Column: You might be paying for insurance you don't want or need on your gas bill. I was.
Today, millions of Hoosiers could be paying for insurance without realizing it. Our gas utility bills opaquely call these charges “third party products and services.” I call it a stealth insurance.
Here’s how it works:
When you call your local gas company to start servicing your home, they put you on the line with a stealth insurer without clearly telling you so. The stealth insurer offers to sell you insurance for your gas line. Because you believe you’re still talking with your gas company and that the conversation is a standard part of starting your gas service, you agree.
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Next, the insurer goes into “dark mode.” It never contacts you. It never even bills you. Instead, the stealth insurer siphons funds from your utility bill. This keeps you ignorant of its existence.
Next, you pay. And pay. And pay.
I learned about stealth insurance because I am a victim of it. For seven years, a stealth insurer I’d never heard of and located in another state quietly drew thousands of dollars from my family’s checking account. The company never sent us an insurance policy or a contract, no subscription reminders, no policy updates — nothing.
In a recent phone conversation with the insurer, I asked why they couldn’t provide me with a single written document. Perhaps a little too candidly, their representative replied, “This is just how we do things.”
The upshot is that stealth insurers live in a twilight zone. They have no written contractual obligations to consumers but draw money from us. Consumers will not file insurance claims when they do not even know an insurer exists. By piggybacking on their relationships with utility companies, stealth insurers enjoy the market power of monopolies without being regulated.
These practices probably violate a host of state and federal consumer protection and anti-competition laws. Indiana law, for instance, explicitly prohibits unfair methods of competition and unfair or deceptive acts or practices in the business of insurance.
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Here’s what you can do:
Look at your gas bill. If you think you’ve been affected by stealth insurance, a good first step is to contact the stealth insurer itself. Ask them to cancel any policies you don’t want.
Ask for a refund for any past payments you believe were improper.
If that doesn’t work, try contacting your utility company and asking for the same.
You can file a complaint with the Indiana Attorney General and the Federal Trade Commission.
The stealth insurer that preyed on my family quickly offered to settle our dispute. They asked me to promise not to publicize their business practices, though, and to falsely certify that we had an actual contract. I wasn’t willing to do that.
Hoosiers have a right to know exactly what we’re paying for. It’s time to drag stealth insurers out into the light.
Michael Mattioli is a professor of law at Indiana University Maurer School of Law.
This article originally appeared on The Herald-Times: Column: Gas company allows charges for insurance from third parties
