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2/5/2010
Steve Lombardi
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Ohio UDM - Suckerpunching those with low limits! Using Fade-Away Coverage

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 passed a law that rips off the elderly poor and the working young in Ohio. If you’ve missed those posts I’d suggest you pick up these linked titles and review them. Of course if you’re a member of Ohio’s legislature you won’t need to read them because you know exactly how your insurance buddies are getting a freebie with selling worthless underinsured motorist coverage to Ohio’s citizens.

It Really Sucks Being in an Auto Accident in Ohio

Steve Lombardi | February 03, 2010 12:01 PM Des Moines, IA

Ohio Underinsured Coverage – They took it away and still charge you a premium.

Steve Lombardi | February 04, 2010 8:01 AM Des Moines, IA

Here is the effect on those buying “economical coverage” in Ohio. If you’re living in Ohio, own an auto policy with underinsured motorist coverage, chances are you are paying for insurance coverage you won’t ever collect on. You’re probably thinking this is just some lawyer complaining about nothing, but I assure you most days I could care less about how Ohio citizens decide to treat each other. But not this day, on this day I do care but only because of the effects of this law on my grieving clients. They lost their child, a wonderfully bright, energetic young lady with great promise in the United States Air Force and all they are entitled to receive is $12,500. Not a penny more.

How does this insurance industry scam work?

Well first you need to contribute to the campaign chests of the best state politicians that money can buy. Then you get them to pass laws taking away the effects of case law that attempts to make some kind of sense out of laws requiring minimum limits of $12,500 for auto insurance. They in turn title the new law the opposite of what it really means, like auto insurance financial responsibility. Let’s get serious how can coverage of $12,500 be a responsible act of financial decision-making? So to call it that is preposterously disingenuous.

Sorry I hope those last two words aren’t too big for the Ohio legislators.

Then you write insurance policies that promise coverage, but in the fine print really you just take away that coverage. That kind of a policy makes you a ton of revenue while saving your company a bunch of money which allows the political campaign war chest more money to buy more politicians. In fact if you can sell something that costs you next to nothing it will increase the revenue to your company. It’s a great scam if you can get to do it.

Of course I’m being a bit factious (oops another big word) because business today isn’t being done like the mob did it 30 years ago. This type of white-collar criminal mentality comes without machine guns and broken legs. This non-criminal conspiracy is done in the open chambers of those state legislative halls in every state passing law allowing similar measures to be passed. They do it right in your face, right under you noses and then they tell you it’s in your best interest – and you’re gullible enough to believe them.

Technically here is how this never-pay insurance policy works. You buy a policy with $12,500 of underinsured motorist coverage. That means when you get in an accident you probably think that if you’re in an accident with an at-fault driver you’re entitled to what his insurance company pays and then get to add this $12,500 on top; that allows you to get closer to being fully compensated. But in the back of your policy, hidden in the finer print is a clause taking away from your UDM coverage whatever the at-fault driver’s insurance company paid. So if the at-fault driver has $12,500 and you have $25,000 in damages you get only $12,500 because his policy payment cancelled out your $12,500. It’s a dollar for dollar setoff. What this means is that any driver with insurance must have at least $12,500 in coverage; meaning anyone in an accident with them will always have a $12,500 setoff against their UDM claim. So anyone with minimum underinsured motorist coverage in Ohio can’t ever collect on that coverage. Get it you're paying for nothing.

Well shucks Auntie Mae, I wished I’d knowed that before I got in that darn wreck!

Can you imagine the profit margin in selling Ohio underinsured motorist coverage? Aside from the commissions paid to insurance agents who sell this worthless policy, the campaign contributions needed to maintain the law and all those bonuses CEO’s pay themselves for whining about the lawyers who help the icky injured people, the margin is a slim 100%.

Why would anyone sell underinsured motorist coverage with minimum limits when the minimum coverage is the same? The answer is easy, money talks and bullshit walks.

Oh my I'm a bit sideways today, could you tell? That’s enough bashing the Ohio legislature for one day. Tomorrow let’s see what other states have joined into this narrow minded scam. Until then review this overview so you know if you’ve got low limits of auto insurance coverage you ought to be taking the bus or riding with your friends who have higher limits of coverage.

GENERAL OVERVIEW – ONLY A CAVEMAN WOULD BUY THIS INSURANCE

Broad View: If your damages exceed the at-fault driver’s coverage you file for UDM coverage with your own company.

Narrow View: If your UDM limits are the same as the at-fault driver’s coverage you get nothing. Your insurance company gets a credit for any insurance coverage the at-fault driver has.

Question for the Insurance Cavemen: If in Ohio the minimum coverage required is $12,500, and you sell $12,500 of UDM coverage how can an insured ever collect on it?

Bonus Question: Can someone remind me again why anyone in Ohio would purchase UDM coverage at the minimum limit?

Like I asked before, why would I ever want to live in Ohio?