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Consumer VIEWS

Revenge of Irritated Policyholder Backfires

March 07, 1985|DON G. CAMPBELL | Times Staff Writer

Question: Junk mailers have made the ultimate intrusion on my time and privacy.

In mid-February I received an orange card from the post office noting that there was certified mail in my name awaiting pickup at the Van Nuys Civic Center office.

No great worry. I was expecting a check, a videotape and a belated birthday gift. So I went to the post office and stood in line with others--37 others, as it turned out. Odd. Why so many? Very peculiar. The post office had set up a separate line for us--all clutching orange certified-mail slips and nobody knowing what they would be picking up. Then the worry began--an IRS audit?

After a wait of 34 minutes (agonizing for the woman behind me who parked her car at a 13-minute meter), I signed for my certified mail: a thinly disguised pitch for earthquake insurance from Fire Insurance Exchange, which implied that this certified mailing was a legal requirement for the company.

Fortunately, I have two home-insurance policies with Fire Insurance Exchange, so I could exact revenge: I called my broker and canceled my policies with FIE. Better yet, I do intend to take out earthquake insurance, but with another company. Why didn't FIE go through the regular mail or contact me by phone?--P.D.

Answer: Your card was orange? Mine was green. Join the crowd, in other words, because the state was flooded for a while with certified-mail, return-receipt-requested forms, and we were among the unlucky ones who happened to have no one at home on the day the mail carrier delivered them--thus the frustrating trip to the post office.

Just how many such mailings were made is anyone's guess. State Farm Insurance Co. alone sent out 1.3 million of them at a cost of about $1.50 apiece (75 cents fee plus regular postage plus return postage, according to the post office. The cost varied slightly because some companies made their mailings before the price of first-class postage went to 22 cents).

Did the law require them to do this? According to Dave Simmons of the Insurance Information Institute (who got one too), it did , and so our ire at the insurance companies (at least all of them that write insurance on private dwellings and/or renter's insurance) may be mitigated slightly on that score.

Here's what happened, according to Simmons: The state Legislature was concerned that all homeowners in the state and all renters with enough valuables to have them insured be notified of the availability of earthquake insurance. Fair enough. So the law was originally written to specify that everyone be informed by first-class mail of this availability. This carries with it, of course, the presumption of notification.

However, here's where irony comes into the picture. It was the insurance companies, not the state, that wanted the notification to be sent by certified mail and with a return-receipt request. Presumption wasn't good enough for the insurance carriers, Simmons adds, because in the event of a major quake, they could see themselves flooded with claims having to do with what is called concurrent causation.

Earthquakes, in other words, are peculiar in the type of loss associated with them. A house, of course, can be flattened by the impact of the shock itself, but in many other cases it will be destroyed either by an explosion or a fire caused by a gas leak that was caused by the quake. This is concurrent causation.

The insurance industry was adamant that if it had to go to the expense of notifying everyone of the availability of earthquake insurance, then it should be permitted to go a step further and have on file proof of individual notification specifically spelling out that coverage, for an additional fee, is available to take care of earthquake and earthquake- related losses.

By having on file proof that such coverage was declined by their policy holders--but that they knew it was available--the industry hopes to be able to defend itself against a flood of concurrent-causation claims. If worse comes to worst, that is.

Too bad you switched over to another company. Now, the new company is going to have to go through the same procedure with you. And there you are--back in the foot-dragging certified-mail line at the post office again.

Q: American Express has me completely confused. Does the right hand know what the left hand is doing in this organization?

Although I have had an AmEx Green Card since 1969, I successfully resisted the company's continuing pitch to sell me a Gold Card membership until about six months ago, when I finally knuckled under and applied for one.

As soon as the Gold Card was approved, and I had it in hand, I naturally canceled the regular card because, as you know, they duplicate each other in usage.

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