Insurance Companies & Advertising: Shouldn’t your word be your bond?

I think we have all seen the commercials and read the magazine advertisements created by the insurance companies. Some insurance companies take a cost approach to their marketing and stress the savings that can be had by the average consumer. For example, Geico markets to the public by representing that you can save lots of money by switching to one of their policies. Other insurance companies, often the ones that charge higher premiums and have been around much longer, market to the public with a message like “you’re in good hands” or “like a good neighbor, we will be there.” Seemingly, these companies are seeking to differentiate themselves by advertising their insurance as superior, albeit for a higher premium.

State Farm even ran the famous “Something is Missing” campaign where they ran an entire series of advertisements aimed at the deceptive practices that “other” insurance companies commit. For example, State Farm has a commercial where they show a hot dog vendor advertising hot dogs on the street. One customer approaches and purchases a hot dog from the vendor. The vendor then turns and provides him with a wiener, but no bun. The customer is upset and asks for the bun, but the vendor merely replies, “Where did I say anything about the bun?” Shocked, the customer replies that it is not really a hot dog without the bun. The commercial fades out and reads, “Is your insurance company selling you a hot dog without the bun? Find out. State Farm.” State Farm ran a whole host of similar ads regarding car washes, foot massages, and shoe shines. In each ad, the customer was not getting what they bargained for. In each ad, State Farm represented that it does not conduct its business in that manner.

Is State Farm suggesting that the “other” insurers, who rely on complicated fine print and legalese to escape coverage, are in the wrong? I would certainly agree with that contention, but is that what State Farm is saying? Does this mean that State Farm is no longer going to be relying on, or pointing to, fine print to escape its obligations to provide insurance? It seems that State Farm has embraced the reasonable expectations doctrine with regards to insurance policies. Under this approach, the fine print matters less than what the reasonable person would expect to receive from the insurance company. Indeed, under the reasonable expectations doctrine, the insurance policy will be interpreted to meet the reasonable expectations of the insured, even if the actual language of the policy said otherwise.

I have represented several people and business that have been given the “see the fine print” argument by their insurance companies. However, it was not State Farm in those instances. What will be interesting to see is whether the courts will hold these insurance companies to their word. For example, will State Farm be able to escape coverage by relying on the fine print or a technical exclusion, after they have represented to the public that they do not employ such practices? It seems that the courts should hold them, and similar advertising insurance companies, to their word, given that the insurance company thought the ad campaign would serve to get them more business. In other words, there are people who switched insurance or purchased insurance from State Farm based on such advertisements. State Farm would not run such a campaign if it was not intended to increase its insurance contracts. Shouldn’t State Farm then be held to its word? Indeed, State Farm is advertising to the public what they should be expecting from their insurance company.

What is even more interesting is that State Farm is setting the tone for all the insurance companies. At the very least, State Farm is calling those other companies out. If State Farm, an insurance company designed to collect premiums and maximize profits, can call those other insurance companies “shady,” then shouldn’t we? Shouldn’t we demand that ALL insurers mean what they say, and say what they mean? Shouldn’t your word be your bond?