Insurance in the spotlight once again

Carolyn Woodie figured she had enough car insurance -- until she really needed it.



After she was rear-ended in 1996, the other driver's insurance couldn't pay all her medical expenses from whiplash or her lost wages. The Cape St. Claire woman ended up going to court against her own insurance company.



Mrs. Woodie said the experience taught her that when it dealing with insurance, consumers are often on their own.



"I became disillusioned," she said.



That reaction is one reason that the General Assembly is swamped with insurance-related bills every year, as lawmakers try to fill in gaps discovered by consumers, perennial problems and even the occasional crisis such as malpractice. For many policyholders, a lifetime can evaporate without filing a claim. When it happens, the fine print can contain some unpleasant surprises.



This year is no different, with insurance bills ranging from medical malpractice, to mold. One measure, HB 64, would require insurers to provide policyholders with annual written statements that summarize the coverages and exclusions.



Sen. Phil Jimeno, a State Farm insurance agent, stays away from the issues because of his work. But he said the national rise in premiums naturally leads to increased concerns for consumers.



"A lot of this comes out of last year from Isabel and what homeowners and flood insurance policies said," Mr. Jimeno said.



Not all of the issues are clear cut. The Maryland Insurance Administration is testifying against HB 117, which would require homeowners' insurance policies to provide coverage for losses that result from mold under specified circumstances.



Randi Johnson, associate commissioner for property and casualty, said it would raise homeowners' premiums. The administration has 23 open files involving a claim for mold damage in some way. That's out of 1,819 open complaints, which she said indicates the consumer is being adequately served.



"Mandated coverage is not something everyone needs or wants," Ms. Johnson said. "If the consumer wants to buy it, they should be able to buy it."



Insurance advice



Allstate spokesman Shaundra Thomas said consumers can avoid shocks over coverage by meeting yearly with their insurance agent to discuss their policy. Too many times, she said, homeowners don't raise their premiums in accordance to their valuables, nor do they update a home inventory list.



"You have people who stay in one place for 15 or 20 years ... over the course of time they may receive more valuable items and they should make sure they have adequate coverage," she said. "It's hard to know when people have received special gifts and to make sure they have insurance for those."



Paying the price



According to the Insurance Information Institute based in New York, the average premium for homeowner's insurance in Maryland in 2001 was $419, while for renters it was $143. The average expenditure for consumers for car insurance in 2002 was $837.34.



Even with standard car insurance, drivers can find themselves in the hole if their car is totaled, said Joel Katz, an Annapolis attorney who has represented clients in medical malpractice and property damage lawsuits. For those buying a new or used car, he recommends "gap insurance" which can cover the difference between what is owed on the car compared to what the vehicle is worth if it's destroyed.



"Without gap insurance, you may owe thousands more," Mr. Katz said. He also recommends personal injury protection, which has a minimum payout of $2,500.



"Nobody should waive their PIP - it's very inexpensive," he said.



Damon Hostetter, the CEO of Jack Martin and Associates Inc. Insurance in Annapolis said while boat insurance is not always a necessity, it's still a smart idea.



Besides, since boats depreciate in value, "they are usually insured for a little more than they are worth," he said. "Does it make sense to have insurance? Absolutely. Am I required? No. But a lot of marinas make owners show proof of insurance."



Steve Donovan, an Annapolis resident, said investing in significant insurance is a small price to pay when confronted with the possibilities. When he reads of people wiped out of their waterfront homes who complain of inadequate insurance, he feels limited sympathy.



"It's your responsibility," he said. "FEMA should be a last resort."



Choosing high coverage can pay off, he said - in the mid-'80s, someone broke into his car and stole his camera. Since that particular model was no longer being manufactured, "the check for replacing it was worth hundreds more than the camera," Mr. Donovan said.



"Insurance to me is not about getting a portion of what I lost back - it's getting it all back and then some," he said. "Nobody wants these things to happen, but all it takes is just one time when it serves you."



Dawn Bristow, of Pasadena, learned that the hard way when another driver's car ran into her house.



With no renter's insurance, she turned to the driver's insurance company, which is covering the cost of renting a house for two months. But it's been a bitter feud over where she's going after March, and who will cover the damage to personal property inside her house.



"The house was my lifeline," Ms. Bristow said. "I'm paying money out all over the place. I don't have a cent to my name. All I know is in two months I'm homeless."