Around 92% of people in the United States have health insurance, 95% of homeowners have home insurance, and 87% of car drivers have auto insurance, so let’s dispel the “I-won’t-need-insurance” myth. If you are uninsured, you will likely have to purchase an insurance plan someday.
And if so, you have to be ready. Among many aspects to consider, there’s one that threatens insurance seekers the most: twisting, churning, and sliding – the cunning tricks unscrupulous insurance agents use to draw profits from inexperienced clients. Luckily, with some basic knowledge, you can protect yourself from tricky sales tactics and get the insurance coverage you want.
Ready to defend yourself from salesy agents? Then let’s roll!
What Is Insurance Twisting, Churning, and Sliding?
So what is it? Insurance twisting is an illegal practice when your agent deceitfully convinces you that you will be better off after switching to a different insurance provider. Instead of acting in your best interests, which any agent should do, they are trying to defraud you by selling you a policy that is inferior to your current policy, but which benefits them.
Insurance twisting is considered a criminal offense in most states and is regulated by the Unfair Trade Practices Act. Agents found guilty are prosecuted under fraud statutes. The National Association of Insurance Commissioners protects people against insurance twisting.
Note that twisting is not just selling a policy. To be considered a twister, an agent must intentionally deceive you. So, again, the act cannot be classified as twisting unless the deception is intentional.
Churning is the same as twisting, except that you are deceitfully advised to switch to a different policy from your current insurance provider. The reason behind churning is to take a commission off of the deal.
Arguably the trickiest tool in the toolkit of unscrupulous insurance agents, sliding is when you are sold extra coverage that you don’t need – for example, a rider for high-value electronics that would be covered by your basic insurance. Most times, clients are not notified about the increase in premium that extra coverage would incur.
Twisting Vs. Churning Vs. Sliding: Is There a Difference for an Insurance Buyer?
All three practices are illegal and should be avoided at all costs. However, a misrepresentation is not always malicious. It can be unintentional, resulting from a lack of knowledge.
How to Protect Yourself from Insurance Twisting, Churning, and Sliding?
Even with anti-twisting legislation at work – such as, for example, life insurance replacement requirements endorsed by the National Association of Insurance Commissioners – you may have a hard time bringing a crafty agent to justice. However, good judgment and awareness of the nuances of your policy can save you in the long run.
Here’s how you can avoid twisting, churning, and sliding:
- Know your policy through and through. Whether switching or updating your insurance plan, make sure you know every detail of the options on the table. Around 20% of insurance owners don’t know their policies, which is unacceptable if you want to stay informed of your coverage.
- Understand all the nuances. The best indicator of a true insurance expert is when you clearly understand the benefits of your new policy. However, if the pros and cons are undetermined, the answers are ambiguous, and the explanation of the deal is unconvincing, then it may be reasonable not to proceed further with this agent. Confusion is the quickest path to being twisted around.
- Balance the amount of coverage, premium, and deductible. Another way to avoid insurance twisting is to objectively assess the options you have at hand. For example, the more coverage you have, the higher the premium. At the same time, the higher the premium, the lower the deductible. Determining the right balance will help you spot underwhelming offers.
- Watch out for salesy agents. It is one thing to elaborate on the details of a policy, but it’s a different thing to be salesy and pushy. A hard sell that makes the conversation awkward and uncomfortable is a red flag. If nothing has happened in your life, but your agent advises you to switch your policy, then you should be cautious.
Last but not least, the law is on your side. Most states and reputable insurance agencies follow the anti-twisting regulations endorsed by the National Association of Insurance Commissioners. Most insurance agencies monitor policy switches and have a cooling-off period, during which you can switch your policy back without loss of premium.
If, however, you’ve fallen victim to insurance twisting, you can report the agent to your state’s Department of Insurance. Before that, you can ask an independent agent (or one you trust) for a second opinion on the issue.