What is an Example of Coercion in Insurance?

What is an example of coercion in insurance? Well, most of the time COERCION is used to express the threats of violence or other intimidating behavior that makes a person immediate fear. When this word relates to INSURANCE, it comes more negatively in front of us. If we choose insurance for a secure life, then why do we hear coercion is taking a huge place in this sector? Curiosity works on our mind to find out many answers and this informative article will help to calm the curious mind.

“Coercion in insurance” means “one kind of force to purchase an insurance policy by using threats, intimidation or manipulation. Any type of insurance is purchased by a contract, that contract happens between general people and insurance companies. Sometimes the members of insurance companies force their clients physically or mentally to sign contracts.

It is an “unfair trading practice” that happens in the insurance business. In a simple definition “coercion in insurance” is when someone forces a person to purchase insurance. Coercion is used to persuade someone to buy insurance against their will and could face physical, mental, or psychological harm. Types of coercion: The use of force or threats to control one person’s action is coercion.

1. Deterrence

2. Compliance

3. Brute force.

Deterrence is the prevention of something, by having such weapons or punishment to use as a threat. According to Britannica, Compellence is the ability of one state to coerce another state into action, usually by threatening punishment.

According to Merriam-Webster, Brute force relies on the application of force, effort, or power in usually large amounts instead of more efficient, carefully planned, or precisely directed methods.

Methods of coercion

We can define “Coercion” as the use of force to persuade someone to do something that they are unwilling to do. Methods of coercion are as follows…. Isolation Monopolization Threats Occasional indulgence Enforcing trivial demands Degradation Induced exhaustion Elements or features of coercion: Coercion means the use of force to achieve a desired end.

The elements of coercion are given below…

a) Committing or threatening to commit any act forbidden by law.

b)The intention of causing someone to agree.

c)The unlawful threatening to detain any property to the prejudice of any person.

The most common element of coercion is associated with the “use of threats”.

Example Of Coercion

“Putting a gun to someone’s head” or “putting a knife under the throat” is the most common example of coercion. For example, A gives a threat to B to sell his house for 10 lakh rupees. If B sells his house to A, it will not be a valid contract since B’s consent was obtained by coercion. A parent, a leader, or an employer could often face some actions like threats, force, bullying, blackmailing, or torture to do what needs to be done.

A typical example is, if an employer fails to gain a specific target, then he or she faces the threat of losing their promotions. Effects of coercion: If coercion is applied in any contract, then it will become a voidable or ineffective contract.

In an ineffective contract, the aggrieved party can decide the following…

1. Cancel the contract and claim for damages.

2. Continue with the contract, and the contract will become valid.

Is Coercion Legal In Insurance?

Coercion is not legal in insurance companies. Insurance companies are required to provide full information to their customers about their policies and coverage areas. And also they have to allow customers to make their personal decisions without coercion. What should you do, if you have been coerced into buying an insurance policy? If you believe that you have been coerced into buying a policy, you must make a contract with your state insurance department. Also, you can file a complaint with the regulatory agency.

You can also make a contract with a lawyer for further guidance. Sometimes insurance companies force general people to buy insurance and it is the hidden dark side of it. Coercion in the insurance industry is considered a fully prohibited business activity. One person must be aware of coercion before signing with an insurance company. When you face this problem, must report to the head office of insurance.

How To Avoid Being Coerced Into Buying An Insurance Policy?

You can follow some tips to prevent you from being coerced into your policy buying. First of all, beware of the licensed insurance policy. A reputed insurance company never will recruit such an insurance agent, who will force you to buy their coverage.

Again, new unlicensed insurance companies offer a low premium as their marketing policy. Therefore beware of the low premium rate as well. No company can give you a low premium rate, which is beyond the standard rate. Visit the company website to check their license status.  If possible see the customer feedback on their website too.  Company license status plus customer feedback will give you the real economic scenario of each company. If you see any negative response from there, do not go for any conversation with the agent of those companies. Because agent of such companies usually intend to give you a thread to purchase their policy.

Finally, if you are already being coerced, directly report to the responsible person of your insurance company. If still it does not work, don’t hesitate to report it to your local police station. You need to know-usually every state law asks for a fraud or coercion report within 30 days. So be aware of it. Collect all the audio-visual evidence, then report it to your state law within 30 days.


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