Why You May Need a Lawyer to Fight the Insurance Company
On February 7, 2007, CNN investigative reporters revealed damning evidence against major insurance companies, such as State Farm and Allstate, which are profiting billions of dollars by underpaying injured car accident victims. The money these insurance companies are denying car accident victims would otherwise go toward doctor visits, lost wages, and rehabilitation. However, new strategies adopted by insurance companies have them making take-it-or-leave-it payout offers that in many cases don’t cover even a fraction of the victims’ expenses.
Imagine you are driving along and another car comes out of nowhere and runs into the side of your car, injuring you to the point where you can barely walk, are in severe pain, and need doctor visits, CT scans, X-rays, and rehabilitation. Wouldn’t you expect the insurance company of the driver who hit you to pay those bills?
Roxanne Martinez did. CNN reported that when she was hit by an SUV on the passenger side of her car, she was smashed against her driver-side window, damaging her spine. Her medical bills quickly accumulated and she thought Allstate, the insurer of the driver who hit her, would pay the costs.
Three years later, after CT scans, doctor visits, X-rays, and a host of medical problems, Roxanne was still fighting Allstate. The company finally offered her $15,000, a sum that did not cover her expenses, much less her pain, time lost from work, or the emotional anguish of not knowing whether or not she would be able to afford her treatment.
This tactic is part of a strategy insurance companies are using to make themselves billions of dollars. CNN’s year-and-a-half investigation into the insurance industry found that if you are injured in a minor accident, major insurance companies will likely challenge your claim, drag you into court, and take years before making you an offer. This offer is often significantly less than your claim is worth.
Industry insiders say this results in 80-90% of injured victims accepting what the insurance company offers instead of fighting.
Why would an insurance company, especially one that you trust and have given significant amounts of money to over the years to take care of you in the event you’re injured, act with such reckless disregard toward your personal well-being? The answer is simple: insurance companies make more money if they pay you less money for your injuries, even if you need the money to cover necessary medical bills, lost wages, and rehabilitation.
According to Jeff Stempel, a Nevada insurance law professor, accident victims are getting hurt further by being dragged into court by insurance companies. Other policyholders aren’t seeing any benefit, such as reduced premiums, when Allstate or State Farm takes those who need money for their injuries to court. This practice isn’t saving the consumer money at all. In fact, the only real beneficiary of keeping money from the people who need it are the insurance companies themselves. Professor Stempel says, “To continue this kind of program is, in my view, institutionalized bad faith.” These insurance companies seem to believe their money is better spent dragging hurt people who need insurance money for their injuries through court instead of helping them pay their bills.
Both Allstate and State Farm would not discuss the investigation’s results with CNN.
Jim Mathis, a former insurance company insider, told CNN, “As long as the public allows this to occur, insurance companies will get richer, and people will not get a fair and reasonable settlement. Period.”
The math behind the insurance companies’ strategy is simple: take $1,000 off of 1 million claims and you’ve essentially made $1 billion. Do this with every claim over a number of years and you’ve made billions of dollars.
Insurance companies achieve this cost cutting through a process known as the “Three Ds”:
- Delay the claim.
- Deny the claim.
- Defend the denial of the claim.
By forcing “smaller, walk-away settlements,” which are take-it-or-leave-it offers years after the actual accident occurred, battles have already been fought, bills have added up, and people are afraid that they won’t get any money for their claims, insurance companies can essentially force an injured victim to accept whatever it is they’re offering.
One Indianapolis superior court judge told CNN that many insurance company lawyers have confided in him that they want to settle many of these minor impact cases, but the insurance companies won’t allow them to. The insurance companies would rather fight every claim, even though that means not giving their paying customers the money they need to heal and get back to their lives.
A lawyer for Allstate said that the company’s strategy was to drive lawyers who represent victims out of the insurance industry. The company tried to accomplish this by making the act of fighting a claim “so expensive and so time consuming that lawyers would start refusing to help clients.”
“Insurance companies fight paying billions in claims.” CNN.com. February 2007. Accessed 02/08/07.