Crappy Consumer Insurance: USAA’s Fade-Away UM Coverage –Disserving the US Military

If it benefited our servicemen and servicewomen would you mind if today I was really nasty with an insurance company? Here goes, USAA is un-American and sets such a low standard that they should be selling insurance to Bulsehviks in Moscow, Russia. Here is the commercial USAA should be showing.

USAA epitomizes all that is wrong with American business thinking. Let’s set the bar low, and if anyone is injured we will protect ourselves with laws that take away their rights to seek compensation. If they point the finger at any of us we will point to China or each other saying we are all doing it so it must be right.

This week I’m covering Ohio’s crappy insurance coverage with the fade-away coverage. The consumer pays for coverage that doesn’t exist when they need it.

Here is what I don’t understand about the car insurance business: Why do all insurance companies try to sell the policy with the least amount of coverage? After all let’s face it no one can read their auto insurance policy and know what will and wont’ be covered after they are in an auto accident.

This is the crap USAA is selling in Ohio. It’s a policy with underinsured motorist coverage (UDM) that takes a credit for whatever the at-fault driver’s insurance company pays and therefore removes that coverage from the injured guy when he needs it the most. It is like letting a fat guy take part of the skinny guy’s seat on a plane. The skinny guy paid for it, the fat guy didn’t and the skinny gets to sit for a couple of hours getting his suit repressed, sweated on, when he least needs it, never asked for it and paid for a whole seat. Don’t you hate that?

Let’s get everyone caught up on this issue. I’ve been covering auto insurance in Ohio because a client of mine whose child died is being paid only $12,500 by the at-fault driver’s car insurance and nothing by USAA, her own insurance company. What USAA did is write their policy and give themselves a credit for whatever the at-fault driver’s insurance company pays. Essentially they took away all of her UDM coverage and pocketed it for themselves.

Here are the titles so far.

Crappy Consumer Insurance: USAA’s Fade-Away UM Coverage –Disserving the US Military, Steve Lombardi | February 07, 2010 12:01 PM | 0 Comments Des Moines, IA , If it benefited our servicemen and servicewomen would you mind if today I was really cruel to an insurance company? Here goes, USAA is un-American and sets such a low standard that they should be...

Ohio’s UDM Coverage: Consumers Being Sucker Punched! The Never-Pay UDM Auto Policy, Steve Lombardi | February 05, 2010 8:01 AM | 0 Comments Des Moines, IA , Ohio must be using the new math? For two days now (Here count them using your fingers, one and two.) we’ve discussed how the Ohio legislature got together with their insurance buddies and...

Ohio Underinsured Coverage – They took it away and still charge you a premium., Steve Lombardi | February 04, 2010 8:01 AM | 1 Comment Des Moines, IA , Yesterday we covered underinsured coverage in Ohio and specifically the minimum limits type of insurance. Those minimum limits are $12,500. We found out the broad view was rejected and the narrow...

It Really Sucks Being in an Auto Accident in Ohio, Steve Lombardi | February 03, 2010 12:01 PM | 2 Comments Des Moines, IA , I thought of titling this piece Underinsured Motorist Coverage, The Narrow View fits Narrow Minds, but really I couldn't because in reality it just sucks to be a Buckeye. Don’t mind me the...

Now consider this, my guess is that USAA will say one of three things:

1. The law allows us to do this.

2. We aren’t doing anything that other insurance companies in Ohio aren’t doing. In other words we are setting the same low standard that everyone else is doing.

3. The low cost end of the insurance market is competitive and if we designed a better policy no one would buy it. Are we supposed to assume the poor are all stupid and would rather waste their discretionary earnings than pay a little more for better coverage?

Here is the problem with this type of thinking. Under the first reasoning it isn’t that the law allows selling crappy auto policies, it does, but it also allows insurance companies to sell better policies, ones that actually do some good for their insured’s rather than pocket the money. Which brings us to the second point: USAA is setting a pitifully low standard in the insurance marketplace that reaches only as high as the lowest possible denominator. USAA should be ashamed. These are servicemen and women who fight for our country and lay their lives on the line so that every USAA employee can live a good life where they can earn a healthy profit. USAA sets the lowest possible standard allowable by writing a policy with fade-away UDM coverage and selling it to young infantrymen and cadets. And so is every other company that sells this crap. The third point they can argue is only a good one if you believe every person who bought low cost insurance is ignorant and incapable of listening to why they should pay a little more to get a better mouse trap.

This is partly what is wrong with American business and why we all struggle against the Chinese. We are our own worst enemy. We are no longer trying to sell a better product than the next guy, now we race to see who can sell a product that meets the lowest possible standards.

One thing that is missing is trust by the consumer in corporate America. The consumers don’t trust businesses because no one plainly states what they mean. The IT community uses vernacular that redefines vocabulary and then when selling a product doesn’t plainly describe what you’re not getting. You find out only after you buy the product that it won’t do what you expected it to do. Then their vernacular becomes clear; you just had to spend more money. But if you go for broke and buy the most expensive you end up with a computer with 80% of the features you’ll never use. Why do you think so many people wait with baited breath for Warren Buffet’s annual report on Berkshire Hathaway? He speaks plainly, honestly and gets to the point. He isn’t racing to be the lowest common denominator; he wants only the best for his shareholders and in the process invests in quality not quantity. And Americans believe him. And Americans forgive him when he makes a mistake because if they know one thing about Mr. Buffet it’s that he’s always honest with them.

It takes a lifetime to build a reputation and only a few seconds to destroy it.

No one forces auto insurance companies to sell crappy insurance; the law doesn’t require them to sell crap. What the law does is allow them to sell crappy insurance policies. And in Ohio the law allows them to sell really-really-really crappy insurance policies. USAA chooses to sell this garbage policy with the fade-away UDM coverage. Now here is the kicker, USAA is doing it not because they have to do it but because it’s profitable for them. These policies with the fade-away UDM coverage don’t benefit the insured, they benefit USAA. And that’s why servicemen and servicewomen should look elsewhere when buying auto coverage.

What USAA is doing is shameful. They are taking advantage of our servicemen and servicewomen to make a buck for them leaving our young men and women without insurance coverage when they need it the most. The shame is on you USAA. Your policy language comes right out of the gutter where you should have left it.