Volume 1 Number 1 ● June-August 2009
Dear Floridian:
Welcome to the first volume of The Advocate's Advice newsletter. Since I became Florida's Insurance Consumer Advocate, my staff has created several informational articles and advisories which have been published on the Florida Insurance Consumer Advocate website. This newsletter is another opportunity for my office to get this valuable information out to you, the consumer.
Do you know what "stranger-originated life insurance" is? If you are a condominium unit owner, do you know all you need to know about self-insurance funds? Are you and your family planning your "trip of a lifetime?" Have you given proper consideration to travel insurance? In this edition, you will learn more about these topics, as well as other important information aimed at assisting and protecting Florida's insurance consumers.
An additional topic included in the newsletter and important to all Floridians is the beginning of another hurricane season. Are you prepared? Have you reviewed your homeowners insurance policy to know what is covered and what is not? Have you looked into possible upgrades or retrofits which might be applied to your home to help protect it against storm damage? Some of these mitigation efforts can save you considerable dollars on your homeowners premium.
This issue will also address the importance of the Department of Financial Services' "Verify Before You Buy Initiative." One of the biggest mistakes I hear that consumers make is the purchase of insurance without verifying the validity of the company and/or agent before signing a contract and issuing payment.
If you wish to receive future newsletter issues, I encourage you to subscribe (it's free!) by clicking on the button on the left. Just put the word "subscribe" in the subject line. You will be able to unsubscribe at any time in the future, if you wish, by clicking on the "unsubscribe" button on the left.
Sincerely,
Sean M. Shaw, Esquire
Insurance Consumer Advocate
Understanding Your Health Insurance
In my position as Florida’s Insurance Consumer Advocate, I often hear about how health insurance is letting our citizens down. Most often the complaint is that health insurance benefits are decreasing thereby leaving many people owing substantial amounts to health care providers after their health insurance has paid its share.
Due to rising health care costs, many health insurance plans have reduced covered benefits and pay less for what is covered. This can create overall confusion as to how health insurance works. In the past, major medical insurance provided coverage when we went to the doctor, hospital, pharmacy or other health care facilities. One just presented their insurance card, paid what they were told, which was usually very little, and went on their way. Now there are Health Maintenance Organization (HMO) plans, Exclusive Provider Organization (EPO) plans, Preferred Provider Organization (PPO) plans and hybrids or combination plans that we must try to navigate. These plans control costs by limiting coverage to a select group of health care providers. Insureds must use these “in network” providers in order to maximize coverage. Given this framework, it is easy to make a misstep and end up owing health care providers a lot of money. In addition, plan managers, as opposed to the treating doctor, have increasing power to decide how and when benefits may be used.
HMO plans have strict requirements that the insured see only their providers; generally a primary care physician will control and direct your health care. The insured must go to the HMO’s hospitals, doctors or pharmacists. It is up to the subscriber to verify that the providers are in the network. The only exception is for out of the coverage area emergencies, in which the insured is required to notify the HMO. Florida statutes outline the payment protocols in this situation.
Some HMO plans have provisions called Point of Service (POS) riders that may allow the insured to go to a doctor out of the network, but there are usually strict requirements including prior authorization, deductibles, copayments and coinsurance to be paid. Additionally, if the provider charges more than the HMO allows, the insured is responsible for the difference. The POS rider gives the insured some added freedom, but understanding the restrictions and cost is very important.
EPO plans are similar to HMO plans in that you usually select a primary care physician who decides whether or not the insured can go see a specialist. The insured is limited to a restricted group of network providers and if he or she goes outside the network for care, there is usually limited coverage or no coverage at all.
PPO plans resemble historical major medical coverage, but with different benefit levels. Usually the highest level of coverage and protection comes from using “in network” providers. The insured generally has lower deductibles, lower copayments and lower coinsurance to pay. Insurance subscribers also have protections from “balance billing,” whereby the network provider cannot charge more than the pre-negotiated amount. In this type of plan the insured usually has a lower level of benefits if he or she chooses to go “out of network.” Subscribers have the freedom to select any provider they choose, but selecting “out of network” providers will generally subject them to higher deductibles, higher levels of copayments and coinsurance. Subscribers are not protected from balance billing. In other words, the insurance subscriber is responsible for the difference between what the health insurance allows and what the “out of network” provider or hospital charges. Sometimes these differences can be substantial. This can be especially problematic when being treated in a hospital. Many hospitals subcontract with radiologists, anesthesiologists, pathologists and emergency room physicians who may not agree to accept the discounts the hospital has negotiated. The insured may go to the “in network” hospital and end up being treated by subcontracted providers, each of which may bill you separately. Here are some tips to prevent unexpected costs:
Read insurance materials carefully
● Insurance plan may only cover “in network” doctors. They will be listed in a provider directory, but it is best to check on the plans website and verify with the provider.
● If a plan does not cover “out of network” care, you will have to pay the whole bill.
● If a plan does cover out of network care, you will still have to pay part of the bill. You usually have to pay more for “out of network” care and you DO NOT have protection from balance billing.
● Those insured may have to get their health insurance plan's approval before they go “out of network” or before they have certain medical procedures.
● Insurers may cover some “out of network” care in emergency situations or in situations where their network does not have a provider of the specialty needed.
Ask Questions
● Ask whether the doctor, hospital, facility, or pharmacy is in your specific health insurance plan's network. DO NOT ASK IF A DOCTOR OR HOSPITAL TAKES YOUR INSURANCE!! This question is far too open ended. Too many different plans are offered by each insurer. They may offer HMO plans, EPO plans, PPO plans, etc. A provider could be “in-network for the PPO, but not for the HMO. If this is the case, and you are in an HMO, you would be “out of network” if you received services. If you have doubt, call the plan's 800 number or visit their website and inquire. It is your responsibility to verify the participation status of the providers you use.
● If you are planning to go to the hospital, ask if your doctor and all treating doctors are “in network.” Even if the hospital is “in network,” your treating doctor may be “out of network,” which will cost you.
● Get help understanding your insurance plan, its benefits and restrictions. Inquire with the doctor's billing coordinator, your employer’s benefits coordinator, or your insurance agent.
● Take notes; get names, dates and times of everyone you talk with regarding claims, bills and disputes. Keep all correspondence, including postage stamped envelopes.
Evaluate the Cost Ahead of Time
● If you are going “out of network,” ask for the billing codes, known as CPT codes, before treatment, then share them with your health care plan to see if there will be coverage. Ask for this information in writing, both for the code information and from your health care plan regarding coverage. You may also ask if the doctor will discount the work. Doctors may give discounts prior to service, they usually won’t afterwards.
● Prior to receiving service, verify whether or not you need prior authorization from your primary care physician, or your plan.
● Verify whether or not you need to satisfy any deductibles and how much.
What to do if your health care plan denies your claim or pays less than you think should be paid
● You have appeal rights. Read your plan document and it will outline your appeal procedures. You may also check with your employer or your agent.
● HMO plans have an additional statutory appeal procedure following appeal denials through the plan. It is called the Statewide Subscriber Assistance Panel. HMO plans are required to provide instructions for appealing to the panel.
● If you cannot pay, try to negotiate the bill and payment plan with your doctor or hospital.
● Be wary of credit card offers to cover medical bills. The interest rate may be very high, or start low and change to a higher rate without notice.
● Your doctor's billing coordinator, or your employer's benefit manager may assist you in filing claim forms and appeals.
● The Department of Financial Services, Division of Consumer Services may be able to assist you by intervening with your health care provider. Call 1-877-693-5236 to speak with a customer service specialist or visit http://myfloridacfo.com. Consumer assistance guides are also available online.
Homeowners -- Some of the basic steps to consider when reviewing your current homeowners policy for renewal or before purchasing homeowners insurance
By ICA staff
Home ownership is considered an “American Dream” and for most it is a primary financial investment. For this reason, it is important that informed decisions be made when it comes to protecting this investment through the purchase of homeowners insurance. In recent years, insurance premiums have risen dramatically due to the hurricane exposure in our state. In order to make insurance premiums more affordable many of the standard homeowners policy provisions are now offered as coverage options. While intentions of this new practice are well founded, many homeowners may find that they do not have adequate insurance coverage to repair or rebuild their homes or to replace possessions after a loss. Some basic steps that should be considered when reviewing your current homeowners' insurance policies or before purchasing homeowners insurance are:
● Visit the Department of Financial Services’ website at: http://www.myfloridacfo.com/Consumers/Guides/Property/index.htm to obtain copies of the Consumer Guide - Insuring your Home and the Consumer’s Quick Check Guide for Homeowners Policy.
● Evaluate the value of your home. (Remember that at the time of a loss, your home must be insured at a limit that will allow you to repair or re-build your home with current building codes and costs.)
● Inventory your possessions and purchase an adequate amount of replacement cost coverage. It is also recommended that homeowners update pictures of their homes inside and out on an annual basis.
● Review the Checklist of Coverage and the Outline of Coverage that are provided with your policy. This is the time to ensure that your homeowners policy provides the coverage you requested and to address coverage concerns.
● Shop and compare - Advertisements which promise substantially lower premiums should be carefully reviewed and compared with all coverage limits and options of current homeowners policies.
● Use caution. We recommend that consumers not cancel their current homeowners policy without first reviewing the replacement policy to ensure that it provides all coverage limits and options as requested. In addition, if you request that your current homeowners policy be cancelled prior to the expiration date, you may be required to pay a penalty.
Homeowners insurance policies are complex legal contracts, if you have any questions or concerns, do not hesitate to contact the Department of Financial Services, Division of Consumer Services at 877-MY FL CFO or 877-693-5236 or visit the website at http://myfloridacfo.com.
Time to Prepare for Hurricane Season
By Sean Shaw
As Florida’s Insurance Consumer Advocate, and as a homeowner, I know that all Floridians realize it’s time to start getting ready for hurricane season. However, the process often seems so overwhelming that many Floridians never get around to it until the hurricane warning is posted. This year, I encourage all Floridians to make protecting their homes, personal belongings and lifetime of keepsakes a priority.
You can start by reviewing your insurance policies, conducting an “annual check-up” of these policies and by asking yourself the following questions:
● Can I access all of my insurance policies right now?
It is recommended that you keep your insurance policies, along with other important documents, in a waterproof container. One copy should be kept in another location, preferably a safety deposit box. Include current date-stamped pictures of the exterior and interior of your home and your personal property. Should you experience a loss, these documents will greatly assist the claims adjuster and expedite the settlement of your claim.
● Do I know what my homeowners insurance policy covers?
Many policyholders have a tendency to renew their policy every year without reviewing the coverage limits to ensure that their home has adequate coverage. Insurance contracts are very complex legal documents. That’s why I recommend that all policyholders review the Outline of Coverage and Checklist that accompany their policy. These documents provide valuable information about what the homeowner’s policy actually covers. Special attention should be given to the amount of the hurricane deductible. Right now, the majority of Floridians do not have enough money set aside to cover their out-of-pocket expenses in the event of a hurricane, including their deductible.
● Do I know what my homeowners association or condo insurance policy covers?
Before a disaster occurs, check with your homeowners association and with the insurance agent who sold you the condo policy, to make sure that you understand which repair expenses are covered by the association or condo and which will be your responsibility.
When conducting your “annual check-up” on your insurance policy, there are some key items every homeowner should check:
Hurricane Deductible – This is the amount the homeowner is responsible for out of the total damages to the home. Homeowners policies contain two deductibles: one (usually stated as a percentage of the policy limits) for damage from hurricanes and another (usually stated as a dollar amount) for damages from other causes such as fire.
Flood Insurance – Homeowners policies do not cover flood damage. Homeowners can purchase flood insurance from the National Flood Insurance Program (NFIP). The Federal Emergency Management Agency (FEMA) also updates flood maps periodically. Homeowners should call the FEMA Map Service Center at 1-800-358-9616 or their county engineer to verify whether they should consider purchasing flood insurance. Please do not wait until a hurricane or tropical storm warning is posted, since flood insurance takes 30 days to become effective! Remember heavy rains can cause a small retention pond to rise over its banks and cause flood damage to nearby homes, so it’s best to take these steps right away, if you haven’t already.
Actual Cash Value (ACV) – This is the depreciated value of property that is damaged or destroyed. Typically, the ACV method for determining the cost of damage is used for personal property such as carpet, furniture and appliances. For example, if your ten-year old carpet is destroyed, you will not be paid enough to buy brand new carpet. The insurer will determine the value of your carpet based on the purchase price ten years ago and reduce that figure by how much the value of the carpet has depreciated over ten years. Your insurer may allow you to purchase replacement cost value coverage for personal property at a slightly higher premium.
Replacement Cost Value (RCV) – This is the amount needed to replace or repair your damaged property with materials of similar kind and quality, without deducting for depreciation. RCV is the method typically used to determine the cost of repairing or replacing the roof, walls, doors and windows. Call your insurance agent to check that your home and contents are covered at their replacement cost value.
Ordinance or Law Coverage – If a local building ordinance or law increases the cost of repairing or replacing an insured dwelling, the insurance company will not pay the additional amount unless this coverage is a part of the policy. Homeowner insurance companies are required to include this coverage at 25% of the dwelling limit and subscribers must sign a waiver to remove the coverage. In addition to the 25%, insurance companies must also offer a 50% limit.
Additional Living Expenses – Most homeowners policies provide additional living expense coverage that will pay some extra expenses if damage to your home is caused by a covered peril and your property is uninhabitable. Policies may designate a limit of coverage for additional living expenses, but this does not obligate the insurance company to pay this amount in advance or in full. You must keep receipts for all expenses and submit them to the insurance company for reimbursement.
For other good ideas on how to get ready for hurricane season, including ways to simplify hurricane preparedness and prepare a home inventory, please visit http://myfloridacfo.com or call the Department of Financial Services at 1-877 My-FL-CFO (1-877-693-5236).
What is windstorm mitigation?
By ICA Staff
Windstorm mitigation is our best defense against the devastating destruction caused by hurricane force winds. Windstorm mitigation means making your home more resistant to being damaged by high wind speeds caused by hurricanes and tropical storms. In addition to protecting you, your family, your possessions and your home, some of the things you do may lead to reductions in the insurance premiums that you pay for the hurricane/wind coverage in your homeowner’s insurance policy. Note that the discount does not apply to the portion of the premium you pay for coverage of all the other perils, such as fire and theft, which are covered under your policy.
Florida law requires all residential property insurance companies to provide hurricane insurance premium discounts for certain fixtures and construction techniques, which have been demonstrated to reduce windstorm losses, including discounts for houses that meet the minimum provisions of the Florida Building Code. Houses built after 1994 in Miami-Dade or Broward Counties and houses built after 2002 in the rest of the state have many wind resistive construction features and will likely qualify for credits. The Florida Office of Insurance Regulation adopted specific percentages to be used for reducing the premium when a house meets specific standards. Insurance companies may use different percentages only if they can show by use of studies that different percentages are reasonable.
The Office of Insurance Regulation adopted the discounts in Rule 69O-170.017. The rule also requires insurers to send a Notice of Premium Discounts for Hurricane Loss Mitigation, which contains a list of discounts with exact dollar savings, to all new and renewed policyholders. To qualify for a hurricane premium discount, consumers have to submit a completed Uniform Mitigation Verification Inspection Form. The form must be accepted by all licensed residential property insurance companies in Florida. Consumers can contract with a licensed inspector to examine their home and complete the official form. A list of approved wind inspectors and inspecting firms can be found at www.mysafefloridahome.com/whathappensnext.asp, or by clicking here.
Although the “My Safe Florida Home” program has completed its mission, its website remains up and running. It is a valuable resource. It will walk you through the process for obtaining a wind inspection and a mitigation discount on your hurricane insurance premium. The My Safe Florida Home program exceeded the Legislature’s goals of awarding 35,000 grants and providing more than 400,000 free wind inspections to eligible homeowners. Although it is no longer accepting applications, it continues to serve homeowners previously enrolled in the program.
CFO Sink is urging the Legislature to continue funding the My Safe Florida Home program to serve additional homeowners. Floridians can express their support for continuing this program to their local legislative officials. Click here to find your local state senator and here to find your local state representative.
A Hurricane Retrofit Guide is available from the Florida Division of Emergency Management. This guide is intended to help consumers decide how to protect their homes against the winds and rains of hurricanes. It is also intended to help consumers decide which protection measures are the most important and therefore which measures should be implemented first. While some mitigation retrofits or protective measures can be done by the homeowner, most require the expertise of a handyman or contractor. This guide will help consumers address the need for professional assistance. The guide provides the homeowner with ideas as well as providing people familiar with construction or in the construction business with the technical help they may need to protect your home.
Also available, courtesy of the Division of Emergency Management, is the Florida Wind Insurance Savings Calculator. This online tool provides homeowners and builders with a general indication of the types of wind insurance savings available from Florida insurance companies for building features that reduce damage during high wind events like hurricanes.
The Institute for Business & Home Safety (IBHS) works to reduce the social and economic effects of natural disasters and other property losses by conducting research and advocating improved construction, maintenance and preparation practices. The IBHS has outlined the top five ways to better protect homes from damaging wind and rain this hurricane season.
1. Shutter all openings.
The most important thing you can do to improve the chance your home will survive a hurricane is to protect all windows and doors. The range of products on the market today means it is easier to find protection that fits your budget. Whatever you choose, make sure the product has the proper approvals for wind pressure and large-missile impact. If it is not a permanent product, install permanent fasteners ahead of time so installation is easier when storms threaten. Gable end vents can be shuttered as if they were a window. Garage door companies have bracing systems available for about $400 that should work for most door styles.
2. Secure loose roof shingles.
Keeping shingles attached is critical to protecting your house. If the edge shingles are not well fastened or extend beyond the drip edge more than 1/4 inch, high wind can lift them off and create a peeling process or domino effect. If they come up without much effort (older shingles become brittle and may crack when bent too much), secure them with three one-inch dabs of roofing cement under each tab.
3. Seal openings, cracks and holes.
Water can invade homes in a number of ways, especially when it’s being blown horizontally. The problem is compounded if there is a loss of power and air conditioners or dehumidifiers are unable to dry things out. Fill holes where wires, cables and pipes enter and exit the house and seal around electrical boxes and circuit breaker panels. Seal cracks around wall outlets, dryer vents, bathroom and kitchen vents, and wall lights.
4. Strengthen soffits (the material covering the underside of your roof overhang).
Keeping soffits in place can help keep water out of your house. Some have wood supports but the soffit material is not adequately fastened to the wood or there is no wood backing and the vinyl or aluminum channels are stapled or nailed to the wall. If there are wood supports, secure soffit material with sharp-pointed stainless steel screws. If the channels are just nailed to the wall, you can use polyurethane caulk to seal the channel to the wall and tie the parts together.
5. Survey surroundings and limit potential flying debris.
Limiting possible sources of wind-borne debris before a storm will help protect your home and those around you. Replace gravel and rock landscaping materials with shredded bark. Limit yard objects. Keep trees and shrubbery trimmed. Cut weak branches.
For more information view Five Things You Can Do in the IBHS video gallery, or review the IBHS publication “S Marks the Spot” in English or Spanish.
The following are additional sources for research and information on mitigation:
Federal Alliance for Safe Homes
Federal Emergency Management Agency (FEMA)
Citizens Property Insurance Corporation
Buyer Beware: Stranger-Originated Life Insurance
By ICA Staff
The Florida Insurance Consumer Advocate sends a caution to all Florida seniors to avoid STOLI schemes. Stranger-Originated Life Insurance or “STOLI” schemes target seniors. They violate the interest of the senior and attempt to fraudulently circumvent the Florida Insurable Interest Law.
Investor-initiated life insurance is a violation of the insurable interest laws of every state in the country. It comes packaged as a “free” or “no-risk” insurance, but what is the actual cost and risk?
This is how the scheme evolves. An investor contacts a high net-worth, elderly, individual. The senior is then coaxed into purchasing a life insurance policy, since it is illegal for an investor to obtain insurance in their name. The investor agrees to pay the premium for the first two years. The intent is to “sell” the policy to a third party (stranger) at the end of the two years. After a STOLI policy is sold, there is financial speculation on the senior’s life.
It may be marketed under the title spin-life, charity-owned life, investor-initiated life or option-life insurance. However it is marketed, it involves a stranger or group of strangers that profit from the demise of the senior.
The senior involved in a STOLI scheme commits fraud by deception. The senior is often encouraged to misstate their net worth to obtain the highest possible face value policy. If the insurance company rescinds the transaction, the senior can be liable for all transaction costs and commissions.
Payments made by the investors to the senior are taxable. Seniors are encouraged to “bet” the limit on their life. This frequently exhausts their life insurance purchasing capability leaving them unable to protect their own family or business. The senior may be promised a purchase price, but the purchaser is not under any obligation to meet that promise. After taxes, the senior could even suffer a sizable overall loss.
The Florida Insurable Interest Law is designed to protect our citizens.
The Office of Insurance Regulation (OIR) released a report on February 6, 2009, indicating STOLI transactions are illegal under Florida Law and has provided legislative language to both the Florida Senate and the Florida House of Representatives seeking support to clarify Florida’s Insurable Interest Law to better protect consumers.
Read This Before You Plan Your "Dream Vacation"
By ICA Staff
In light of the
recent news reports concerning the sale of travel insurance from unauthorized
companies, it is important to explain some specifics about travel insurance.
What is travel insurance? Section 626.321(1)(c), Florida Statutes, states that travel policies and certificates of travel insurance may provide coverage “for risks incidental to travel, planned travel, or accommodations while traveling, including, but not limited to, accidental death and dismemberment of a traveler; trip cancellation, interruption, or delay; loss of or damage to personal effects or travel documents; baggage delay; emergency medical travel or evacuation of a traveler; or medical, surgical, and hospital expenses related to an illness or emergency of a traveler.”
What does travel insurance cover? Most often, consumers buy travel insurance when they are planning an overseas trip or lengthy cruise and want to protect their financial investment in the event that an emergency arises that would necessitate a change in plans. As with any insurance, the specific coverages being offered and the premiums being charged for these coverages will vary from one company to another.
It is recommended that travelers obtain a schedule of benefits and a certificate of coverage when they purchase travel insurance, and that they read the “fine print” to make sure the coverage being offered will meet their needs.
Finally, before purchasing travel coverage, please verify that the agent selling the policy is properly licensed and that the insurance company that will be underwriting the policy is authorized to write travel insurance in Florida. Call the Department of Financial Services, Division of Consumer Services Help Line at 1-877-MyFLCFO (1-877-693-5236) for information about purchasing travel insurance.
Have a safe trip.
Verify BEFORE You Buy!
By ICA Staff
In
today's economic times, the door has opened for unscrupulous people to invent
new and exciting ways to present their offers as opportunities. Unfortunately,
many times these "offers" or "opportunities" are unsolicited, fraudulent
and are being offered by persons who are not legally licensed to do business
in the state of Florida. We are seeing examples of these fraudulent "offers"
in all types of business transactions -- including prescription drug savings
plans, loan or investment opportunities, health insurance coverage, and
even automobile and home warranties.
You are encouraged to refer to the web pages and brochures linked below to learn more about how you can protect yourself from these predators:
Information provided by the Department of Financial Services:
Information provided by Florida's Attorney General:
Smart Consumers Can Stop Fraud