(Denied) claim of the week: Insurer denies hole-in-one claim

Santa Fe New Mexican reports on a guy who hit a hole-in-one to win an SUV. But not so fast:

… After Robert Gabaldon of Albuquerque sunk his ball with a single stroke, Hole in One International denied the claim because it measured the distance from the tee to the No. 8 hole at 179 yards — while tournament officials had insured it at more than 190 yards.

These sorts of contests (half-court shots for $1 million, kick a field goal for a trip around the world, etc.) are often insured. It’s fairly simple. The insurer underwrites a bunch of these contests and absorbs the risk of the exceptional event.

Now insurance is a contract, not a feel-good proposition. Claims that don’t fall under the contract should be denied. But we’re talking about 30 feet here. I don’t think the shorter distance made the hole that much easier. It’s not like going from Pebble Beach to Putt-Putt.

And the hole may actually have been the length the insured claimed it was, according to Scott Simkins, the manager of Chalmers Capitol Ford, the dealership that bought the policy.

Simkins said he believes the No. 8 hole measured more than 190 yards on the day of the tournament because the tees had been placed at the back of the tee box. But when the company agent measured the distance, he said, the tees had been moved back to the front of the tee box.

The lucky golfer drove away happy, though.

Nevertheless, he said, Chalmers Capitol Ford turned over to [golfer Robert] Gabaldon a nice, used Expedition worth $25,000 “because it was the right thing to do.”

The insurer has reopened the claim, which is a good idea. Denying claims like these doesn’t help your long-term operations. And if you are going to deny claims like these, you should underwrite more tightly – getting the length of the hole measured in advance, so your actuaries can adjust the premium to reflect the risk.

Or maybe checking the internet.

“It’s kind of an ongoing saga,” Simkins said Friday. “In the interim, I’m out $25,000. … We won’t be dealing with them in the future. Unfortunately, they’ve really kind of soured me as being a hole sponsor for golf tournaments.”

(h/t iii.org)