20th. Travel, food and other expenses are not included. Email firstname.lastname@example.org to take advantage of this offer and claim your reward!