Clients often bring us insurance-related problems that end up having more to do with the quality of the insurance product than with an insurance company misapplying its own policy provisions or not paying claims under a policy. Whether the policy does not cover a lot because the “grant of coverage” is narrow or there are exclusions that take away most of what the grant of coverage does allow, the results are the same.
You can try filing a complaint with the South Dakota Division of Insurance, but the policy “form” has likely already been approved. Know your policy inside and out so that you do not find yourself in this position or one like it.
“Cancer insurance”
Cancer insurance coverage can be frustrating. Often sold door to door across South Dakota by agents trying to capitalize on fear, this insurance is notoriously questionable. Moreover, from our perspective, cancer insurance has improved little in the last few decades. Although some policies claim to cover “certain other expenses resulting from treatment for cancer,” the policies often greatly limit those expenses while also limiting the amount of money each category of benefits pays.
Yet fear still sells. So there you are with a cancer policy and fighting to get benefits that you thought were due only to find out that the policy limits most of what you expected it to cover. In our opinion, your money is much better spent on better major medical insurance.
Heart attack coverage
What if someone buys an insurance policy to cover heart attacks, but in order to qualify for benefits, a physician must diagnose them with a heart attack, and the person needs to have a confirmed heart attack via ECG test strip? These policies have recently been sold in South Dakota. But if you die from heart failure without being hooked up to an ECG, there is no way to confirm benefits are due electronically.
Meanwhile, ER departments do not always take blood tests of dead people, particularly when it does no good. Even with timely blood tests, the substance in your blood that would “confirm” a heart attack may not show up for hours after a heart attack or never at all. Thus, this person will not benefit from the coverage because of a seemingly minor detail in the policy.
Travel insurance
You might have heard of Hurricane Dorian, which hit the Bahamas in September 2019. However, as big of a story as this was, you might not have thought about those who had booked vacation homes on Elbow Cay, the island where the powerful storm first struck off the coast of Great Aboco. Many families booked this major travel destination for the holidays and got travel insurance for it, which costs several hundred dollars.
About a month after Dorian hit, it became obvious that the 220 mph wind did not leave anywhere to travel “to” in December. Many families likely bought travel insurance for the first time and were even proud to call the travel insurer to get started.
“We only cover hurricane-related losses if it happens to your own home or happens to the vacation home with 15 days of your travel.” Sure enough, travel insurance that cost a fraction of the price of the vacation did not cover what many imagined to be the most likely cause of loss. Sure, it covered other things, but not what those families needed it for.
ERISA insurance
In sheer numbers and billions of dollars every year, this is the worst of the worst. What was supposed to be an employee-friendly law to protect workers’ benefit plans has turned out to be, in our opinion, the single largest catastrophe for injured people in the last century.
The Employee Retirement Security Act of 1974 (ERISA) legalized and continues to allow insurers to unfairly treat claimants in ways that prevent claimants from recovering owed benefits and otherwise makes it nearly impossible to find legal representation to navigate the ridiculous process.
In summary, insurance has traditionally been a state-regulated issue. Many states have repercussions that prevent and discourage insurers from cheating claimants. But the insurance industry got involved in ERISA — a federal law — that effectively preempted basically all state law repercussions against insurance companies for treating claimants poorly and replaced it with a lashing via wet noodle.
If you get your health insurance, long-term disability insurance, or short-term disability insurance through a self-funded employer-sponsored group plan and are denied the benefits you need, you may be in for the shock of your life.