BUYER BEWARE
Officials of the California Department of Insurance advise consumers to take several precautions when buying and maintaining insurance policies:
* Determine whether the salesperson is an agent or a broker. Insurance agents are the representatives of the companies whose policies they sell. Insurance companies are obligated to honor the promises of their agents if a client can document that money was given to the agent in good faith. Brokers are legally the customer’s representative, and insurance companies are not obligated to make good on brokers’ claims. However, since they agreed to do business with brokers, many companies will honor claims in cases of broker fraud.
* Before giving an agent or broker money for a premium, obtain a written binder naming the insurance company. this serves as temporary proof of insurance until receipt of an official policy. Receipts for any money given to a broker for an insurance premium should also be obtained.
* Insist on an official policy from the insurance company within 30 days after a deposit. If a policy is not received, the broker or agent should be contacted immediately.
* If there are doubts about coverage, contact the insurance company directly. Most insurance companies have a customer-service division that can verify coverage.
* If a cancellation notice is received, for any reason, contact the broker or agent and ask whether coverage is still valid. If the representative says it is, written proof should be obtained.
Again, doubts can be resolved by contacting the insurance company directly.
* If a company advises that insurance coverage has been canceled, demand a refund from the broker or agent and notify state authorities at the Los Angeles investigations bureau of the state Department of Insurance, (213) 736-2560.
* To resolve any doubts, ask the Department of Insurance about the reputation of a broker or agent before beginning business dealings.
The department can confirm whether a representative is licensed, which insurance companies have agreed to sell policies through that person, and how long he or she has been in business. The state can also advise consumers if disciplinary action has been taken. The number of the licensing division is (916) 322-3555.
