How I spent my summer vacation

There was a lot of jogging on the beach at dawn, walking at sunset, and comparing lobster rolls from different takeout windows.  But there was also some channel surfing (a clicker all to myself -- that's a luxury I rarely get), and I came across this US Senate hearing on insurance issues.  I was immediately sucked in by lawmakers talking about insurance other than medical insurance -- indeed, liability insurance.  Here's the link.

I was particularly interested by questions from Senator Blumenthal of Connecticut.  He accused  homeowner's insurers of fraud because they changed policy terms to exclude specific losses without adequately informing the policyholders.  His questions start at around the 47 minute mark. 

One of the responses from the panel was to the effect of, "We don't know how to get homeowners to read their policies before they experience a loss."  I can only imagine.  I was just going over my own homeowner's renewal policy.  Sure, I'll talk to my agent about the limit on the mold endorsement, which I want to be higher.  And I skimmed through at least the titles of the endorsements.  But even I -- an insurance coverage geek who regularly litigates homeowner's policy issues -- could not bring myself to read the policy closely.  And really, what good would it do me?  Other than the limits, what can I negotiate in the policy?  What should I?  How can I anticipate every possible loss and every possible way that it may not be covered?

Senator Blumenthal complained specifically about policy exclusions that exclude damage to foundations as a result of faulty building material.  One of the responses from the panel was that the proper claim is against the manufacturer of the defective product, not the homeowner's insurer.  Yeah, sure, if you can figure out who the manufacturer was, it still exists, you can find it, you can afford to pay an attorney and you can find one to take your case, there's no applicable statute of limitations or statute of repose, and you can wait the several years it will take to resolve a third-party claim.

I'm not opposed to policy exclusions, not even major ones for construction defects.  But I do think that representatives of the insurance industry should be straightforward about why they exist.  After all, the fact that a third party may ultimately be liable for a loss is not in and of itself a good enough reason to exclude a type of claim.  All other things being equal, the homeowner's insurer can pay the loss and then bring a subrogation action against the manufacturer.   The exclusion exists because paying those claims are expensive and the insurers don't want to underwrite that type of risk.  Just be straightforward about it.  No policy covers everything.