(OP-ED, first posted: August 25, 2018) —
The writer of this post is a paralegal and consultant to attorneys on matters involving chain of title, foreclosures and document manufacturing. The opinions expressed herein are that of the writer’s only and do not constitute legal or financial advice.
Everything these days revolves around insurance of some sort. The credibility of some professions is backed up with insurance or bonding to guarantee against losses incurred by inadvertent or blatant illicit behaviors of those insured or bonded. The system of things revolves around the dollar. People have put their faith in the dollar, whether it has any backing or not. As long as people (the body politic) can be fooled into a perception of believing that this so-called “legal tender” can still be used to pay debts “public or private”, the system will continue to flourish, whether “in the red” or “in the black”.
Look how many times you purchase insurance in your life and for what purposes (CYA).
Virtually all 50 states require some sort of minimum liability auto insurance, through a policy that guarantees the insurance company will cover a loss if a claim is filed against the policy. Many folks just get a liability policy if they’re driving a car that has no lien against it; however, an auto loan on a vehicle will require that you have full coverage. Based on your driving record and your credit score, full coverage insurance can rape your monthly income, denying you of even basic needs just because you need to get to work and a means of insurable transportation to get you there.
Throughout the last decade of this dismal fight to keep Americans in health insurance, we’ve been forced to buy health insurance coverage through some sort of program connected with the Affordable Care Act. Seniors over 65 are forced to buy Medicare. That too comes with a price tag. Part B is $134 a month, no matter WHO you go through to get insurance. Any supplement insurance (which is highly recommended by agents these days), adds another $80-$100 a month on top of the $134 you pay every month just to avoid a financial catastrophe due to health issues.
You can’t get a mortgage loan without insuring the property with hazard insurance. When homeowners get into trouble, the first thing to be neglected is the hazard insurance payment. Then the property taxes. The lender (or its servicer) then has to cover any claimed losses by putting forced placed insurance on the property because the property owner failed to do so. This process, which I call a “cheap date”, is used in part to prove that the servicer, acting on behalf of the lender, has some sort of interest to protect in the property, especially when it comes time to foreclose on said property.
If you own a business, most if not all responsible business owners carry a general liability insurance policy. These policies generally start at $350 a year, which is no big deal. However, given any type of special insurance coverage, you’ll find that the more “risk averse” an insurer has to weigh in on a given situation, the more expensive the policy. For example, if your business deals in a product or service that comes with a higher risk than most of injuring the general public, this forces the premiums to go up.
Because many Americans are not well-funded and are deep in debt, the last type of insurance policy they encounter is a life insurance policy, to make sure that if something happens to them, their loved ones at least have some minimal nest egg to keep them going. This is where a majority of Americans put the least amount of dollars. Most of us are underinsured in this category. I’ve heard a lot of folks say that “you’re making a bet with the insurance company that you’re going to live so long before they have to pay out”. This is true, which is why I buy 10 to 15-year term insurance. If I live past 80, I’m lucky. Good luck getting insurance past 85, because virtually all insurance companies will deny coverage past that age because they know what the odds are of a quick payout.
By the time you’re 80 (if you live that long), you should have some sort of an “estate” to leave behind that’s worth something. Most Americans however don’t even have $50,000 in savings they can fall back on if, God forbid, something goes wrong. In fact, the number of consumer bankruptcies, especially those over age 65, is on the upswing. Student loans, mortgages and consumer debt are driving the bankruptcy filings, statistically well ahead of medical catastrophes. However, I would proffer that “debt stress” would cater to certain medical issues at some point.
A NECESSARY EVIL
There’s insurance coverage out there for virtually every kind of behavior, including liability for actions taken against you that could be deemed illegal. This is why we have “bonds” in place for judges, clerks, virtually all elected officials, notaries and credit repair people, to name a few. Most counties in America are “self-insured”. Most states have what is known as an “insurance risk pool” or a back-up fund of money to pay for damages that the state or its actors might cause against its citizens.
Law firms and real estate brokerages have what is known as “E & O” policies (or should) in order to exist. “E & O” stands for Errors & Omissions (policies). These types of policies generally pay out for legal services in case the insured comes under fire for erroneous or negligent behavior. It’s a “knew or should have known better” scenario. So the E & O primarily covers legal fees for representing the insured and/or paying out claims against the insured’s policy.
If there wasn’t an insurance policy covering something somewhere, our litigious society would drive this country into a financial meltdown sooner than later. The only way that a meltdown would occur sooner than later is if the “perception” of the masses were to dynamically change to reflect an understanding that “insurance” supports the “underbelly of the beast.” This is why I wrote the “Beyond End Game Strategies” supplement. The concepts expressed here go beyond the traditional thoughts of most Americans. Insurance companies are “risk averse” … and their “end game” is to deny claims whenever possible due to exceptional or non-covered acts of the insured. This is why insurance companies file more declaratory relief actions than most any other entity in America … to have a court determine whether they’re responsible to pay a claim on behalf of the insured.
Do you see where my thought processes are going? There is a method to the madness and the “beast” is the system of things.
And … at some point … a meltdown in America is likely.
Stay tuned for Part 2. It gets better!