Understanding Your Insurance Policy – Who’s Job is It?
The Mississippi Court of Appeals issued an opinion this week which discussed an insured’s duty to read and understand her insurance policy.
In this case, Cherri R. Porter’s home was destroyed by the Grand Casino’s untethered barge during Hurricane Katrina. While the case had a host of issues, I was struck how the court discussed Ms. Porter’s claim against her insurance agent for failing to provide her the appropriate coverage. In legalese that’s sometimes called negligence procurement.
Ms. Porter’s case was dismissed by the lower court. The court reasoned that her homeowner’s policy clearly excluded wandering casino barges. And as for her claims against her insurance agent, Ms. Porter simply had no evidence that she asked her agent to obtain any coverage other than what she had. In other words, she didn’t tell her agent what specific coverage she wanted.
The Court cited to the 2010 Mississippi Supreme Court opinion of Mladineo v. Schmidt. That opinion provides that insurance agents do not have a duty to tell the customer about coverage needs. That opinion reasoned that “insureds are in a better position to assess their assets and risk of loss, coverage needs are often personal and subjective, and imposing liability on agents for failing to advise insureds regarding the sufficiency of their coverage would remove any burden from the insured to take care of his or her own financial needs.”
What is the lesson from these opinions, besides making sure your home is insured against wayward casino barges? Simple. Read and understand your policy. And if you’re not sure ask your agent to explain. Ask “what if” questions? For example, is their enough coverage to replace my $50,000 fence I just added? Does it matter if it’s attached to my house?
