OLYMPIA…In response to alerts from insurance agents in her district, Sen. Val Stevens, R-Arlington, has introduced a bill to combat a practice by some insurance companies designed to save themselves money by silently reducing coverage on policy renewals.
“Imagine you’re renewing your car insurance, which has $500,000 in liability coverage,” Stevens said. “The price is the same; the coverage sheet still reads $500,000 liability coverage, so you think you’re safe. Then a visiting relative has a collision in your car and you discover the liability limit has been reduced to $25,000 – and it’s listed on page three of your new policy. Then you learn it’s even a surprise to your agent, who was not notified.”
Senate Bill 6568 would require an insurance company to notify its agents of any reduction in coverage not specifically requested by the insured – otherwise the change is unenforceable. It would also require the agent to alert the client to any reductions in coverage.
“Amazingly, there appears to be no law protecting the consumer from this practice,” said Eric Wagner, president of Eric Wagner Insurance, Inc. of Marysville. “From an agent’s standpoint, it’s just a nightmare. The renewed policy looks identical to the old one except for those few added words hidden inside the policy.”
Wagner tells of a construction company he has insured for years. Its policy covered any defects found in construction for up to three years. Since some defects, like a leak behind a wall, take years to surface, the policy was excellent. After the policy was renewed, Wagner and his client learned the insurance company had surreptitiously deleted coverage for all past work.
“Fortunately, most insurance companies are honest.” Stevens said. “But those that aren’t must realize this is fraud, pure and simple, and it’s got to stop.”