It’s puzzling: why don’t more people notice that President Obama is a rather weird guy? When he describes his own experiences, they tend to be other-worldly. During the health summit today, Obama related one of his formative experiences with an insurance company; in this case, it was auto insurance:
OBAMA: … You know, when I was — when I was young, just got out of college, I had to buy auto insurance. I had a beat-up old car. And I won’t name the name of the insurance company, but there was a company, let’s call it Acme Insurance in — in Illinois. And I was paying my premiums every month. After about six months I got rear-ended, and I called up Acme and said, “You know, I’d like to see if I can get my car repaired.” And they laughed at me over the phone.
Because really, this was set up not to actually provide insurance, what it was set up was to meet the legal requirements. But it really wasn’t serious insurance.
Now, it’s one thing if you got an old beat-up car that you can’t get fixed. It’s another thing if your kid is sick or you’ve got breast cancer.
Obama’s story passed without comment, but it made zero sense. What on earth was he talking about? He had car insurance; his vehicle was rear-ended; he called the insurance company to arrange for repairs; and they laughed at him because it “really wasn’t serious insurance” even though it was “set up to meet the legal requirements.” Huh?
Automobile insurance (like health insurance) is a heavily regulated industry. In some states, all auto insurance policies are required to include collision coverage. If the cost of the repairs exceeds the value of the “beat-up old car,” you get the value of the car. In other states, liability insurance is required but collision coverage is optional. If you prefer to take your chances, you can choose to forgo collision coverage. Obama is a reasonably bright guy; is he telling us that he bought an insurance policy that didn’t provide for repairs if he had an accident, but didn’t know it?
Further, insurance companies can’t just laugh at you over the telephone and say, “Tough luck, sucker. We don’t pay our policyholders’ claims.” Doing so would expose the company to additional damages on top of its liability for repairs and, if repeated, could result in the company’s being banned from writing coverage in the state in question.
I can think of three possible explanations for what happened to Obama, assuming his story wasn’t a complete fabrication. First, he made a rational decision not to buy collision coverage on his vehicle. But in that case, he can hardly complain if his insurance company told him they didn’t cover the damage to his car when he was rear-ended. Second, he could have bought auto insurance from a company that went bankrupt. But in that case, he wouldn’t be out of luck, his claim would be picked up by a state fund. Third, he could have bought a high-deductible policy and the damage from being rear-ended was within his deductible. In general, buying high-deductible insurance is a good idea. If either 1) or 3) is correct, is Obama telling us that he is such a dope that the government should re-write his contracts so he can get a benefit he didn’t pay for? Maybe so; he is a Democrat, after all.
The more we see of Barack Obama, the stranger he appears to be. Either that, or he is cynically making stuff up to play to an audience that is ignorant with respect to insurance, and much else.
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