A friend of mine was recently checking over his insurance
policies, and he said it's a good idea to review your insurance periodically, especially
with the rise in fake insurance. What can I do to make sure I am properly covered?
Your friend is right. It is a good idea to check over your insurance policies at
least once a year, and the beginning of the new year is a good time to make sure
all of your affairs are in order and all of your insurance needs are covered. That's
why the Louisiana Department of Insurance, along with the National Association of
Insurance Commissioners (NAIC), encourages you to "Get Smart" about your
insurance coverage during Get Smart About Insurance Week, Jan. 24-28, 2005.
Here is a list of some important things you should consider to Get Smart about your
1. Contact us here at the Department of Insurance.
The Louisiana Department of Insurance works for you. We are an unbiased source for
information that can help you understand what you need and should expect from your
insurance policies and providers.
2. STOP. CALL. CONFIRM...before signing up for any new policies. Call the Department
to verify that the insurance company and producer you are dealing with are legitimate
and licensed to do business in Louisiana.
3. Schedule a routine insurance check-up.
It is a good idea to get with your insurance providers at least once a year to make
sure you have the right insurance, in the right amounts, to adequately protect you
and your family. Be sure to let them know of any changes in your life, such as marriage
or a birth in the family.
4. Dig for discounts.
Ask your producer about ways you may be able to reduce the cost of your coverage.
Some companies offer discounts for such things as good driving, good grades, special
education and training, safety equipment, as well as discounts for multiple policies
and healthy lifestyles. Also inquire about the cost benefit of opting for higher
5. Filing a complaint.
If a claim has not been resolved to your satisfaction in a reasonable amount of
time, contact us at the Department of Insurance. Often, your questions can be answered
without a written complaint. However, if you feel you need to file a formal complaint,
contact us for a complaint form and a copy of our brochure, How to File an Insurance
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I can't find an insurance company that will sell me the coverage
I need. Dont I have any rights?
You have the right to apply for insurance, but insurance companies also have the
right to refuse to write you a policy if you dont meet their underwriting
guidelines. You dont say what kind of insurance coverage you need, so lets
take a look at three major types of insurance and your right to purchase them.
The Louisiana Automobile Insurance Plan was formed to provide insurance for people
who have trouble getting the required auto liability insurance. You have the right
to apply for, and receive, coverage through this plan if you have a valid Louisiana
drivers license and have been turned down by other insurers. Any property
and casualty insurance producer can complete the application for you. Expect to
pay significantly more than you would for a regular policy.
The Louisiana Health Plan operates an assigned risk pool that makes health insurance
available to at least some of the people who have been turned down by other health
care plans. Also, people who have recently lost their group health insurance through
no fault of their own may be eligible for the state HIPAA pool. Because only a limited
number of slots are added each year, this coverage may not always be available.
Health insurance coverage through these plans is also very expensive. Contact us
here at the Department of Insurance for details and other possible options.
The FAIR and Coastal Plans were established for people who are turned down for insurance
on dwellings that are at high risk for property damage losses. If you have been
unable to get insurance on your home because of where you live, you can apply for
coverage through one of these plans. As the name implies, the Coastal plan is especially
designed for property along the coast where insurance is hard to get because of
the threat of hurricanes and other storms. Any property and casualty producer can
help you complete an application for the plan that is right for you. Both plans
offer the standard coverage that you would buy from any insurance company. In addition,
they cover vandalism, malicious mischief and windstorm damage.
If you have additional questions about the availability of the insurance you need,
give us a call here at the Department of Insurance.
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How do I go about filing a complaint against an insurance
company that won't pay my claim?
If you have tried everything and still feel you are not being treated fairly by
an insurance company or producer, you can file a complaint with us here at the Department
In fact, we have an award-winning brochure called "How To File An Insurance
Complaint" that explains how to go about filling out a complaint form. We can
mail you a free copy of the brochure along with a complaint form, or you can download
both from our web site. Details on how to contact us are listed at the end of this
We receive thousands of insurance-related complaints each year. That means we are
able to help thousands of individuals and their families get the insurance payments
and other insurance-related benefits and services they are entitled to.
The complaint brochure gives a step-by-step explanation of what information you
should include on the complaint form and what supporting documents you may need
to attach, such as medical bills or vehicle damage estimates. One important thing
we emphasize is that you should never send any original paperwork to us, or to anyone
else. Do, however, send us copies of anything you think may help us resolve your
problem with the insurance company.
Once we have a chance to review your complaint, we may contact you to request more
details. Keep a file on everything you send to us and have it where you can get
to it if we need to discuss the complaint with you. If we ask you to contact us
with more details, remember that we may not be able to continue our investigation
if you don't get the additional information to us. Many times, we are unable to
help people who contact us because they don't provide some of the critical information
Once you file a complaint, you should get an acknowledgement letter from us in a
couple of weeks, and we will keep you updated on our progress during the course
of the investigation. Even if your problem is not resolved exactly as you would
like, I can assure you that we will have taken all necessary steps to see that you
are treated fairly and equitably by the insurance company.
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I keep hearing that citizens should help fight insurance fraud.
I know fraud is a bad thing, but what does that have to do with me?
You may be surprised to know that Louisiana law requires you to report any knowledge
of insurance fraud to the Fraud Section of the Department of Insurance. Reporting
insurance fraud is also in your best interest because it costs you and me money.
Statistics indicate that more than 10 percent of every insurance dollar we pay goes
to make up for insurance claims fraud.
We follow up on every insurance fraud tip we get, and you can report your suspicions
of fraud confidentially. Make your fraud report by calling our toll free number,
1-800-259-5300, and asking for the Fraud Unit, or by calling the Fraud Unit directly
at 225-342-4956. Or, fill out your report on the Internet by going to our website,
www.ldi.state.la.us, and clicking on Report Fraud.
One of two major sources of information about fraudulent insurance activities is
individuals like you. The other major source is insurance companies, who can lose
their right to do business in the state if they dont report suspicions of
insurance fraud committed by their employees, producers or the general public.
Individuals usually contact us quickly when they feel their insurance producer is
pocketing their money instead of sending it to the insurance company. However, we
also need to hear from you and your neighbors if you have reason to believe that
someone is committing claims fraud. The bit of information you give us may not seem
like much to you, but it could be that one piece of the puzzle that will lead to
the conviction of a perpetrator of fraud. For example, in one case, our Fraud Unit
received an anonymous tip that a homeowner had submitted a bogus theft claim for
valuable personal items that the homeowner still had. That anonymous call started
an investigation that led to the arrest and conviction of the guilty parties.
If you have reason to believe that an individual or a group has committed insurance
fraud, do your part by passing that information along to us. Well do the rest.
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What is the Department of Insurance, and what does it do for the
The Department of Insurance is a state agency created by the Louisiana Legislature.
One of its major functions is to make sure you get the insurance coverage you are
paying for. Regulation of the insurance sellers is especially important because
insurance is not a tangible product that you can see and touch. We constantly monitor
the insurance industry so that you can be reasonably sure your insurance will be
there when you need it.
Heres a very general overview of how the regulatory process works. First of
all, to write insurance in the state, a company must file an application with the
Department of Insurance requesting permission to write specific kinds of insurance
under specific guidelines. Department staff members check to be sure the applicant
is offering the kind of insurance policies Louisiana citizens need and that it has
adequate financial resources to pay claims. Background checks are done on the people
involved in the company to make sure they meet the high standards the Department
has set for the insurance industry. Similar rules apply to anyone wanting to become
a licensed insurance producer in Louisiana. Each one must submit an application
to the Department, undergo a background check and pass a rigorous written exam.
To remain in business, companies must file quarterly and annual reports for review
by the Department. Also, producers must earn continuing education credits to keep
One of the best tools we have in monitoring the insurance industry is feedback from
people like you. We encourage people to file a complaint with us if they have a
conflict with an insurance producer or company that they cant seem to resolve.
Common causes for complaints are that a company 1) isnt being cooperative
when people file claims, 2) doesnt pay its claims on time, or 3) denies claims
that should be paid. We rely upon the watchfulness of the consumer to let us know
about such problems. Fortunately, we often are able to work with the consumer and
the insurance company to resolve the complaint to everyones satisfaction.
I hope this brief overview gives you some idea of what we do. If you have specific
questions about the Department, let us know.
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What kinds of questions should I expect to be asked when
I apply for an insurance policy?
You will be asked a number of questions when you apply for any kind of insurance.
Take your time in answering these questions. If you fail to give the insurance company
full and accurate information, they may reject your application or refuse to pay
your claims at some later time.
You will be asked two different kinds of questions. The first type is the familiar
demographic question, such as name, age, gender, and address. The second type is
specific to the insurance you are interested in. When applying for health or life
insurance, you will be asked about your health, any medical procedures you have
undergone, your occupation, hobbies, and family medical history.
When shopping for automobile insurance, the insurance company will ask about your
driving record, any recent accidents or tickets and the type of car you are insuring.
With a homeowners policy, youll be asked how much the house is worth, and
with life insurance your age and health are the two big questions.
Asking questions provides the insurance company with the answers it needs in two
areas. With this information, the insurance can determine whether you and your lifestyle
match with the type of insurance the company offers. For instance, some automobile
insurers specialize in offering low-cost insurance to very safe drivers and will
only insure people whose driving habits fit their criteria of a safe driver.
Secondly, your answers will be used to determine which rate to charge you. For instance,
based on your driving record, the insurance company will decide which rate you should
be charged. Rates will vary from person to person, but they must always be based
on approved underwriting standards that apply equally to every individual applicant.
Now that you understand the reason for the questions insurance companies ask, you
should feel comfortable asking the insurance producer to explain if you are presented
with a question you feel is unnecessarily personal. A good producer should be happy
to explain why any question is relevant to your application.
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Ive recently gone out on my own and need to purchase
insurance. What are some things I should look for when trying to find a producer?
There are several things to think about when starting out on your own. Making sure
you have the right kind of insurance is a major concern, so it is important to find
a producer and a company you can trust.
A good place to start is to ask family, friends or co-workers who they are insured
with and what kind of service they receive. Many times personal referrals are the
best way to find a producer. Remember, though, that your insurance needs may not
be the same as someone elses, so take your time and talk to several individuals
before you make a decision. We can provide you with a list of producers in your
area if you need it.
Many people stay with the same insurance representative for years, so it is important
to be as informed about your producer as you are about the policy he or she wants
to sell you. One way to do this is to determine if the person is a licensed producer
in good standing in Louisiana. You can contact us here at the Department to check
on a producers credentials.
Another factor to keep in mind is that some insurance producers represent only one
company while others offer a choice of insurance carriers. One advantage to doing
business with someone who represents more than one company is that he or she can
look for the best policy for you and find the best value for your money.
Also ask if the producer works with a full-service agency that can handle all of
your insurance needs. You may have only one car to insure right now but that will
probably change over time. Some insurance companies offer multiple policy discounts,
which could be to your advantage in the future.
No matter how you find a producer or insurance company you are interested in, give
us a call before you make a final decision. We can tell you whether any complaints
have been filed against the producer or insurance company. We can also give you
the companys rating which will indicate the financial stability of the insurance
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My neighbor says she checks up on her insurance every
now and again, and shes trying to get me to do the same. Is this really necessary?
Yes, it is important that you look over your insurance policies once every two or
three years to make sure you really have the insurance protection you think you
On a life insurance policy, for example, write the company for a status report periodically,
even if the policy is paid up. Sometimes life insurance companies are bought out
by other companies. When this happens, you may need to call us here at the Department
of Insurance to get a phone number for the new company. When you make contact with
the company, ask for a current status report, in writing. If the report shows that
the company will pay out less money at your death than your original company would,
ask for an explanation.
On automobile policies, look over the amount of coverage you are carrying at least
once a year. If you are carrying the minimum 10/20/10 liability limits and youve
been doing pretty well financially, you may want to increase those limits to protect
your hard-earned assets in case of a serious accident.
With homeowners insurance, keep track of what homes are selling for in your area
and adjust your homeowners insurance coverage accordingly if there is a significant
change in the prices or if you make improvements in your home that will increase
Most of us have a general idea of what our health care plan covers. But what would
your policy actually pay if you had a serious illness? A health care plan may claim
to cover a lot of different treatments, but if it also adds steep deductibles and
copayments, you may not be getting as much protection as you thought. After all,
the bottom line is the amount of money you have to pay out of your own pocket in
order to get the best medical care available.
Being well informed about your insurance coverage gives you just a little added
insurance against major financial surprises when you have a claim.
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Do you really do something about it when you find out
somebody is committing fraud or is involved in other illegal insurance activities?
Yes, we take appropriate action promptly when suspected cases of insurance fraud
or other illegal insurance activities come to our attention. Lets look at
some recent examples from our files. One involves a producer charged with fraudulent
activities, another is about false claims filed by an individual, and the third
concerns an illegal insurance company operation. Notice that in each case the fraudulent
or illegal activity was shut down once it was discovered and investigated.
In our first example, it was the insurance producers customers who first alerted
us. A producer took money from customers but did not turn it in to the insurance
company. After several customers became suspicious and called us, we investigated,
issued cease and desist orders to stop the producer and his wife from selling insurance,
and subsequently suspended his insurance license. Even after the producer was arrested,
customers continued to file complaints, which led to additional charges against
In another case, a man was charged with six felonies, including staging an accident
and submitting false claims, after an insurance company employee noticed he had
misspelled the name of a medical clinic on a claim form. An investigation revealed
he had falsely claimed he was treated at the clinic after an auto accident that
never happened. In reporting the discrepancy to us, the insurance company was complying
with a state law that requires insurance companies to report all suspected fraud
to the Department of Insurance.
In our third example, an insurance company and related association were found, by
the Department, to be operating illegally in Louisiana. We issued a cease and desist
order to stop them from selling insurance in the state and called them both into
a hearing. They were found to be in violation of the Louisiana Insurance Code, and
each was fined $10,000.
If you suspect that an individual or group is guilty of fraud, contact us here at
the Department of Insurance. You do not have to give your name.
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I've heard that it is very important that I have a good
credit record, even when I go to buy insurance. Why is that?
Yes, it is true that your financial credit record plays a very important
role in your life. In the past, your credit rating was just something a bank or
other lending institution looked at if you applied for a big loan. But, in recent
years, more and more insurance companies have started checking credit ratings before
they will sell you an automobile or homeowners insurance policy.
You may think you don't need to worry about such things as you have always had a
good credit rating. Right? But what if there is an error on your credit report?
A recent survey reports that as many as 29 percent of all credit reports may have
mistakes in them. It's easy to see how some of these mistakes could happen. One
person with a bad credit rating may have the same name as another who has a good
rating. Or a family member, business associate or former spouse may make a bad financial
decision that implicated you when you didnt do anything wrong, and the list
Just think about how long it has been since you called your local credit bureau
to ask for a copy of your credit report. I wouldnt be surprised if you said
you had never checked on it. Most people havent.
So why dont we check on our credit reports more often? For one thing, it just
isnt that high a priority, and it seems rather silly to call up the credit
bureau to ask for information on yourself.
But its too late to check when you apply for a loan or an insurance policy
that you need right away, only to find that you cant follow through with the
transaction because there is a mixup in your credit history. It may take you weeks,
even months, to get the matter straightened out.
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According to ads Ive been seeing, my local insurance
producer is giving seminars that can help me plan for my golden years of retirement.
Can he do that?
Insurance producers may have additional credentials which certify that they are
qualified to help you with financial planning. However, just being a licensed insurance
producer is not enough. And mail order training wont properly qualify a producer
as a financial planner, either. Furthermore, producers need to realize that they
can lose their licenses or be fined for taking part in misleading or deceptive advertising
and sales schemes.
We have received calls from a number of people who have been ripped off by the sales
pitches used in these seminars. In one case, an 83-year-old man was talked into
buying an annuity that matures in 12 years. He will have to pay heavy penalties
if he takes the money out before he is 95 years old. By law, such contracts must
mature by the anniversary date following the annuitants 70th birthday or 10
years, whichever is later.
Before you waste time going to a seminar or invest in something called a financial
or retirement package, insist that the so-called financial planner show you the
appropriate credentials. An example would be that a CPA would be able to show proof
of state certification.
One thing that makes these seminars suspect is the sensational advertising. Notice
that the wording in financial planning seminars sponsored by banks and other financial
institutions is usually very professional.
Compare that to seminar advertisements that claim Grandma is going to be thrown
in the slammer for breaking some law, or that disgusting and cruel attacks
are being made against the elderly, and all government programs for
the elderly are going bankrupt. The ads also promise nobody will try
to sell you anything.
Before you decide to buy a financial planning package of life insurance, annuity
contract and/or long term care insurance through an insurance producer, ask several
different producers what they have to offer. If one persons story is very
different from anothers, go back to each one and ask why that particular program
is best. If they cannot explain why you need their product, then you probably dont
Meanwhile, call us at one of the numbers listed below to check out any insurance-related
advertisement or sale pitch you feel is suspect.
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What is the time limit in Louisiana for filing a claim
or a lawsuit against an insurance company?
Generally speaking it is best to always file a claim report with the appropriate
party at the earliest opportunity, or as soon as is practical after an accident.
This will help to ensure that you receive the best possible cooperation regardless
of the kind of claim involved.
Claims generally fall into two basic categories: those you file when someone else
is liable and those you file under one of your own insurance policies.
It is always to your advantage to see a doctor right away if you sustain injuries
that may involve filing an insurance claim, for two reasons. The first, and most
important, is to safeguard your health. Injuries sustained in an accident are not
always apparent to the individual. The second reason is to establish a record of
the injury. The date, time and circumstances of the injury should be reported by
you for the medical records. If you learn later that you were seriously injured
and require extensive medical treatment, you have that early medical report to support
Even if you file a liability claim against someone elses insurer, you still
have just one year from the date of the accident to file a lawsuit against the individual
who caused the accident and the insurance company. After one year the individual
or company may no longer be responsible if a suit has not been filed, even if your
treatment is ongoing or your claim is not completely settled. The company the claim
is filed with is required to advise the claimant of the statute of limitations that
The responsibility of the company is for a longer time period when you file a claim
with your own insurer. For example, you may have up to 10 years before your insurance
contract is no longer responsible. This applies to contracts where the insurer is
directly responsible to you, such as your auto collision, homeowners, health care,
and life policies. In one recent case in another state, a court ruling upheld a
property damage claim for storm damage to a building even though the hidden damage
was not discovered for seven years.
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If I think a person or a business is committing insurance
fraud, what should I do?
You should contact us at the Department of Insurance directly with any information
you have concerning activities that may involve insurance fraud.
Every shred of information you have is important to us. All tips we receive will
be investigated by the Department's Fraud Division. If our investigation indicates
that fraud is involved, we will turn the matter over to the appropriate law enforcement
or regulatory agency. What you tell us may be that one last piece of information
we need to shut down a fraudulent operation.
Insurance fraud is often committed by those we least suspect. For example, a person
may risk personal injury by stepping in front of a car or faking a fall to collect
insurance money. Others may sell bogus insurance policies, ask for premium payments
in cash, and pocket the money. Sometimes people go from state to state, running
their own particular insurance fraud scam at every stop.
We work closely with state, national, and international insurance regulators and
law enforcement officers to detect, apprehend, and convict all perpetrators of insurance
fraud as quickly as possible. Information from people like you helps us do that.
There are a number of ways for you to submit your confidential fraud tip to the
Department of Insurance. You may contact the Fraud Investigation Division at the
toll-free number or mailing address listed at the end of this article. Or, if you
prefer, you can fill out the official Fraudulent Claim Report. You can get a copy
by contacting us at the Department or by accessing the form on the Internet at the
Departments web site, also listed below, and you can e-mail your information
to the Fraud Division at ldiFraud@ldi.state.la.us. To contact the Fraud Division
directly, call (225)342-4956 or send a fax to 342-7393.
Insurance fraud costs us an estimated $120 billion per year in this country, and
insurance consumers pay the price in the form of higher insurance premiums. To learn
more about other ways you can fight insurance fraud, ask us for your free copy of
the Louisiana Insurance Fraud Investigator, a publication outlining the Department's
plan for stamping out insurance fraud in our state.
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