I recently discovered what I believe is a disturbing practice by insurance companies that deserves public scrutiny.
I cancelled my homeowners insurance after selling the property. The policy was cancelled halfway through its annual coverage period, and I requested a refund of the unused portion of my premium.
I naturally expected approximately half of my annual premium to be returned. Instead, I was offered only about one quarter.
When I questioned this, I was told there was no penalty for early cancellation, yet I received a complicated explanation as to why the refund did not correspond with the unused period of insurance.
Perhaps there is a legitimate technical explanation, but why should an ordinary customer need a degree in insurance mathematics to understand how much of their own money they are entitled to receive?
This raises a bigger question: How many other unsuspecting customers are simply accepting whatever refund the insurer calculates?
Insurance companies have sophisticated systems, actuaries and legal departments. The average customer does not.
If there is no cancellation penalty, insurers should be required to clearly disclose, in plain language, exactly how refunds are calculated when a policy is terminated early.
Consumers should not have to fight for what is rightfully theirs or become too exhausted to argue.
The regulators need to examine this practice. Transparency should not be optional when it is the customer’s money.
Gordon Laughlin,
Westmoorings
