A possible loophole being exploited by many car insurance providers has caught the attention of Ohio state officials.
According to industry experts, car owners and drivers in Ohio may not be as safe as they believe they are. A particular clause in many car insurance contracts and policies can leave many families high and dry and without any insurance in the event of an accident.
Because the state government allowed insurance companies to include a certain provision called “intra-family exclusion”, policyholders involved in car accidents may not be covered at all by their policies. State law essentially allows providers to exclude family members of a policyholder from availing of coverage.
This would mean that even if a car owner does own extensive coverage, the insurer is not obliged to pay for expenses if an accident is caused by a family member. If the policyholder is behind the wheel, however, then the policy is still valid.
The loophole was used mostly by budget car insurance providers as a way to avoid paying out claims. Now, larger insurers are including the provision in their own policies.
Doris Floyd, a resident of Ohio on her way back from Detroit with two daughters, experienced the disadvantage of the loophole firsthand. The truck they were in lost control and flipped over. Her daughter was behind the wheel. Despite the severity of the accident, Doris suffered only a few cuts and bruises, as well as a broken collarbone. Her medical bills set her back $13,000.
Hoping that her insurance company would pick up the tab, Doris was surprised to see that her provider refused to cover their hospital expenses because of the intra-family exclusion clause.
Doris said that she was dumbfounded and shocked to see they were shunned by the insurance company even though she was a loyal policyholder.
According to many legal experts and insurance agents, the provision is largely unheard of in the industry. They warn that most insurance firms would never allow clients to avail of added coverage for family members even if they are willing to pay considerably more.
Critics of the provision say that insurance companies are prioritizing profits over people. Despite several attempts to have the loophole removed, the state appeals court has so far sided with insurance providers. Even the Ohio Supreme Court has refused to pay any serious attention to the issue. Attempts to change the law were defeated last year and the bill has not been reintroduced.