Tough Action Needed to Halt Insurance Abuse

Bradley Inman’s story, “Industry Shoots Down Garamendi’s Insurance Consumer Bill of Rights” (July 5), accurately portrayed the commissioner’s pro-consumer legislation as being deflected by a one-two punch from insurance companies and agents.

These same lobbyists have also stalled another consumer protection measure, SB 1854, by Sen. Nick Petris (D-Oakland). This bill would warn homeowners that so-called replacement coverage does not really pay the full cost of replacing their home, even if it includes “inflation protection.”

The only insurance that will always pay the full cost is called “guaranteed replacement coverage.” SB 1854 requires clear disclosure to insurance buyers of the true meaning of these extremely misleading terms.

Many people who lost their homes in the Oakland hills firestorm were fooled by this confusing terminology and found themselves grossly underinsured.

Sen. Petris’ legislation is an attempt to prevent future battles over coverage limits like the ones in Oakland.

The insurance industry doesn’t care about the legitimate concerns of people who buy their products.

Even in this rather extreme case, in which thousands of homeowners suffered emotional and financial distress attributable to the industry’s misleading contract terms, insurers and agents thumb their collective noses at customers.

Until the Legislature and the governor stand up to the insurance lobby’s assault on efforts to protect consumers from deceptive practices, these abuses will continue.

TOM EPSTEIN

Los Angeles

The writer is deputy commissioner of consumer protection and communications at the Department of Insurance.