Insurance buyers should do their homework.
Question: You are always pointing us to the terms of the contract. Do you realise that when one is buying property or car insurance, one is never shown the contract or allowed to read the fine print? We only see the contract weeks or months after paying the premium! Does that practice make the terms of the contract legally binding? Can brokers and insurers truthfully say that they show the contract to clients BEFORE the business is accepted? Does the law allow insurers (and brokers) to get away with conducting business this way?
- L.L., Kingston.
Answer: Insurance is a commodity. In many ways it is not different from produce sold in Linstead Market or other goods (or services) that consumers buy across the island. Some of the things that shape the price of ackees or influence how the sellers of breadfruit behave, also affect insurers. Insurance obeys the laws of economics. Sellers of insurance are subject to the same forces that pressure the suppliers of other goods (and services) - after all, they conduct business in the same environment.
A PROMISE
Insurance is a promise. The Consumer Affairs Commission (CAC) says this service helps consumers "pick up the pieces after a disaster." The insurer, in exchange for the premium, agrees to do some things. It promises to pay the buyer in the event that certain things happen. Details of the promise and how much it will pay are set out in an agreement (a.k.a. policy). Unlike tomatoes, onions or other products, insurance (the promise) cannot be seen or touched. Recovery from a disaster is, therefore, very dependent on the buyer's ability to "get a clear understanding of the 'fine print' or hidden costs" to quote CAC.
I agree with the commission. Insurance buyers should do their homework. This means finding out as much as possible about the coverage before making the decision to buy. Many persons treat insurance as special. They allow some insurers and brokers to avoid doing things sellers in other markets cannot get away with. Money is handed over to sellers in the absence of the goods. I would not pay premium to any insurer who refused to explain the details of the coverage I was buying and provided me with a specimen copy of their contract.
MANY CHOICES
Insurance buyers like you are not powerless. In today's world, you have many choices. Use the Internet to visit the website of insurers to get information about the products and services that they offer. If you cannot get details about the coverage on the Net, avoid that company. You should not have to wait for months for the actual policy. Naturally, you should avoid any insurer that does not have a presence in cyberspace.
I do not agree with you. Insurance buyers - not sellers - 'run things'. Buyers owe themselves and their families a duty to enter into contracts with their eyes wide open. If they fail to do their homework before signing on the dotted line, they will end up bearing extra costs when they are least able to afford it. On the other hand, if insurers and brokers do not operate their businesses in concert with the demands of sellers, they will find themselves in a position similar to the vendor in the popular folk song who sold ackees in Linstead Market.
Cedric E. Stephens provides independent information and advice about the management of risks and insurance. If you need free information or counsel to help you solve a problem write to The Financial Editor or contact Mr. Stephens directly at aegis@cwjamaica.com.
