Busted: 3 pernicious insurance myths

I love to watch TV, but I'm starting to get tired of the distractions. I try to get involved in the dramatic Navy crime stories on NCIS or absorbed by the cool 1880s antique desk with the hidden gun on an episode of Pawn Stars, but I can't focus. Every five minutes I'm accosted by some caveman or lizard telling me that I pay too much for insurance.

At the next intermission, there's a giant insurance company renaming itself after a policy holder or changing its jingle to personalize it for one specific customer. I can't think about dead Navy commanders or weaponized furniture because now I'm worried about whether the red umbrella covers me too.

So I figured that if a former insurance lawyer such as myself is confused about insurance, a lot of veterinarians must be a little edgy about what kind of policies they have and whether they need to make changes.

Here, I'll debunk the common myths and misunderstandings that policy holders have about insurance and its handmaidens—the broker, the carrier and the adjuster.

Myth No. 1

All insurance agents are insurance professionals

There are many qualified, experienced and knowledgeable insurance brokers and agents who pride themselves on helping customers wade through the complexities of various types of insurance. However, there are more than a few insurance "professionals" who do not avail themselves of opportunities to learn about changes in insurance law and new developments in an ever-evolving universe of insurance products.

Moreover, there is a difference between an insurance professional—whose main obligation is locating the best policy and coverage for each specific client's personal and business needs—and an "insurance guy." The insurance guy sells a policy and never bothers to check whether the client's home and contents have changed, whether new business equipment has been purchased or whether areas of business risk have expanded.

Would you be a "veterinary professional" if you sent your hyperthyroid cats home with a dose figure and a case of Tapazole, never intending to look at another blood value?

Myth No. 2

The more you pay, the better your claims experience will be

Ridiculous. In your town, can you be assured of getting the best veterinary care for your pet by calling around to find the highest possible price for an office visit? Some insurance companies have elected to include as part of their business model a commitment to excellent claim handling. They're more careful about screening the adjusters they use. They make more claim representatives available at more convenient times. They train their people. When these things are done, customers get better service. It's not magic—it's the same business paradigm veterinary practices use to build a client base.

Further, companies with lousy customer support—long waits on the phone, offshore client service centers, annoying telephone-menu nonsense—aren't necessarily the least expensive. Their customers stay with them because they don't know any better and because they've gone years without having to make any claims. Consequently, they haven't suffered enough to look elsewhere for coverage yet.

Myth No. 3

Use the same broker your family has always used

Insurance—whether home, auto, disability or otherwise—is a commodity, and products vary little from one provider to another. This consistency is mandated by state law. The difference between customers' experience lies in the quality of the insurtance personnel at every level of service. So why pick an insurer, a broker or a policy based on one family's experience?

Insurance can be an enormously lucrative business, particularly for family agencies in business for more than one generation. Every time a policy is renewed, the brokerage receives a commission. If that commission becomes an entitlement—when a customer always renews the coverage and always has—the incentive for the broker or agent is minimal for providing service. The agency can spend its time looking for new business.

Imagine if you developed a good relationship with a client and after the first few pets, you were allowed to just mail them a syringe and vaccine vials so they could administer their own shots—and you'd still get the full exam fee. You could vacation in the islands more often and upon returning to your office, you could spend more time cultivating new clients.

That's what's happening when a policyholder receives a renewal invoice, writes a check and mails it to the insurance company. The broker and agent did nothing, yet they still get the commission.

So how do you find an insurance professional who will review your policy without being asked, suggest increases or decreases in coverage as your life changes and, in a word, work for the commission? Simple. You do it the same way you pick a restaurant, a snow blower or a new car: You get recommendations from friends, relatives and business associates.

Is it worth the effort? Let me take off my lawyer and doctor hats and don my favorite hat: my hot-rodder/car collector hat. You see, I get traffic tickets and hit things with my cars fairly often so I know a thing or two about making claims on auto policies. Consider two of my very true, very personal experiences.

July 2002: I forget to set the emergency brake on the 1970 Plymouth Barracuda Convertible I had bought the day before. The car backs itself out of my garage and crashes with enormous body damage. I had contacted my insurance agent the moment I purchased the vehicle at a car show before even pulling it into my trailer.

After the accident I called that agent to make a claim, and he was embarrassed to report that he'd never gotten around to covering the new vehicle and, therefore, I was on my own to see to the repairs. Considering that the repairs on a vintage car can cost more than the price of a brand-new car, I was livid but not satisfied with the agent's answer. I read the policy covering my other old cars and discovered two things: 1) 30 days of automatic coverage on newly acquired vehicles and 2) my agent was a moron for not knowing that fact.

I bypassed the agent and made the claim to the insurer of my other cars. The company questioned every part and procedure the restoration company used to bring the car back to show quality. The experience was a nightmare for me and my body man.

October 2010: I was speeding merrily along Interstate 88 on my way to Albany and a deer jumped out of the woods and bounced off the hood of my 1967 GTO convertible. My seatbelt kept me from any serious injury, but the deer left my Pontiac with its headlights sitting on the dashboard.

After my 2002 insurance fiasco, I had shopped insurers aggressively and switched my cars to a far-less-expensive company with a far better claims record. But you never know about a company until the true test: a major claim.

My new insurer did great for me! The restoration company sent an estimate of about $30,000. The insurer sent an adjuster to the shop, and he approved every single part and procedure. The company even paid extra to replace some sheet metal with vintage parts that cost more than reproductions. The body man and I were both amazed. And this company charges substantially lower premiums than my previous carrier's.

Look critically at insurance agents and policies. Don't end up like my good friend whose practice was damaged in a recent flood. His agent told him he was "all set" with flood coverage after the last one three years ago.

After this year's flood, he was all set all right—all set to pay entirely out-of-pocket for his prescription food inventory, pharmacy inventory, radiography machine and ultrasound machine. None of those were included in doc's "building contents" coverage. Can you say "broker malpractice?"

Dr. Allen is president of the Associates in Veterinary Law P.C., which provides legal and consulting services to veterinarians. Call (607) 754-1510 or email info@veterinarylaw.com.

For a complete list of articles by Dr. Allen, visit dvm360.com/allen