What is twisting in auto insurance? It simply refers to when a broker advertises one kind of coverage from another insurer while simultaneously selling different coverage from another insurer. Twisting does not only include lying about how the accident occurred; it includes exaggerating personal injuries or losses, exaggerating damage or costs, and misrepresenting the type of coverage provided. There are many ways that agents can commit twisting. The most common is misrepresenting the insurer's rate change caused by the kind of coverage offered. There are other ways that brokers can commit twisting as well.
When a change is made to a policyholder's car insurance policy, the old policyholder must give written notice to the agent. This is called Changing Policies. Within forty-eight hours of the policyholder changing policies, the agent must give the new policyholder a new policy number and a copy of the new policyholder's insurance card. In short, if the agent starts selling a policy and starts selling it again without giving the policyholder a reason, there is what is known as "twisting in insurance." The agent must disclose that they are changing policies and give the policyholder a new number and policy name card.
What is twisting in auto insurance if the insurer sells the same policy to more than one person? In some cases, the same insurer will sell a policy to more than one person. In other cases, the insurer may be selling the same policy to different people simultaneously. When this happens, what is twisting in insurance occurs. The insured pays for two identical policies. Later, when the insurer offers a third identical policy, the insured has a binding contract for coverage, even though the three identical policies are the same.
Sometimes what is twisting in insurance also happens when a policyholder purchases a term life insurance policy and becomes terminally ill within a specified period. The insurer advertises the policy as ending within a certain period. As a result, when the insured receives their death benefits, they are paid to a different beneficiary. It is the insurer who determines the beneficiaries. So, twisting in insurance happens when the beneficiary is not who was stated in the policy.
Insurance twisting also happens if the agent makes assumptions about what kind of coverage a person needs when the client asks questions. In what is twisting in insurance, the agent has assumed what kind of coverage a person needs and asks for that amount. This leads to what is known as "shortsighted" coverage. Suppose the insured tries to get coverage for something not listed on the agent's initial agreement and the client. In that case, the insurance agent will often make assumptions about the client's coverage.
What is also commonly called "dead Wrong" coverage happens when the insured tries to get their death benefits from the insurance policy in a year when it is a year away. Again, this results from what is known as "shortsighted" coverage. In short, an agent twists the arm of the insured so that they can take all the death benefits, leaving the client with the balance.
What is also commonly known as "Loss Prevention" is what is twisting in insurance in the sense that it refers to agents who are lax in accepting claims. For example, if an insured person dies in a car accident, the family of the insured victim may claim that the insured caused their untimely death through negligence. A life insurance company will have policies that do not cover losses in certain instances. This means that an insured individual can be left devastated after losing their life due to another person's fault, which is what is commonly referred to as "loss prevention." The insurance agent will try to avoid the loss prevention clause. What is important to note is that if the loss prevention clause is present, the insured person has the right to claim compensation from the insurance company if the claim is unfounded.
Another example of twisting in insurance is the practice of what is known as "re-birthing." What is meant by this is when an insurance claim starts to rise, with the first claim being for a sum that is too high, the company will often attempt to lower the amount of the claim to settle the claim at a lower amount. This means that an insured individual could end up with a substantially lower amount of money when the case settles. What is even worse is that the same thing could happen in the future should the individual start to have financial problems. The insured individual could end up with even more problems because of what is called "re-birthing."
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