People buy insurance as protection against something that's not likely to happen.
If the risks insurance companies insure against were likely, the insurance companies wouldn't last long. That's common sense 101.
The odds of any specific people getting into serious car accidents, having their homes burn down, or contracting chronic or fatal illnesses are pretty slim. It's only because possibilities are so remote that insurance companies can afford to insure against them.
Does that mean that people with insurance who don't experience collisions or fires or illnesses are being cheated? Certainly not.
Normal people do not want to suffer misfortune so they can collect on their insurance policies. What they're buying when they purchase a policy is peace of mind, the luxury of not having to worry about the great What If?
Plaintiffs attorney Mark Brown of Alton's LakinChapman law firm doesn't seem to get this. He's leading a class action suit against H&R Block Tax Services for offering peace of mind coverage.
According to Brown, the tax-preparation company is cheating its customers when it promises, for a fee, to cover their liability in case of an audit.
"Block knew that 99.7 percent of its customers would not use the peace of mind coverage," Brown observed, noting that "the overwhelming majority of Block's clients never have a peace of mind claim because their returns are so simple that the likelihood of error by Block and the chance of additional taxes being owed are remote."
If its customers were frequently audited, Block wouldn't be doing a very good job – nor could it afford to insure against the risk. It's only because Block has an exceptional success rate in preparing its customers' tax returns that it can make the promise of peace of mind.
Brown seems to think that Block customers who purchase peace-of-mind policies should be guaranteed an audit. Everyone who uses H&R Block and wants to be audited should consider asking Brown to be part of the suit.