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Got a complaint? Call your state insurance department

Having a problem with your insurance agent, company or adjuster? Is the claims process moving as slow as molasses in January? Feeling wronged? Where do you turn to complain?

The answer may be as close as your state insurance department. Since insurance is regulated at the state level, each state has its own way of accepting, investigating and tracking consumer complaints. However, there are some general rules of thumb that you can follow to rectify the situation.

Before you take your complaint to the state, try and work it out with the insurance company or agent first. State insurance officials usually ask if you've already contacted the party that you're complaining about. While there are no guarantees, there's a good chance you can resolve your problem without filing a formal complaint. If that doesn't pan out to your satisfaction, call the state insurance department.

INN has contact information for each department. If you need the address or phone number, go to the state insurance gateway and select your state from the drop-down list. You'll find the contact information on the resulting page.

Many insurance departments offer over-the-phone assistance in the hopes of resolving the problem without the consumer filing a formal complaint.

One of the first questions you'll be asked by the insurance department is if you've contacted an attorney. Once you've hired a lawyer, the department won't be able to speak with you directly, which only makes their job more difficult. Lawyer jokes aside, hiring an attorney should be seen as a last resort.

Know what you have

Knowing exactly what your policy covers is probably the most important step to avoiding problems and complaints. An insurance policy is a contract between you and the insurance company. You should read it carefully before you sign on the dotted line. That can help prevent trouble later on.

If you buy a new car or make any major changes to your home or your life, you should probably look at your policy again and determine if you need additional coverage.

Insurance departments around the country handle thousands of complaints each year. Some of those complaints are valid, while others revolve around miscommunications and misunderstandings.

Of the almost 17,000 complaints handled by the Texas Department of Insurance in 1996, 40 percent were determined "justified," according to Audrey Selden, the department's associate commissioner for consumer protection. In those cases, the department found there was some violation of state law or department regulations, or the company or agent mistreated the consumer.

Another 40 percent of the complaints were deemed unjustified, Selden said, and the remaining 20 percent were referred to another agency.

In those cases, she said, the consumer's complaint may be outside the jurisdiction of the insurance department. They may, for example, be sent on to the attorney general's office, the Department of Labor or the worker's compensation commission.

That remaining 20 percent also includes inquiries from consumers that didn't really develop into a formal complaint, Selden said.

Although some complaints might seem frivolous on the surface, the department takes them all seriously.

The most common complaints deal with underwriting and handling of claims for auto and homeowners insurance, said spokesman Mark Hanna.

Sometimes, their hands are tied

Unless there's something illegal about a company's underwriting standards, there's little the department can do, Hanna said. Depending on the regulations in your state, the insurance companies usually determine how important your driving record, claims history or type of home is.

And unless the insurance company is deliberately dragging its feet on your claim, you may be out of luck. Most states require that an insurer make a settlement offer within a particular period of time -- usually 60 days.

Many complaints arise from rejected claims, Hanna said. That's another reason why it's so important to know what your policy covers. The insurance department can't force the insurance company to cover something that wasn't in the policy in the first place.

While regulations vary from state to state, the insurance department's authority is somewhat limited. The department might be able to resolve a problem involving the improper denial of a claim or a delay in handling your claim, but not complaints about rates, refusal to insure or deciding who's at fault for an accident -- except in very specific circumstances. Unless an insurance company has broken the law, the insurance department can't force the company to make you happy.

And although the insurance department can call for new legislation or regulations, that won't help resolve your complaint now. Such actions could help prevent problems in the future, but they're rarely retroactive.

If the insurance department decides against the insurance company or agent, the department can levy a variety of penalties, ranging anywhere from a fine to revoking the license of the agent or company.

All in all, the complaint process is there to keep your problem from hitting the court system, said Hanna. The idea is "to put it to bed as soon as possible," he said.

Although each insurance department has its own procedures when it comes to consumer complaints, the process has many common elements.

Insurance departments usually try to help consumers solve their problems without resorting to official complaints -- which is the last line of defense before the crowded legal system.

Filing a formal complaint should be considered a last resort. If you've exhausted all other possibilities, it's time to tell your story.

After you provide the insurance department with all the necessary information -- including your policy or claim number and supporting documentation -- the department will notify the company or agent you're complaining about. The company or agent is then required to respond to the department within a certain amount of time -- typically somewhere between 10 and 30 days, depending on the state.

After receiving the company's reply, insurance department officials will dig deeper, trying to determine what, if anything, can and should be done.

The whole process usually takes at least 30 days, although more complicated cases will take longer.

In some cases, the insurance department may be able to get the insurance company to pay you what you deserve. In fact, Texas insurance officials were able to return some $16 million to consumers in the 1995-96 fiscal year, Selden said.


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