Sep 26, 2017

Full Disclosure in Insurance Policies


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11/17/2008
Brian S. King
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As discussed in this post, I don't know anything more about the Henderson's case than what the SacBee story tells me. But apparently the trial court felt that the disclosures in the MEGA insurance policy were legally sufficient. On the other hand, I have run across circumstances I felt were outrageous in terms of inadequate disclosure of insurer's exclusions and limitations. For example, I recently litigated claims involving a policy issued by American Medical Security in which the insurer reserved the right to limit what it paid under the policy to its "maximum allowable charge." That term was defined as: "a portion of any charge for services or supplies which does not exceed an amount determined by us." Seriously. This was the only specific information in the policy about what AMS would pay. Now would you feel comfortable paying a nickel for that policy? Should you be willing to pay anything that policy? As it turned out, the amount AMS determined in its goodness and mercy to pay was based on Medicare fee schedules. For my client's cancer surgery that turned out to be less than fifty cents on the dollar and left my client owing more than $100,000 to the hospital. The case ultimately got worked out but I continue to shake my head at how insurers can honestly feel this type of disclosure in a policy comes anywhere close to being legally adequate. Why not just say "the ABC Insurance Company will pay whatever it feels like in exchange for collecting your premium" and be done with it?

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