Frequently Asked Questions

Homeowners Insurance Health Insurance Life Insurance Automotive Insurance

Homeowners Insurance

Q. I had a loss, and my roof needs repair. The company is only willing to pay for repairing part of the roof, even though the contractor has said that I need to replace the entire roof.
A. The company is only obligated to pay the cost of repairing the part of your roof that was damaged by a covered peril. If the entire roof needs replacing because of normal wear and tear, you will be responsible for paying the additional cost.
Q. What protection does the personal liability coverage in my homeowners policy provide?
A. This coverage protects you and all family members living with you against claims or lawsuits resulting from bodily injury or property damage to others for which you are legally liable.
Q. Does my homeowners insurance policy cover flood damage?
would probably be listed under "water damage." Flood insurance is available through the federal government's National Flood Insurance Program. It may be purchased through any licensed property/casualty insurance producer or through many private insurance companies that are now writing flood insurance under arrangements with the Federal Insurance Administrator.

Health Insurance

Q. My health insurance company is non-renewing my policy. Can they do this?
A. If your policy is not guaranteed renewable, the company may exercise their right to non-renew your policy. It is important that you very carefully read the section of your contract concerning cancellation.
Q. How long does a company have to pay a medical claim?
A. The insurance company has 45 days to either pay or deny a claim once proof of loss has been received, unless additional information is requested.
Q. I recently had open heart surgery, and the physician's bill was $20,000. I filed a claim with my insurance company, but they say that only $11,000 is reasonable and customary. I do not have $9,000. Can I do anything to get them to pay more on this claim?
A. Reasonable and customary rates, which vary between providers and hospitals and geographical areas, are not regulated by the Alabama Department of Insurance.
Q. The insurance company is delaying paying my hospital claim. They keep telling me they are checking for a pre-existing condition, and want information about all the physicians I have seen in the past five years. I know the condition was not pre-existing, and this is a waste of time. Can you assist in this matter?
A. If the policy is more than two years old, the company should not be conducting a pre-existing condition investigation. If the policy is less than two years old, the company has the right to conduct a pre-existing condition investigation. The consumer should complete a Consumer Complaint Form, and provide us with copies of any correspondence received from the company, as well as a copy of the insurance policy. We will contact the company to find out why they are delaying on paying the claim, and see what can be done to expedite it.
Q. My insurance company has rescinded my health insurance policy. What does this mean?
A. Rescission usually occurs as a result of incomplete or inaccurate information submitted on the application, or an omission of information that is pertinent to the underwriting of the policy. Rescission means that the policy will be null and void from the beginning. All premiums should be refunded to the insured.
Q. What is a PPO plan?
A. A PPO (Preferred Provider Organization) plan is a plan where preferred providers of service (including doctors and hospitals) have a contract with an insurance company or a health plan to offer service for their policyholders. Generally, the preferred service provider agreed to accept an insurance company's usual and customary payment. If you have a PPO contract, and do not use the preferred service providers, you may find yourself paying more for services rendered by the physician or hospital.
Q. I applied for health insurance nearly two months ago, I still have not received a policy. Now they tell me that I am not accepted. I have bills from the doctor and hospital. I paid my premium. Why do they not have to pay these bills?
A. Premiums for a health insurance policy are usually not binding until the application has been approved and the policy is issued.
Q. Are mammograms covered under health insurance?
A. Every policy which provides coverage for surgical services for a mastectomy must provide certain mammography coverage.
Q. My health insurance company is reducing my benefit payment, because I did not pre-certify my hospital stay. Can they do this?
A. It is very important for you to read your policy and look at the section dealing with pre-certification. If your contract states that you must pre-certify a hospital stay, then the company may either reduce or deny benefits, according to the terms of your policy.

Q. How long does it take for a policy to be issued?

A. If you have not received your policy within 60 days from the date you completed the application, file a Request for Assistance, and we will contact the company to find out why the company is delaying your policy.

Q. My employer is changing our group health program to another one with less benefits. Can he do that?

A. Yes. The insurance contract is between the policyholder (the employer) and the insurance company.

Q. Last year, my husband lost his health insurance when he was laid off. Consequently, I listed him on the health insurance plan at my office so that he would have coverage. When he began his current job, I did not notify my personnel office within the allotted time, so I cannot cancel him from the policy until the next enrollment period. When my husband needs to have an exam or some medical work done, is his health insurance coverage through his work considered primary? Can my policy be used to pay the 20% uncovered portion, or is his coverage under my policy useless?

A. If your husband has a claim, his policy will be primary, and yours will be secondary. It would be reversed if you have a claim. If you have any children who are covered by both policies, the primary coverage would be provided by the policy of the parent whose birthday comes first in the calendar year. The other policy would provide secondary coverage.

Q. I want to apply for a conversion policy under my group contract. I have been told I must pay a quarterly premium. I would prefer to pay on a monthly basis. What can I do?

A. Most companies have done away with monthly billing, because it is cost prohibitive. You may want to inquire whether your company will let you pay by monthly bank draft; but,otherwise, premiums will have to be paid in a mode (quarterly, semi-annually, or annually)that is compatible with the company's accounting practices.

Q. I have been covered under my employer's health policy, but now find that my claims are not covered, because my employer failed to pay my premium on time. Is the insurance company obligated to let me know that my premiums have not been paid? What happens to my claim?

A. The company is not required to provide you with updates concerning premiums being paid by your employer. The contract is between the policyholder (the employer), and the insurance company. The insurance company would not be liable for your claim since the premiums have not been paid.

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Life Insurance

Q. My husband took out a life insurance policy 18 months ago. When I filed the claim, the company denied it, because he stated on the application that he was a non-smoker when, in fact, he did smoke. The company is refunding all premiums paid. Can they do this?
A. Possibly. Companies may contest statements made in the application up to two years from the effective date of the policy. If there was an omission, inaccurate, or incomplete information on the application that was material to underwriting the risk, the company may rescind the contract, and refund the premiums. Generally, if a company offers a smoker policy, then the death benefit should be adjusted to reflect the amount of insurance that the premium paid would have bought at the smoker rate.
Q. What is universal life insurance?
A. Universal life insurance is a flexible adjustable life policy, which incorporates annually renewable term insurance with an interest bearing side fund (cash value). The insured may vary the amount and timing of the premium payments to adjust the cash value and/or the death benefit of the policy.
Q. What happens if I get a loan from my life insurance policy, and never pay back the interest?
A. Unpaid interest is added to the loan balance. If the loan balance ever grows to exceed the amount of policy cash value, the contract will terminate without value. Also, if you should die before paying back any loans made against the cash value of your policy, the outstanding loan balance will be subtracted from the death proceeds.
Q. Can anyone insure your life?
A. No. In order to purchase a life insurance policy on anyone, there must be an insurable interest. A relative who might suffer financial loss if you died, a debtor who may be at risk of repayment, a business partner, a spouse, son, daughter, or parent are examples of those who may have an insurable interest.
Q. How can I find out if a person who has passed away had any life insurance?
A. This Department does not have that information on file. There is not a state agency that maintains or provides this information.

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Automotive Insurance

Q. My car is financed through a bank. I could not afford to pay comprehensive and collision coverage. The bank secured coverage on my vehicle without my knowledge. Can the bank do this?
A. Yes, a lender has the right to require a borrower to protect the lender's interest in the collateral. A collateralized loan agreement typically includes a provision requiring the borrower to keep the collateral insured, and allowing the lending institution to secure coverage and charge for it; if the borrower fails to obtain the required insurance. These charges are subject to interest, and the premiums are often much higher than if you purchased insurance yourself.
Q. The company wants to repair my car with non-factory parts. Can they do this?
A. Yes, as long as the repairs restore the vehicle to its value which existed before the loss. The parts used do not necessarily have to be original equipment manufacturer (OEM) parts, but should be of like kind and quality as the parts being replaced. Ask your company about what guarantees they will give you on these parts.
Q. I was in an automobile accident. The other party was at fault. What should I do?
A. You have two options: You may file a claim with the at-fault party's insurance company if they are insured, or if you have collision insurance on your vehicle, you can have your own insurance company pay for the damages, and they will usually subrogate against the at-fault party to recover their loss.
Q. My car has been totaled. The company has made payment, but the amount paid will not cover what I still owe the financial institution. What should I do?
A. Insurance companies are obligated to pay in accordance with their policy provisions, which is usually the actual cash value of the vehicle at the time of the loss. This amount does not always cover the loan balance because you may owe more than the vehicle is actually worth. The borrower of the loan is responsible for paying the difference to the financial institution.
Q. I was involved in an automobile accident, and my car was totaled. My company is not offering me a fair settlement on my claim. What can I do?
A. Check the "blue book" for the actual cash value (ACV) of your car, check out the classified advertisements in local newspapers, and check with the car dealerships in your area. Look for the prices of cars similar to yours, and submit them to your company. If the prices are higher than the company's offer and if they still fail to offer you more money, you may invoke the appraisal clause in your policy, request mediation, or consult an attorney to see if legal action may be taken.
Q. I was involved in a car accident, and was not at fault. The officer gave a ticket to the other individual. I have contacted the other party's insurance company, and they refuse to honor my claim because their insured has not given them notice of the accident. Doesn't the company have an obligation to pay my claim, even if their insured does not report the accident?
A. The company is obligated to pay claims for which the insured is legally liable, because of an accident. The fact that the insured did not report the accident appears to be irrelevant, as long as sufficient documentation substantiating the claim can be provided to the company.

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