Monthly Archives: July 2015

Renter’s Insurance

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Last week I was in Laramie, Wyoming helping my daughter move into a new apartment.  This afforded me an opportunity to teach my college-student daughter a little bit about renter’s insurance, an often overlooked and misunderstand insurance product.  Many college students mistakenly assume that all their “stuff” is still covered under their parents’ homeowners insurance but that is no longer true once they move off campus and into their own apartment.

I found a local independent insurance agent in Laramie and took my daughter to meet the agent and explore the renter’s insurance products they could offer.  The agent was professional and thorough as she reviewed the coverages and price for two different renter’s insurance products.  While most renter’s insurance products are very similar in terms of their coverages, there were two distinct differences for my daughter to consider in this case.  First, one carrier offered only a $500 deductible whereas the other offered a $250 deductible.  For a poor college student, a $250 deductible sounds much more manageable than $500.  Second, the $250 deductible carrier also offered loss of use coverage for the actual loss sustained up to 12 months, whereas the other carrier offered a fixed limit of $3,000 for loss of use.  The agent explained the purpose of the coverage to my daughter:  If you’re unable to live in your apartment due to a covered loss such as a fire, this coverage will pay for your alternate living arrangement.  My daughter nodded in understanding, and understood the benefit of having  12-month actual loss sustained coverage rather than just a fixed $3,000 which might cover only 4-6 months of living in another apartment while hers was being repaired.

In the end, my daughter selected the renter’s insurance policy with the better coverages (i.e., lower deductible, 12-month actual loss sustained limit for loss of use) even though it was $38 more expensive.  Even with these coverage advantages, the entire renter’s insurance policy cost her only $163, or less than $14 per month.  Understanding the realities of college living, which is that bad things can happen and property sometimes goes missing, renter’s insurance is a prudent purchase.  In fact, many landlords now require tenants to purchase renter’s insurance as a condition of the lease agreement.  This is probably more for the liability coverage that is also included in the insurance policy, but it also avoids unpleasant misunderstandings with tenants who may incorrectly think that damage to their “stuff” is covered by the landlord.  That’s an expensive bit of ignorance.

The moral of the story is that renter’s insurance is a very affordable insurance product that all renters should purchase.  My daughter learned some basic insurance principles (e.g., deductibles, coverage purposes, loss limits) that will serve her well as she becomes an independent adult.  Finally, I enjoyed spending a week in the beautiful 70-degree, no-humidity weather of Laramie, Wyoming, 7,200 feet above sea level and nestled in a valley between the Laramie Range Mountains and the Snowy Range Mountains.  And yes, the mountain hiking was exquisite.

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Hiking along Lookout Trail at the base of the Snowy Mountain Range, 35 miles west of Laramie, Wyoming.

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Your humble correspondent hamming it up for the photographer – on the Turtle Rock Trail 15 miles east of Laramie.

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The Iron Triangle

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The health insurance industry has a new high-profile employee.  Marilyn Tavenner was the chief bureaucrat running Medicare, Medicaid, and the Obamacare exchanges.  Now she’s the CEO of the health insurance trade group America’s Health Insurance Plans.  No doubt, her deep connections to the Washington political class and the federal government’s new and deep role in our country’s health care system makes her an appealing hire.  It’s also a stark example of the “iron triangle” that is common in the top echelons of American political power.

Color me skeptical that this is a good thing for America’s individual health insurance providers, let alone consumers.

ACA Legal Challenge, Part 3

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Just two weeks ago I wrote about the Supreme Court’s ruling that upheld nationwide federal subsidies and preserved the Affordable Care Act.  In my closing paragraph I said that the legal challenges now seem to be exhausted and its time that we accept the ACA and move on.  Personally, I am not a fan of the massive health care reform law but as a businessman and insurance professional I’m growing weary of the uncertainty surrounding the law.  Well, as it turns out, I was wrong about King v. Burwell being the final judicial word on the ACA.

There looms another potential judicial dagger aimed at the heart of the ACA in the lesser-publicized case of Sissel v. HHS.  The case lost at the D.C. Circuit when the three-judge panel applied logic that resembled a mental version of the game “Twister.” The plaintiffs are now seeking an en banc review of the case at the D.C. Circuit, and the next stop could be the Supreme Court.  [sigh] Here we go again.  What is an insurance professional attempting to help their clients with health insurance and benefit plans to do?

At its core, Sissel’s argument is that the ACA violates the Origination Clause of the Constitution which requires that all taxation bills must originate in the House of Representatives.  In the murky legislative mechanics that gave us the ACA, the bill originated in the Senate.  When the original 2012 Supreme Court (SCOTUS) ruling came down, it upheld the individual mandate because SCOTUS ruled that the monetary penalty for not purchasing health insurance was actually a tax.  Chief Justice John Roberts took a lot of heat for that tortured legal conclusion, just as he did for last month’s interpretation of the law’s language regarding subsidies.  The two milestone SCOTUS rulings on the ACA have seemed to give incredible deference to the ACA and its intentions, more than its language.

If Sissel v. HHS makes it to the SCOTUS in the near future, things will get very interesting.  The biggest problem for SCOTUS is that its 2012 ruling that proclaimed the ACA’s penalities to be taxes now gives Sissel an opening to challenge the entire law as a violation of the Constitution’s Origination Clause.  On its face, I wonder how Chief Justice Roberts will reconcile what appears to be a slam dunk argument.  How can SCOTUS possibly rule that the law includes taxes as the justification for upholding the individual mandate, and then not rule the entire law to be unconstitutional on the grounds that it violated the Origination Clause?

What happens next will be very interesting.  SCOTUS could refuse to take up the case and let the D.C. Circuit’s ruling against Sissel stand.  The problem with that is that the D.C. Circuit’s ruling essentially obliterates the Origination Clause, and SCOTUS may not be able to stomach that precedent.  If SCOTUS does take up the case, all bets are off.  Personally, I thought the plain language at the core of the issue in King v. Burwell was a slam dunk and I was wrong.  I am actually somewhat intrigued by the notion of a trifecta ruling in favor of the ACA and especially the judicial acrobatics that would most certainly come out of such a ruling on Sissel v. HHS.

I can anticipate a few such legal gyrations… SCOTUS might rule that the ACA bill did actually originate in the House because there was some monkey-business with “empty shell” bills from the House that were filled with the ACA language by the Senate.  That’s a political game that the nation’s Founders certainly did not intend but SCOTUS seems to be willing to give more weight to certain intentions than others these days (see King v. Burwell).  Another way out could be to somehow massage the D.C. Circuit’s logic that declared the ACA’s taxes were not intended to raise revenue but to expand health insurance.  So the ACA included a tax in order to uphold the individual mandate but it’s not a tax in the sense that it is not a revenue-raising bill that must originate in the House.  Huh?  What is a tax if not a means for government to raise revenue?  Good luck John Roberts.

One thing is certain… I do not envy my insurance industry colleagues who specialize in the health insurance market these days.  Does the ACA cover whiplash?

 

Happy Independence Day

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The July 4th weekend typically marks summer’s midpoint as we gather on the beaches and campgrounds of our land to enjoy the great outdoors and celebrate our country’s independence.  The celebration is punctuated by the liberal use of pyrotechnics and fireworks, which pose some inherent danger.  Adding to the minor danger of exploding firecrackers and multi-colored rockets is the news that terrorist chatter has been on the uptick in recent days.

The celebratory use of fireworks and the possibility of terrorist attacks intruding on our nation’s holiday represent opposite ends of the risk spectrum but both require prudent risk management all the same.  Let’s all practice good personal risk management as we celebrate this weekend.  Be careful as you celebrate, and be vigilant for those who would attempt to harm us.  Let’s all be risk managers as we celebrate our freedom and independent this weekend.

Be safe out there.  Happy Independence Day.