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Wednesday, February 16, 2011

How to spot abusive insurance policies

Abusive insurance policies may be illegal, misleading, unreasonably expensive and otherwise dubious in terms of standards within the insurance industry as a whole. This article will illustrate the ways which insurance companies can be abusive, where to look to uncover abusive and/or potentially abusive insurance companies and practices, in addition to providing tips on how to avoid insurance abuse.

Ways insurance companies may be abusive

Insurance abuse may be subtle or just seem like abuse when it actually isn't. Defining insurance abuse is left largely to Federal and State regulators, as well as litigation outcomes via individual, government or class action suits.

When court rulings and pertinent legislation is adjusted, information becomes available to the public so they may be informed of cases in which insurance companies have been and may be abusive. A few of ways insurance companies can be proven to be abusive are as follows:

• Breach of state and/or federal legislation regarding the claims process
• Disinformation regarding insurance policy details
• Questionable advertising
• Price gauging through excessive insurance premiums
• Failure to carry out contract provisions

Where to look for abusive insurance policies

Sometimes it can take a little digging to uncover abusive insurance policies. After all, what insurance company is going to advertise the fact it is being abusive? In one's investigation it may be helpful to look for warning signs and/or pre-cursors to actual insurance abuse in addition to public alerts on proven cases of insurance abuse. A few of the ways to become informed regarding insurance abuse are to be aware of the following:

• Class action suits against insurance companies
• Governmental hearings and/or investigations on abusive insurance
• Federal and State Insurance Regulators
• Consumer rights organizations

Tips on avoiding insurance abuse

Holders of insurance policies don't have to be victims of insurance abuse. If one is involved with an abusive policy one can consider switching to a different company. Otherwise and before doing so it may also be advisable to consider the following initiatives:

• Compare insurance policies
• Research insurer statistics such as payout percentages, and claims ratios
• Investigate consumer alerts, litigation or government actions against insurers
• Question the insurance provider when in doubt

The video below offers a few tips on how to distinguish good insurance from bad insurance, specifically in the case of term life insurance:

In summary, insurance abuse is something that happens but may have to proven as such through a legal process, or investigation. There is significant legislation governing the practices of insurance companies regarding insurance claims, pricing, and advertising all of which may be considered standards and/or benchmarks to assess an insurance policy and the carrying out of insurance contract provisions.

Through being informed of ways insurance companies can be abusive, where to look for abusive insurance policies and taking steps to avoid insurance abuse, policy holders can be better equipped to handle and identify insurance abuse when it happens.