View Cart

Featured Products

Succeeding
Aggressive Tax Avoidance for Real Estate Investors
Distressed Real Estate Times
How to Get Started in Real Estate
How to Buy Real Estate for at Least 20% Below Market Value

Checkout

Because of the articles at my headline news Web page, my insurance company of 40 years, USAA, refuses to sell me umbrella liability insurance or homeowners insurance policy. Ironically, USAA was started by military officers because they were denied car insurance by regular car insurance companies. I was urged to join USAA when I was a senior at West Point and I did. I was urged to buy the new liability insurance in question by our USAA financial planner. Neither homeowners insurance nor umbrella liability insurance covers business claims. USAA says with regard to the homeowners,

This action was taken due to the increased liability exposure presented by your in-home publication endeavors.

I have had a home office for the entire 40 years that I have been a USAA member. I have been writing for publication out of my home office since 1976—32 years ago.

In a call, a USAA representative said this was because of my headline news page. When I pointed out that neither homeowners insurance nor umbrella liability covered business activities, she said that the headline news page “blurred the line between business and personal.”

My son speculated that the USAA executive who decided to cancel and refuse to offer was probably an Obama supporter. I would have thought a McCain supporter would be more likely. He was in the military. Or it could have been a Hillary supporter since I criticize all three of them. If it was any of the three, USAA has inappropriately put itself in the business of telling its members how to vote or comment upon the political debates of the day.

Another reader speculated that my criticism of the U.S. military and calls for reform of it are the reason. It would be a sad day if an insurance company that specializes in military personnel opposes any of its members criticizing or calling for reform of the military. If not us, who?

Here is a letter I wrote to Joseph Robles,the CEO of USAA

John T. Reed
John T. Reed Publishing
342 Bryan Drive
Alamo, CA 94507

March 25, 2008

General Joseph Robles
USAA
9800 Fredericksburg Road
San Antonio, TX 78288

 

Dear General Robles:

I had what I thought was an odd and disturbing discussion with some of your employees today.

Chronology
• I have been a USAA member since I was a senior at West Point 40 years ago. My wife and sons Dan, Steve, and Mike are also members.
• On 3/24/08, my wife and I had a hour-long session with your financial planner [redacted]. He said we should [purchase] umbrella liability insurance coverage [details and reasons redacted]. For that purpose, he put a liability underwriter on the phone with us.
• On that same day, my wife decided to switch our homeowners insurance to USAA in spite of the fact that it was more expensive for less coverage than AAA because she thinks USAA is a great company.
• Today, 3/25/08, a woman called to tell me that USAA refuses to sell me either homeowners insurance or umbrella liability insurance because of the CONTENT of the headline news articles at my Web site www.johntreed.com.

I suggest that USAA revert to underwriting based on objective criteria like liability claims history rather than subjective criteria like whether a USAA middle manager finds my writing acceptable.

I do not think the VP who made this decision about covering me thought through the implications. His action suggests that I could get approval for the policies in question if I remove from my Web site all words and phrases not approved of by the head USAA censor.

If his decision is, indeed, USAA policy, it suggests that USAA needs to issue the following public statement in USAA magazine and/or at the USAA Web site:

Although many, if not most, USAA members have risked their lives for America’s freedoms, and USAA has proudly celebrated those members’ efforts to defend freedom in USAA magazine, USAA is displeased by members who actually try to exercise their freedoms of speech or the press and may cancel your homeowners and umbrella liability policies if you publicly say things that USAA does not approve of. While USAA members have risked and lost their lives defending those freedoms, USAA itself will not tolerate even the remotest possibility that it may have to defend a member for exercising those freedoms.

The VP’s decision also implies that all USAA members should be warned against either becoming prominent or speaking or writing publicly. This would appear to cover all prominent USAA members like David Petraeus, Al Haig, Norman Schwarzkopf, Wes Clark, Oliver North, and so forth. It is my impression that these members have displeased large numbers of people by various things they have said. Also, less prominent USAA members should be admonished to avoid statements or activities that might displease others like writing letters to the editor, posting comments on the Internet, having a blog or Web site, running for public office, serving on homeowners association boards, writing op-ed pieces for publication, writing books or articles, umpiring or coaching youth sports, and other public expressions or actions that may displease anyone.

However, it seems to me that USAA has among its members, or claims to, a disproportionate number of leaders. Leaders, by definition, come in contact with extraordinary numbers of people and take positions, either by statements or by actions, that displease many of them. That being the case, a policy of rejecting homeowners and umbrella liability insurance for members who act or speak publicly mocks the very idea of who is allowed to become a USAA member.

Thank you,

John T. Reed,
925-820-7262, fax 925-820-1259
johnreed@johntreed.com
www.johntreed.com

Robles’ response to my letter? Nothing. A woman from USAA Member Relations left a message on my answering machine. I returned her call twice and left two messages saying so on her voice mail. She never called me back.

In an unsigned letter dated 4/3/08, USAA said,

At this time, we are unable to honor your request because of the increased exposure presented by your publication endeavors.

It also said “You can request more information.”

I have.

Very simply, it seems to me that either USAA needs to reverse this decision or cite the pertinent objective criteria based strictly on sound insurance principles. Furthermore, the decision to reject my application should be made exactly the same with regard to all of the other past, current 6.5 million, and future USAA members who are similarly situated, that is, have a home office and write or otherwise comment publicly on matters of public interest. I suspect that I am the only one who has been treated this way by USAA and that the decision was subjective and based on nothing but my failure to conform to the political views of someone at USAA.

Here is the letter I received from USAA on 4/26/08:

 

April 18, 2008

Dear Mr. Reed:

Your letter to General Robles has been referred to me for review and response. Thatk you for taking time to write. Please accept my aapologies for any misunderstanding regarding the deciison four our decgrination of your requested coverage. Your disappointment with our decision in understandable.

Declining a member’s request for coverage is difficult, and the decision is never made arbitrarily. Prudent underwriting often requires judgment-based decisions that may adversely affect an individual member, but which we believe serves the best interests of the Association as a whole.

USAA provides personal lines insurance to members with acceptable risks. Due to the level of increased risk, USAA does not provide ahomeowners or an umbrella liability policy when there is a pending lawsuit. In addition, we believe your business and personal opinion publications present a higher degree of exposure for future lawusits, similat to the lawsuit that was pending when you requested coverage. Thus, due to the potential exposure, it was decided to not offer the requested coverage for you.

I understand this was not the decision you were seeking. However, our General Agency may be able to assist you in finding coverage through other companies that specialize in inderwriting broader risk coverage. You may reach them by calling [redacted].

I appreciate the opportunity to explain our position and hope that our explanation was helpful in understanding our decision. If you have further questions involving this matter, please contact [redacted—the woman who did not respond to my two prior voice mails to her] of our Member Relations staff at xxx-xxx-xxxx.

Sincerely

Russell Powers

Senior Vice President

USAA Property and Casualty Alternative Markets

And here is the letter I sent back to him:

Russell Powers
USAA
9800 Fredericksburg Road
San Antonio, TX 78288

 

Dear Mr. Powers:

Thank you for your letter of 4/18/08 regarding why I was turned down for umbrella liability insurance and why my homeowners insurance was cancelled.
1. Your statement that I have a pending lawsuit is false. As I told your agent, the suit was settled on 7/5/05 and was later dismissed by the court with prejudice when my opponent failed to submit a promised stipulation.
2. You offer no business insurance, and I did not apply to you for any business insurance, so my business is none of your business. No insurer has ever paid a claim on a homeowners or umbrella liability policy related to my business in the 40 years I have been buying such insurance.
3. The personal opinions of USAA members are also none of your business. Illegal activity by a member, like running a crack lab in his house, would be pertinent to writing homeowners insurance coverage, but not the legal expression of opinions. Expression of opinion in the U.S. is protected by the First Amendment and therefore cannot be the subject of a lawsuit. Any lawsuit filed against any USAA member or any other U.S. resident based on his or her opinions would immediately be dismissed for “failure to state a claim.” [Federal Rule of Civil Procedure 12(b)(6)]
4. I was offered and requested an explanation and a look at the information in my USAA file about me. Instead of an explanation, you simply restate that USAA will not write the insurance in question because of my Web site. Your letter neither mentions nor includes the promised information from my file.
5. To the extent that your rejection of my application for insurance was based on a “pending lawsuit,” the decision not to cover me must be reversed since there never was any pending lawsuit during the application period.
6. To the extent that the coverage was rejected by you due to fear of future lawsuits regarding my opinions, it must be reversed because such suits are a legal impossibility under well-settled U.S. law.
7. To the extent that the coverage was rejected by you due to my business, it must be reversed because your policy excludes business activities from coverage and I accept that exclusion.
8. In the absence of a reversal of the decision, please send me the explicit, written USAA underwriting criteria under which I and all similarly situated USAA members have been denied homeowners and umbrella liability coverage in the past or will be in the future. In other words, I want to see the written policy that was in existence at the time of my application that the decisionmakers were following when they concluded that the USAA underwriting criteria require that I be rejected.
9. Please send me the USAA file information about me that I was promised in the letter from you that I attached to my letter to Robles.

Thank you,

John T. Reed

To be continued: