How Insurance Companies Keep Auto Accident Victims Stressed Out & In Debt
Leslie N., a truck driver, was traveling in his big rig on Route 25 in Kentucky when another driver ran a stop sign directly in his path. To avoid hitting the other driver, Leslie swerved left, causing his truck to jackknife. He suffered serious injuries to his head, neck, back, and brain, eventually needing back surgery. Leslie was exonerated by local police, who confirmed Leslie was driving the speed limit and operating safely. Because the at-fault driver was uninsured, Leslie filed an uninsured motorist claim with his own insurer.
That's when his troubles really started.
Leslie faxed the police report to his insurer. The insurer, without evidence, denied the claim and accused Leslie of speeding (which his truck's onboard computer proved wasn't true). The insurer then hired an expert to reconstruct the accident—no small expense—and even the expert agreed that Leslie was not at fault. The insurer then told Leslie that he needed to get examined by the insurer's doctor, despite the fact that Leslie had already been examined by 20 doctors. Leslie, who was injured, requested a doctor that was nearby because travel was difficult. The insurer asked him to visit a doctor more than two hours away. The doctor's exam lasted less than 10 minutes.
As Leslie and his wife left for their two-hour trip home, they noticed a car behind them with a video camera pointed forward. After a few turns, they realized the car was following them. The car proceeded to keep pace with them all the way home. Later, at trial, they would find out that Leslie's insurer had hired a private investigator to follow them home. This went on for more than a year. Meanwhile, Leslie and his wife had to remortgage their home, sell their farm equipment and hunting dogs, burn through their savings, deplete their son's college fund, and plan yard sales to keep on living. Experts said his claim's value was between $750,000 and $1.3 million. In the end, the insurer paid Leslie $60,000 for his trouble.1
Stories like this aren't rare—this is how the insurance industry operates now. Thanks to changes in how insurance companies make money, insurers have almost no incentive to pay claims fairly and on time.
An Insurance Company's Loyalty Isn't to Auto Accident Victims
When insurance companies were first created, they were funded by and comprised solely of policyholders. The idea was simple: you paid into a group fund, and in return you received the right to withdraw from that fund when you suffered covered losses. A claims adjuster, who was paid by policyholders, would be in charge of deciding how much each claimant received. This is how 18th century insurance companies helped homeowners protect themselves from fire damage (which was fairly common).
Today, things are different. Insurance companies are enormous corporations made up of hundreds and thousands of claims adjusters. While companies are paid by policyholders, the actual owners of an insurance company are its shareholders. The point of an insurance company is no longer to serve its policyholders—it's to make as much investment income as possible on its premium revenue.
You might ask, "What does that have to do with me?"
Since insurance companies make money from investment income, they want to have as much cash on hand as possible. The more money they have in the bank, the more they make. Insurance companies can even collect income on money that belongs to a claimant and hasn't been paid yet. This is called "float," and it's the key to understanding why Leslie's insurance company made him wait over a year for a claim that he would obviously win in court.
When insurance companies delay claims by even a few weeks, they can increase their float by billions of dollars every year. One well-known investor, whose company owns major nationwide insurers, bragged to shareholders that they made $2.8 billion in one year by "holding our float," i.e. paying claims more slowly than they should.
How Companies Get Away with Delaying Insurance Claims
There's another reason insurance companies delay or deny claims. Insurance companies have more time and money at their disposal than auto accident claimants. Claimants have no power to force an insurer to do the right thing—and insurers know it. After the 1994 earthquake in California, an adjuster for a nationwide insurer testified that all adjusters were told to "deny everything you can." In another case, an insurer forced an out-of-state claimant to drive to an arbitration meeting in person instead of allowing him to attend over the phone.
Insurance defense lawyers revealed that their client, a larger insurer, would fight no-fault claims with no valid defense because it would deter future claimants; they called it a "business decision." Companies will deliberately spend more money fighting a case than they'd spend settling it fairly. Why? Because fighting all claims makes it less likely for auto accident attorneys to take cases. At least one court has ruled that fighting claims in order to deter other claims is a violation of a insurer's obligation.2
The Only Time Insurance Claims Settle Quickly
Insurers only offer fast settlements when your case is bigger than you think it is. In other words, they only offer to settle when they can low-ball you, but they usually give one caveat: no lawyers.
Insurers only offer fast settlements when your case is bigger than you think it is. In other words, they only offer to settle when they can low-ball you, but they usually give one caveat: no lawyers. There's a reason for that. One consulting firm's study of uninsured motorist claims found that claimants who had lawyers recovered 90 percent more money than claimants without them. Another study they did found that claimants who were represented recovered two to five times larger settlements on average than claimants without lawyers.3 Insurance claims attorneys and auto accident lawyers are the only people qualified to drag insurance companies to court and make them accountable to regular people.
Ultimately, the only way for auto accident survivors to get what they need—medical care, lost wages, and more—is to fight for it. The best way to fight for it is to have someone fighting alongside you, someone who has faced insurance companies before and beaten them at their game. That's why people call the auto accident attorneys at Arnold & Itkin LLP. Our firm has won billions of dollars for injured people, helping them get the money they need to move forward. Leslie N. and his wife deserved better—you deserve better too.
Call (888) 493-1629 to learn your options in a free case review. Our attorneys are ready to help you get what you need to get your life back to normal.