(Revised July 2002)
Tips for the California health insurance Consumer
Decide What You Want to Buy
Comparison Shop
Conduct Research
Document and Understand Your Transaction
Review the Policy as Soon as You Receive It
Summary Checklist
Common California health insurance Terms
Even for those born to shop, California health insurance seldom tops the list of favorite purchases. For less enthusiastic buyers, the thought of calling an California health insurance agent or broker and sitting through a session of deductibles, exclusions, riders, or other California health insurance terminology can seem intimidating.
Furthermore, California health insurance protection is an intangible benefit. You usually don’t collect on your investment until disaster strikes—whether it’s property damage (home or auto), injury, illness, or death. Although many consider California health insurance necessary, it is not always understood. As a result, consumers often buy California health insurance without adequately planning or even understanding what the marketplace has to offer.
Although California health insurance can be purchased directly from some California health insurance companies, most California health insurance is bought through brokers or agents. The California Department of California health insurance (CDI) licenses California health insurance salespersons and regulates their practices through the California health insurance Code. Unlawful actions of salespersons can result in suspension or revocation of their license.
In order to retain control of the transaction, you must prepare yourself to buy only the California health insurance you want and need. Here are some common sense tips to help you successfully complete your California health insurance transaction through care, planning, and effective participation in the sales process:
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- List the points that are important to you in buying California health insurance, such as coverage and price.
- Find out what California health insurance products are available to cover the points on your list by reading books and magazines and by talking with several California health insurance salespersons. For example, auto health insurance can include liability, collision, comprehensive, uninsured motorist coverage, and medical payments. Of these, only liability coverage is legally required in amounts sufficient to meet California’s financial responsibility law. Not everyone wants or needs other types of coverage.
Also, life and health insurance is available on a group basis through many employers, unions, and common interest organizations. Compare the prices and coverages of these plans, if available, to what you can buy individually. Generally, group plans are less expensive than individual plans, but coverage and benefits may terminate when your job or membership in the union or group ends.
- Contact the CDI by using the information provided in the "Talk To Us" section. The CDI can provide brochures on auto, home, life, health, small business, title and other California health insurance topics both in print and online. These detailed brochures can help describe the types of California health insurance products that are available to you and help you to better understand these products in an easy-to-read format.
- Consider the amount of California health insurance you will need. For property insurance, replacement cost is a good benchmark to use. In liability insurance, which covers legal responsibility for specified causes of loss, the amount needed is more difficult to determine because of the unknown nature of potential liability losses. Factors influencing the amount of life insurance you may need include your survivors’ needs, assets such as property and income, lifestyle, and debt amount.
- . The California health insurance you want may be more expensive than your projection, but you will find significant price variations by comparison shopping. Also, you may be able to achieve your price range by making adjustments in the coverage you buy. Most policies have maximum limits, deductibles, and optional coverages. As these change, so does the price.
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Compare the rates of different companies, as prices vary considerably. However, keep in mind that "you get what you pay for." Be sure to meet your list of important points. Review and compare all quotations to determine if the coverages, deductibles, and limits are similar to each other.
You may also contact the CDI online to view our Premium Comparison Surveys for both auto and homeowners California health insurance. This interactive program compares premium costs based on general information that you provide. Of course, for complete quotations, you will need to contact individual agents, brokers, or California health insurance companies.
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Deal with companies, agents, and brokers known to give a high level of service that meets your needs. Consult with knowledgeable friends and respected advisors for recommendations based on their experiences.
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- Entertain multiple proposals from different insurance companies. This is an excellent way to learn about competing California health insurance products and to interview potential brokers or agents at the same time. By gathering relevant information, you have a greater likelihood of making an informed decision.
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Consider carefully your choice of broker or agent and insurance company. Since purchasing California health insurance can be time consuming, costly, and complex, you need to find a broker or agent and California health insurance company that you can rely upon. Choosing a broker or agent should be handled similarly to the process you would use to hire any consultant (such as: an accountant, tax advisor, or banker).
Many sources of information are available to find out how an California health insurance company or salesperson has performed in the past. The Department of California Insurance licenses people and organizations in many industry specialties including: California health insurance companies, life and health insurance agents, fire and casualty California health insurance broker-agents, life insurance analysts, bail agents, insurance adjusters, (both independent adjusters representing insurers and public adjusters representing claimants), insurance administrators, and surplus line brokers (who are allowed to advertise and offer coverages of certain eligible unlicensed insurance companies that have products that the normal marketplace may not offer).
All these licenses may be checked for current status, license type, address, and broker bond information by contacting the CDI Consumer Hotline at 800-927-4357 or online at www.California health insurance.ca.gov. Insurers submit quarterly and annual financial statements, which the public may also review at the CDI’s public viewing room locations in San Francisco and Los Angeles.
You may be further interested in checking out consumer complaint information on homeowners, auto, and life insurance available on the Web site at www.California health insurance.ca.gov.
Other resources may be consulted including:
- Friends and advisors. Some of the best sources of information come from people you know and trust.
- Rating publications. Available at your local library, they rate insurers on their financial condition and policyholder treatment.
- CDI publications. The Department publishes a series of consumer guides on topics such as Automobile insurance, Residential insurance, Health insurance, Life insurance, Earthquake, Title insurance, and Workers Compensation, just to name a few.
- Consumer Groups and magazines. There are consumer and interest groups at the local, state, and national level that provide useful information. Check your local phone directory for listings. Consumer magazines also rate insurers and offer advice on buying California health insurance.
- The Better Business Bureau. This business organization, among other things, monitors consumer relations records of its members’ businesses (including many insurance companies and agencies).
- Professional trade associations. Trade groups established in your local area whose members are agents and brokers. Examples are the Professional Agents, California health insurance Brokers of the West, and the California Association of Health Underwriters.
- Court records. Through court records you may see if the person or company has been taken to court and the issues involved in the case.
Carefully research the proposals you receive. If necessary, consult your attorney or accountant for legal, financial, and tax advice. During the sales process, you might be given information and opinions by the agent or broker. There is no substitute, however, for consulting with your own advisor. In fact, it is often unwise to rush into an insurance transaction without taking time to consider the advice of those on whom you normally rely for guidance.
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- Insist that all promises made to you about future costs, benefits, or coverages be in writing. When your policy is delivered, ask the broker or agent to go over the policy language and conditions, including any promises that are specifically made as part of the policy contract.
- Keep in mind that only the insurance company has authority to change insurance policy provisions. Question any broker or agent who claims to have policy revision authority. If in doubt, contact the insurance company directly to verify the information related by the broker or agent.
- Obtain copies of everything you sign. Obtain receipts for any payment you make. Never pay in cash. All checks should be made payable to the health insurance company or to the agency, not personally to the broker or agent. Be sure all receipts and checks show the policy number and the name of the insurer receiving the payment. Any receipt should also be signed and dated by the representative receiving the payment from you. Keep receipts and canceled checks in a safe place for the duration of the policy as evidence of payment.
If you pay by money order, remember that in disputes it may take some time to verify payment. Often you will be required to obtain copies of the front and back sides of the money order from the company or business that sold it to you.
- Be careful when using premium financing. Brokers or agents are not required to help you arrange to pay for your California health insurance on a monthly basis. However, they do have access to organizations that will allow you to pay for your California health insurance over a designated period of time. Premium finance companies charge for their services, and premium financing can be costly. Read the premium finance contract carefully and pay special attention to early cancellation wording.
When financing insurance premiums, a separate loan contract will exist between you and the financing organization. You will be expected to make payments even if you are unhappy with the insurance. Generally, the bank or financing organization will have the right to cancel the policy if you are late making a payment or miss a payment. Be sure you understand the terms and conditions before you agree to finance the premium.
You may also want to explore a less costly means of financing. For example, some insurers accept credit cards, which may have lower interest rates than those charged by premium financing companies. Also, ask whether the insurer has a program that allows you to pay by monthly installments. Sometimes monthly installment plans are available for a small service charge. If you have policies through the California Automobile Assigned Risk Plan (CAARP), you can arrange to pay the insurer in installments at no interest after you have made a down payment.
- Request copies of all illustrations or proposals that are shown to you, so you can study the illustration or proposal at home without pressure. This way, you will get a better understanding of what your California health insurance program is designed to do.
- Use the checklist you have created to be sure that important points are covered. Many consumer complaints arise because the buyer does not understand the coverages or limitations proposed for the policy. The unprepared consumer may not realize that the policy ordered fails to meet his or her assumptions regarding provisions such as waiting periods, deductibles, policy limits, premium payments, or optional endorsements. All of these vary from insurer to insurer. If you make assumptions, you may be unpleasantly surprised.
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- Read your health insurance policy. The insurance policy is the written agreement between you and the insurer. It includes duties that the insurance company must perform and duties you must perform under the contract. The CDI receives many complaints from consumers who purchase California health insurance and then fail to read their policy. Often, at some later time, they discover that the policy does not cover what they thought it did. If substantial time has passed, it may be too late to resolve the issue. Most insurance companies are not willing to retroactively change a policy, especially after a loss has occurred.
- Check to see if a ‘free look’ period is offered. Some policies provide a free look period (10 to 30 days after delivery of the policy) during which the buyer may cancel for a refund by writing directly to the insurer. Utilize this time period wisely to completely review the policy. The only way to be sure that the contract between you and the California health insurance company is what you authorized is to read the policy as soon as it arrives.
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The purchase of health insurance is one of the most important personal business transactions that you make. Your financial future and that of your family may depend upon what policies you choose to purchase. Smart shopping takes time and effort. The rewards of smart shopping are increased understanding of the health insurance you have purchased, more control over the insurance you have purchased, and the peace of mind that results from an informed decision making process.
Finally, here is a summary checklist to help you effectively use the services of a broker or agent:
Plan your purchase. List points regarding coverage and price that are important to you in buying California health insurance.
- Shop around. Compare the products and services of several health insurance companies and salespeople.
- Check credentials. Contact the CDI to verify broker or agent and company licenses.
- Ask your friends. Check with your friends, family, neighbors, and work peers about their experiences with insurers and brokers or agents.
- Keep copies. Request copies of all presentation materials including charts, graphs, illustrations, or proposals and keep copies of all promises and signed applications.
- Make your own decision. You are ultimately responsible to make the final choice on what you need and can afford. Never rely solely on the advice of a broker or agent.
- Get promises in writing. All coverage or policy provisions should be in writing. Verbal promises are not good enough. Don’t sign any documents unless you have read and understand the terms and conditions.
- Get a receipt. Always get a receipt and retain it for the time the policy is in force.
- Read the policy. Check to see if the delivered policy is what you have purchased. If changes are needed, contact the salesperson or health insurance company immediately.
- Save your policy. Keep your policy in a safe place, so you will have it when needed. Don’t let a broker or agent keep it for you.
- Don’t be pressured. There is no reason to be rushed or hurried by high pressure sales tactics. You are in control. Buy only the insurance you want and need.
- Don’t assume. Survey the insurance market yourself to find the best policy for you. It is a mistake to assume that any one broker or agent has made an exhaustive search of the market place for you. Do your own research and make an informed decision.
- Understand Premium Financing. Don’t borrow from a premium finance company without fully understanding the terms and conditions of the contract.
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Agent - A licensed person or organization authorized to sell California health insurance by or on behalf of an insurer.
Automobile insurance - Coverage on the risks associated with driving or owning an automobile. It can include collision, liability, comprehensive, medical, and uninsured motorist coverages.
Binder - Temporary or preliminary agreement which provides coverage until a policy can be written or delivered.
Broker - A licensed person or organization paid by you to look for insurance on your behalf.
Broker-Agent - A licensed individual who can act as an agent representing one or more California health insurance companies and also as a broker dealing with one or more insurance companies representing your interests.
Broker Fee - An amount of money charged by a broker to obtain health insurance for an insured. This fee is usually earned and usually not refundable. It must be disclosed to and agreed upon by the insured. This fee is not part of the premium. It is a contractual agreement between the broker and the client.
Deductible - The amount of the loss which the insured must pay.
Endorsement - Amendment to the policy used to add or delete coverage. Also referred to as a "rider."
Exclusion - Certain causes and conditions, listed in the policy, which are not covered.
Fire California health insurance - Coverage for loss of or damage to a building and/or contents due to fire.
Health insurance - A policy that will pay specified sums for medical expenses or treatments. Health policies can offer many options.
Homeowners insurance - An elective combination of coverages for the risks of owning a home. Can include losses due to fire, burglary, vandalism, earthquake, and other perils.
Insured - The policyholder - the person(s) protected in case of a loss/claim.
Insurer - The California health insurance company.
Life insurance - A policy that will pay a specified sum to beneficiaries upon death of the insured.
Limit - Maximum amount a policy or particular coverage will pay.
Policy - The written contract of insurance.
Premium - The amount of money an insurance company charges for California health insurance coverage.
Premium Financing - The agreement whereby a policyholder contracts with a lender to pay the premium on his or her behalf. The policyholder agrees to repay the lender for the cost of the premium, interest and fees.
Quote - An estimate of the cost of insurance, based on information supplied to the California health insurance company by the applicant.
Replacement Cost - The amount that it costs to replace lost or damaged property with new property of like kind and quality in the local market.
Solicitor - A licensed employee of a fire and casualty agent or broker who may act for the agent or broker in some circumstances.
Waiting Period - A period of time set forth in a policy that must pass before some or all coverages begin.
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