Revenge of Irritated Policyholder Backfires

Times Staff Writer

Question: Junk mailers have made the ultimate intrusion on my time and privacy.

In mid-February I received an orange card from the post office noting that there was certified mail in my name awaiting pickup at the Van Nuys Civic Center office.

No great worry. I was expecting a check, a videotape and a belated birthday gift. So I went to the post office and stood in line with others--37 others, as it turned out. Odd. Why so many? Very peculiar. The post office had set up a separate line for us--all clutching orange certified-mail slips and nobody knowing what they would be picking up. Then the worry began--an IRS audit?

After a wait of 34 minutes (agonizing for the woman behind me who parked her car at a 13-minute meter), I signed for my certified mail: a thinly disguised pitch for earthquake insurance from Fire Insurance Exchange, which implied that this certified mailing was a legal requirement for the company.

Fortunately, I have two home-insurance policies with Fire Insurance Exchange, so I could exact revenge: I called my broker and canceled my policies with FIE. Better yet, I do intend to take out earthquake insurance, but with another company. Why didn't FIE go through the regular mail or contact me by phone?--P.D.

Answer: Your card was orange? Mine was green. Join the crowd, in other words, because the state was flooded for a while with certified-mail, return-receipt-requested forms, and we were among the unlucky ones who happened to have no one at home on the day the mail carrier delivered them--thus the frustrating trip to the post office.

Just how many such mailings were made is anyone's guess. State Farm Insurance Co. alone sent out 1.3 million of them at a cost of about $1.50 apiece (75 cents fee plus regular postage plus return postage, according to the post office. The cost varied slightly because some companies made their mailings before the price of first-class postage went to 22 cents).

Did the law require them to do this? According to Dave Simmons of the Insurance Information Institute (who got one too), it did , and so our ire at the insurance companies (at least all of them that write insurance on private dwellings and/or renter's insurance) may be mitigated slightly on that score.

Here's what happened, according to Simmons: The state Legislature was concerned that all homeowners in the state and all renters with enough valuables to have them insured be notified of the availability of earthquake insurance. Fair enough. So the law was originally written to specify that everyone be informed by first-class mail of this availability. This carries with it, of course, the presumption of notification.

However, here's where irony comes into the picture. It was the insurance companies, not the state, that wanted the notification to be sent by certified mail and with a return-receipt request. Presumption wasn't good enough for the insurance carriers, Simmons adds, because in the event of a major quake, they could see themselves flooded with claims having to do with what is called concurrent causation.

Earthquakes, in other words, are peculiar in the type of loss associated with them. A house, of course, can be flattened by the impact of the shock itself, but in many other cases it will be destroyed either by an explosion or a fire caused by a gas leak that was caused by the quake. This is concurrent causation.

The insurance industry was adamant that if it had to go to the expense of notifying everyone of the availability of earthquake insurance, then it should be permitted to go a step further and have on file proof of individual notification specifically spelling out that coverage, for an additional fee, is available to take care of earthquake and earthquake- related losses.

By having on file proof that such coverage was declined by their policy holders--but that they knew it was available--the industry hopes to be able to defend itself against a flood of concurrent-causation claims. If worse comes to worst, that is.

Too bad you switched over to another company. Now, the new company is going to have to go through the same procedure with you. And there you are--back in the foot-dragging certified-mail line at the post office again.

Q: American Express has me completely confused. Does the right hand know what the left hand is doing in this organization?

Although I have had an AmEx Green Card since 1969, I successfully resisted the company's continuing pitch to sell me a Gold Card membership until about six months ago, when I finally knuckled under and applied for one.

As soon as the Gold Card was approved, and I had it in hand, I naturally canceled the regular card because, as you know, they duplicate each other in usage.

Since then, however, I have received no fewer than three hand-wringing messages from AmEx about how shortsighted I am in "canceling" my membership and pointing out, for page after page, all of the advantages of being an American Express card member--all of them signed by a vice president of the company, no less. It's beginning to annoy me.

Don't the people in the Gold Card division of AmEx talk to the people in the Green Card division? Isn't there any cross-checking done to establish that I haven't canceled anything? --D.T.

A: Nothing pains American Express more than having a long-standing member--obviously in good standing--flake out on them. And the longer you've been a member, the deeper the pain.

We had helpful Melinda McMullen of AmEx's public affairs department track you down. What obviously happened was that you skipped one of the boxes on the application form right next to the space where you indicate where you want the bill sent--to your home or to your office.

"The type is pretty small," McMullen admits apologetically, "but right next to this line, there's a section headed 'American Express Cardmember Experience. Account number . . .' whatever."

And here is the teeny-tiny type reading: "After I receive the Gold Card please cancel my above account." And there's a teeny-tiny box to check.

Because you canceled your Green Card separately and failed to check the box that would make an automatic transition from Green to Gold Card membership, the Green Card division of AmEx concluded that you were miffed at them (it happens, they concede) for some personal reason. And, they hoped, with enough tearful pleas for reconciliation you might be persuaded to kiss and make up.

Now that AmEx knows the true facts, McMullen assures us, the mail barrage will stop instantly. They don't want you canceling the Gold Card too, heaven knows.

Q: You had an item several weeks ago about a deaf woman and her husband who had received mysterious $46.46-a-month bills from the phone company for several years without any explanation as to what they were for. Both AT&T; and Pacific Bell denied sending them, but presumably they were for a private line between this woman's home and the telephone-answering service six blocks away because of special equipment installed in both the home and the answering-service office.

Did you ever find out where the bills were coming from? They surely had to be coming from somebody. --L. S.

A: They certainly were, but it took Pacific Bell about two weeks of culling through old files to come up with the gracious admission that, sure enough, they were the guilty party.

"It was a computer error," Pacific Bell's John Donner concedes. "We couldn't find any record of it for a long while and honestly didn't think they were coming from us."

Compounding the confusion, at least initially, was the letter writer's firm conviction that the bills were definitely coming from AT&T--huffily; denied by that equipment-oriented branch of the now-fragmented Ma Bell. By the time the letter writer double-checked and corrected himself--and forwarded copies of the bills to me so that they could be verified--the column was in place.

Actually, the deaf woman and her husband have been paying the $46.46 a month only since last October; before that, it was $15 a month, which apparently didn't arouse their suspicion. At that time, the Public Utilities Commission permitted Pacific Bell to put the quantum jump in fees for private lines (that's what it was for, all right) into effect.

How long it will stay in effect--at least at that level--is anybody's guess, though. The PUC has been having second thoughts about the size of the increase and is currently holding hearings on it.

"I've talked to the lady's husband about this several times in the past few weeks," Donner adds, "and he takes the position that there should be a discount for hearing-impaired customers, at least. It doesn't sound unreasonable to me even though the deaf are provided with TDDs (Telecommunication Devices for the Deaf) and already receive a pretty sharp discount on their regular phone bills, because it takes them longer to type the message on the TDD than it does for a person with normal hearing to carry on a conversation."

So there could be relief for the couple before too long.

Don G. Campbell cannot answer mail personally but will respond in this column to consumer questions of general interest. Write to Consumer VIEWS, You section, The Times, Times Mirror Square, Los Angeles 90053.

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