Renton, WA

Do we need to make it illegal for insurers to “unreasonably” deny certain coverage claims?

Sunday I read the Focus section of the Seattle Times with interest, as there are several significant issues coming up on the ballot. I could see good points on both sides of the radio and TV advertising for this issue.

On one hand, making the unreasonable denial of claims actually illegal would allow the consumer to sue if a claim is denied. I imagine that right now all one can do is go to the Washington State Insurance Commissioner, which may not be common knowledge to the average state resident. The con side of the argument tried to prove that this law was not necessary because only 2800 complaints for which this law would apply were filed with this Insurance Commissioner. If only 2800 complaints were filed, then it must follow that 99% of claims are satisfactorily settled, right?. I find it hard to believe that 99% of insurance claims are truly settled to the satisfaction of the consumer. Perhaps instead the low percentage of complaints indicates a lack of the knowledge by the consumer on how to complain. Does the consumer really know that they can and should go to the State Insurance Commissioner if they feel unfairly treated? Or how to do that?

On the other hand, I imagine that this law would encourage anyone who felt their claim was denied when it should have been covered - which would be just about everyone denied - to sue. So I can certainly see how this would lead to some frivolous lawsuits. Even if the insurance company does not have to pay the reasonably denied claim, the insurance company does have to pay for court costs to defend itself. Naturally, rising costs will be passed onto the consumer in the form of higher rates.

The con argument started off with the emotional appeal to consider those who would have to pay higher insurance premiums when they could barely afford current insurance premiums; I consider starting with an emotional appeal to indicate not having a strong factual basis. Sure enough, the increased cost is estimated to be $205/year. This was calculated by the “con” side of the argument, the people trying to convince us it will be too expensive to us, so that number would err on the side of over-estimating. That’s $205 over the course of a year. If that could push a family over the edge, any small extra bill, like a speeding ticket or a cavity, would do it too.

After having read the arguments, I am voting for the proposition. $205/year, about $15/month, seems like a relatively small price to pay in order to have additional legal protection. What do you think? Are you voting for or against, and why? Leave me a comment and let me know.