I think insurance companies are really good with Venn Diagrams. John Venn created the diagram more than a hundred years ago. It is a simple way to illustrate the intersection of different things. The diagram is a rectangular box. Inside the box are circles that represent all of the properties of things. The things may be objects, events, theories, anything. All of the properties of any one thing is illustrated as a circle within the rectangle. We all know the expression: “You are comparing apples to oranges”. A Venn diagram of “apples to oranges” would be a rectangle with two equal size circles, one for apples and one for oranges. The circles would sit side by side in the rectangle and they would never intersect. i.e they are always different and mutually exclusive. If we created a Venn diagram for Mustard, Hot Dogs, and Buns, we would have three circles that all intersect at some point. The intersection is the delectable treat we have for lunch. A hot dog on a bun with mustard.
Insurance companies are masters at creating situations where nothing associated with their claims will intersect. In essence they strive very hard to ensure that any type of loss is likely to escape all of the rules of coverage for their policy. The perfect world for them is a Venn diagram with no intersecting circles for any type of casualty claim.
Let me explain my recent experience with the Artful Dodger Home and Auto Insurance Company, Inc. While we were in Michigan, our home in Florida was clipped by hurricane Milton. When our very helpful neighbor did a post storm inspection, he found that a ten foot section of the ceiling had collapsed. He took pictures of the damage before any cleanup and I immediately opened a claim with Artful Dodger. I wanted to give the insurance company the opportunity to evaluate the casualty before any clean up or repairs. Artful sent Inspector Shirley Teflon out the following morning. My wife and I loaded the car and headed back to Jacksonville to ride herd on the project.
Someplace in Tennessee, I received a call from Shirley with her preliminary findings. “Mr. Sinelli. I could not find any cause for your ceiling collapse. I toured the inside of the house and carefully inspected the roof and the attic. There were no holes in the roof and there was no apparent structural damage to the attic. There was no water intrusion from the storm. Everything was totally dry. It is our opinion that the damage was not caused by the hurricane. If you think there is structural damage you will have to retain the services of a structural engineer at your own expense.”
This was good news to me. The damage, though likely to be more than $10,000, is significantly less of a challenge without roof or structural issues. My gut response was that a huge wind gust came through the attic vents and the massive negative pressure blew out the ceiling. My response to Shirley was: “Isn’t it amazing that the very evening of the hurricane, in fact during the six hour duration of the storm, my ceiling would simply collapse and it was not storm related? What a coincidence. That’s right up there with a guy named Lou Gehrig contracting a rare disease that happens to be called Lou Gehrig’s disease. Good news, however. Since you verified that the collapse is not storm related, I won’t have to pay the $11,000 hurricane deductible. I’m only on the hook for my $500, non hurricane, deductible.”
The phone got very quiet. Finally, Shirley came back and said: “I’m going to have to get back to you on this.”
At this point the outcome looked pretty favorable. In our Venn Diagram, the Catastrophe Claim Circle was intersecting with the Pay the Policyholder Circle.
Meanwhile, I asked my contractor to evaluate the situation and start the remediation project. The contractor said that the section of ceiling that collapsed was weakened over several years by a condensation problem. The attic vent blowout theory was almost certainly correct. However, it would not have occurred without the damp conditions progressing for a long time. The cost to fix the condensation issue and fully restore the ceiling would be $9,900. So I called Shirley Teflon and passed along the contractor’s findings. She said: “I am terribly sorry but the policy terms are quite clear. Artful Dodger Home and Auto Insurance Company, Inc. only covers “sudden” losses. To cover anything else would invite insolvency for the insurer. The real reason for the collapse was the deteriorated condition of the ceiling which clearly did not happen suddenly.”
Now I was fully victimized by the Artful Dodger’s, mutually exclusive, Venn Diagraming. Even if I successfully argued that the event was hurricane related, the $11,000 Dollar Hurricane Deductible Circle would not intersect with the Pay the Policyholder Circle. I have to pay the first $11,000 and the repair was less than that. The condensation weakening was not a sudden event and so it is not covered. The Non Sudden Event Circle would not intersect with the Pay the Policyholder Circle. I got the impression that no matter what I found, one of the hundreds of policy provisions that had been carefully detailed by Artful’s actuarial professionals and legal team would have blocked entry into the Pay the Policyholder Circle.
Without reading and evaluating the thirty three page policy for several weeks and creating your own Venn Diagrams, you cannot know the real protections the policy offers. I hope that, at least, I have some coverage for a major event. That is, if it is both a major and “sudden” event. However I can see myself embroiled in a conversation with Shirley Teflon that goes like this. “My house was totally destroyed by a falling meteor. Talk about sudden. This baby was travelling 5,000 miles per hour. The collision has been verified by the University of Florida who extracted the rock from my living room and have it on display in their Museum of Natural History. You owe me the policy limit of $650,000.” “I’m sorry Mr. Sinelli. You don’t qualify. That meteor has been enroute to your home for several billion years. That’s not sudden. Besides section 15, paragraph a. of your policy specifically excludes non terrestrial events from coverage. For your edification that also encompasses damages caused by alien visitations.”
So the Artful Dodger Home and Auto Insurance Company, Inc. are the absolute masters of employing logic to create a bullet proof policy. John Venn would be proud. It is easier to solve all of the ciphers in the Da Vinci Code than it is to understand the policy coverages. This makes me wonder if any Artful Dodger policyholder has ever made it to the Pay the Policyholder Circle.