As part of his regular practice, Barry P. Goldberg reads insurance policies every day and will take on an insurance company when it wrongfully denies coverage. But, what is the average consumer to do? Most insurance policies are impossible to read or interpret unless you are an insurance coverage lawyer or enjoy reading arcane language for fun. With all the discount carriers out there, many consumers buy their policies online or over the telephone and never even understand what they are buying.
If you have a home and multiple vehicles, you probably should consult with an independent insurance agent. "Independent" means that the agent can sell you policies from a choice of many insurers to find the best price and best coverage to fit your needs. A "captive" agent will only sell you an insurance policy from the company he or she works for. Either way, the average consumer needs the agent to explain in as simple of terms possible what kinds of coverage you are buying and for what limits. There is no such thing as "full coverage."
Over 100 years ago the California Supreme Court observed that " 'It is a matter almost of common knowledge that a very small percentage of policy-holders are actually cognizant of the provisions of their policies . . . . The policies are prepared by the experts of the companies, they are highly technical in their phraseology, they are complicated and voluminous. . . and in their numerous conditions and stipulations furnishing what sometimes may be veritable traps for the unwary. . . . [¶] The courts, while zealous to uphold legal contracts, should not sacrifice the spirit to the letter nor should they be slow to aid the confiding and innocent." (Raulet v. Northwestern etc. Ins. Co. (1910) 157 Cal. 213, 230.)
"it is a matter almost of common knowledge that a very small percentage of policy-holders are actually cognizant of the provisions of their policies . . . ." (Eddy v. Sharp (1988) 199 Cal.App.3d 858, 864.)
So the question is "Should you read your insurance policy or rely on your agent?"
As the court put it in Clement v. Smith (1993) 16 Cal.App.4th 39, 49, "When dealing with a contract as adhesive as the typical insurance policy, we are unwilling to impose on the insured so onerous a burden as would automatically defeat any agent's liability for misrepresentation. Certainly an insured cannot remain intentionally ignorant of the terms of his or her policy. . . . Absent some notice or warning, an insured should be able to rely on an agent's representations of coverage without independently verifying the accuracy of those representations by examining the relevant policy provisions."
This does not really answer the question in all circumstances. Most insurers are careful to give multiple forms of notices or warnings that are acceptable to the courts. Also, it is not always easy to document the insurance agent's representation (or misrepresentation) of coverage. But, if an agent does provide a reasonable representation of what is covered and what is not covered, "an insured should be able to rely on an agent's representations of coverage without independently verifying the accuracy of those representations by examining the relevant policy provisions."
Depending on the court, lawsuits can proceed against agents and insurance companies when there is a reasonable reliance on the coverage representation. It takes an experienced coverage attorney and reader of insurance policies to evaluate whether 1) there is a coverage issue and, 2) whether there has been an actionable misrepresentation of coverage. Barry P. Goldberg's website is loaded with suggestions concerning buying adequate insurance. However, an experienced independent agent can usually provide the best advice concerning the types and amounts of coverage you should buy.