While insurance coverage is a valuable purchase for families focused on financial security and mitigation of the risk of loss, insurance companies sometimes undermine the value of coverage or otherwise take advantage of consumers by using misleading or deceptive practices. Common examples of inappropriate practices include overcharging for coverage, misleading consumers about benefits and lowballing claims. While these types of bad faith insurance practices are recognizable to most consumers, there are more subtle unfair practices that are prohibited under Florida statutes.
While many industries are subject to fair business practices standards, investigations usually arise because of consumer complaints. By contrast, the insurance industry is a highly regulated industry, so government regulators do not simply wait for complaints. Government regulators in Florida establish rules for how insurance companies, brokers, and agents communicate and deal with consumers. All rates and forms also are subject to approval by state regulators. The Florida Office of Insurance Regulation will routinely look for potential violations even in the absence of consumer complaints. The insurance industry like other industries can engage in puffery in promoting their company and products, however, certain practices cross this line.
A memorandum recently issued by the Florida Office of Insurance Regulation (OIR) provides an example of how insurance companies attempt to deceive consumers along with the role of Florida regulators in moving to penalize such actions. The memorandum specifically addressed a recent practice involving travel insurance policies but could be equally applicable to other types of insurance coverage. The OIR memorandum sent to insurers reiterated that the practice of “sliding” constituted an illegal practice under the Florida Unfair Insurance Trade Practices Act.
The practice of sliding essentially refers to misleading consumers about either the cost or scope of insurance coverage. For example, an insurance agent might inaccurately inform a consumer that Florida law requires homeowners to also purchase umbrella coverage or auto insurance when they purchase a homeowner's policy. Similarly, an agent might inform a consumer that certain supplemental coverage is included with no extra charge when purchasing a homeowner's insurance policy even though there is an additional fee. These are typical examples of sliding.
The memorandum recently issued about sliding was based on a particularly deceptive approach to selling additional coverage without the informed consent of the consumer. On the insurance websites through which the supplemental coverage was sold, the consumer was forced to “uncheck” a radio button to avoid being charged for the supplemental coverage. If the consumer did not notice the checked box and failed to remove the check, he or she ended up purchasing the extra coverage for a higher premium. The OIR has been clear in the past that this type of opt out scheme constitutes an unfair and deceptive practice. The requirement that a consumer identify a pre-selected box and opt out of additional coverage is not the same as obtaining the consumer’s informed consent indicating the intention to purchase the extra coverage.
Even if an insurance agent engages in the practice of sliding without the knowledge, consent, or subsequent approval of an insurance company, the insurer can still be financially liable for the misleading acts of an agent who is selling the insurer’s product. Because of the extensive regulation of the insurance industry to protect consumers, Florida regulators not only monitor insurance carriers and agents but also anyone authorized to sell the insurer’s products. If you are the victim of deceptive, misleading or unfair insurance practices, you might have a legal claim for financial compensation.
You can reach Miami Insurance Claims Lawyer J.P. Gonzalez-Sirgoby dialing his direct number at (786) 272-5841, calling the main office at (305) 461-1095, or Toll Free at 1 (866) 71-CLAIM or email Attorney Gonzalez-Sirgo directly at [email protected].