"Fast Claims Service" May Be a Disservice to You: Don't Be Too Hasty To Settle Your Claim

Below is part of an email that a car accident victim recently sent to me.  Unfortunately, I cannot help her with her claim because once you have settled with the insurance company for injuries caused by a car accident you can not “renegotiate” if you are later found to have more serious injuries.  This case is a good example of why you 1-) should not settle with the insurance company until your medical condition is fixed and stable for some period of time,  2-) you should not be in a hurry to settle medical claims immediately following an accident, 3-) you may need an attorney to help negotiate your settlement.

I was in a car accident on Tuesday, March 4th.  I hit my head and shoulder on the left side and had neck and lower back pain.  I went to the emergency room that day.  I was given muscle relaxers and anti-inflammatory medicine and was told to follow up with my family doctor. 

 

Within a few days my symptoms became much worse.  My neck and back problems got worse.  I starting having memory problems.  I saw more doctors and I started seeing a chiropractor. 

 

Florida Court Suspends Allstate in Florida

Late Friday, April 4, 2008, the District Court of Appeals, First District, State of Florida upheld the Florida Office of Insurance Regulation’s suspension of Allstate from writing insurance in the State of Florida. The Office had suspended Allstate weeks before for a refusal to produce the McKinsey documents during an investigation of the company. That investigation, started as a result of the media surrounding Trial Guides From Good Hands to Boxing Gloves, and Robert Hunter’s reference to it, resulted in Allstate being cut off from a market comprising 17% of its national sales. The court found Allstate guilty of arbitrary reductions of “bodily injury claim payments to its policyholders and beneficiaries by up to 20%.” It also determined that Allstate was engaged in ongoing criminal activity by failing to cooperate with the Office of Insurance Regulation’s investigation of a crime, and that this constituted a danger to the public health, safety or welfare of citizens. Realizing the seriousness of this, given the pending shareholder lawsuit against the company for other problems resulting from the company’s refusal to turn over the documents in several cases nationally, Allstate posted 150,000 documents related to McKinsey on their web site. This number of documents is substantially more than the number they had represented were “all” of the McKinsey documents, to several courts in the country. But it wasn’t that ruling alone that scared Allstate into finally disclosing the documents. It was that Trial Guides is about to release a public version of From Good Hands to Boxing Gloves. As the Miami Herald-Tribune said just as that book was going to print “Berardinelli's plan to publish a book for the general public next month, and a Florida appellate court.

More Allstate stories, articles, and news.

40,000 Car Accident Deaths Per Year

According to a new study sponsored by Allstate insurance the average U.S. driver gets in a wreck every 10 years.  Auto crashes in general have declined over the last few years, Allstate reports, but crash fatalaties still average about 40,000 every year, despite technological advances, according to the National Highway Traffic Safety Administration.  Allstate suggests following a few basic reminders to avoid accidents. They include avoiding distractions, taking extra care in bad weather, avoiding driving while drowsy and stearing clear of road.

Study Reports That Seattle Drivers Are Involved In Accidents Once Every 8.6 Years

According to a recently released report issued by Allstate insurance company Seattle, WA ranks 128th on a list ranking US cities based on how many years drivers are most likely to go without an accident. The report says that Seattle drivers commonly go 8.6 years between motor vehicle collisions.

Frivolous Lawsuits by Car Insurance Companies

Insurance companies: give them an inch and they'll take a mile.

We represent a very nice lady who was very seriously injured. The lady who hit her pleaded guilty to causing the accident.

This major insurance company begged us not to sue... "send us your demand... send us your medical records...we want to settle."

We sent them everything..

we waited

and waited

and waited

and then filed suit.

What's the first thing the insurance company did? Filed its own suit against the driver of our client's vehicle (our client was a passenger.)  Purely 100% frivolous. Their lady pleaded guilty! 

This is an example of what insurance company's due to muck up the system.

Delay

Delay

Delay..

then blame someone else.

Next time this insurance company says "we want to settle...don't sue..." they won't even get a return phone call.

Contempt order that triggered huge fines against Allstate to be lifted

From Good Hands to Boxing Gloves: How Allstate Has Earned Billions by Shortchanging Policyholders & Claimants

The book From Good Hands to Boxing Gloves: The Dark Side of Insurance (2008) by David J. Berardinelli, discusses how Allstate revolutionized the claims handling process by implementing policies to deliberately reduce benefits and claim payouts by intentionally paying out less than the true value of the claim. 

Mr. Berardinelli states that our insurance system is founded on two key rules: the indemnity principle and the fiduciary principle. Together these principles are intended to level the playing field between the insurance company and the policyholder. These principles balance the insurer’s legitimate goal of being profitable while allowing the insured policyholders to get prompt and fair payment for covered losses.

Mr. Berardinelli states that casualty insurance is a unique insurance product. It’s different from other kinds of insurance like life insurance. Life insurance pays a set benefit when you die regardless of the cause or consequences of your death. But casualty insurance is indemnity coverage. It doesn’t pay a set benefit. It pays as much as the policyholder needs, up to the policy’s limit, "to restore an insured to the same financial position after the loss that he or she was in prior to the loss."  To indemnify someone means to make them whole again. That means the insured doesn’t get paid more than the actual loss. It also means the insured shouldn’t get paid less than what it takes to make the insured whole again. The insurance company's duty is to pay the full amount the policy holder needs to be put back in the same position he or she was in before the loss.  This is called the indemnity principle.

Mr. Bernadelli states that Allstate implemented a program to intentionally pay out less than the true value of claims.  Essentially, Allstate intentionally violated the indemnity principle, leaving policyholders and claimants much less than the insurance coverage they were entitled to receive.

How did Allstate accomplish this?  Well Allstate often deliberately delays paying legitimate claims by asking for useless information or demanding more proof than it really needs. It would delay payment or force policyholders to jump through needless hoops, in hopes they’ll give up or take less than the full and fair amount of the benefits they’re owed under the policy. Allstate paid for studies which showed that nearly 85% of claimants would accept whatever lowball offer Allstate made, and not bother with the hassle.  When you are talking about hundreds of thousands of claims, this adds up to hundreds of millions saved for Allstate.

Another tactic Allstate uses is to pressure policyholders who are in a financial bind into accepting a quick payment that’s far less than what they need to make them whole. It forces policyholders to file needless, expensive, and time consuming lawsuits as the only way to get what they need to fully restore them to where they were before the loss. Again, Allstate found that most people will not bother to go through the hassle of hiring a lawyer and filing a lawsuit.  More money saved for Allstate.

Mr. Bernadelli found that Allstate repeatedly violated the important principles which are necessary to protect people who purchase insurance.  Yet Allstate continues to get away with its tactics.  Allstate continues to put its own financial interests ahead of their insured’s needs, and now the system is no longer fair. The playing field is no longer level and an insured either accepts less than they receive or seeks legal counsel to level the field.

 

Allstate Claims Process Explained l Davis Law Group Seattle

I found a great article on how Allstate Insurance Co. rigged a computer program to produce artificially low values for injury claims, sent fraudulent information to state regulators to avoid scrutiny, and accepted lawsuits over its claims handling as a cost of doing business. 

Colossus: Understanding The Insurance Claims Dragon And How To Slay It

Colossus is a computer program used by insurance companies to value personal injury claims.  At least half of the insurance claims in the United States are evaluated by Colossus.   Colossus is probably on your claims adjustor’s computer screen while they are talking with you.  Everything you tell them is probably entered into Colossus.

In the 1990s insurance companies such as Allstate turned to Colossus because they wanted to standardize how their adjusters evaluated claims and because they wanted to save money by reducing the amount that they pay for injury cases. Though Colossus companies have also figured out that most plaintiffs' lawyers (Colossus identifies and keeps track of lawyers) will not file a lawsuit in most cases and are willing to settle for the best offer that they can get.

Colossus considers a number of factors when determining the value of your case. Such as: your injuries; the type and duration of your medical treatment; and the amount of damage to your vehicle.  Colossus uses this information and a special formula to assign "severity points" to claims.  The system counts up the points and converts them into a dollar value.  That dollar value is typically what the insurance company will offer you during negotiations. 

The problem with Colossus is the that it cannot take the place of human beings understanding of human suffering. Colossus will not take into consideration the human factors : stress, pain, inconvenience, loss of enjoyment of life, loss of consortium (relationship), inability to participate in the things that you enjoy most, or any number of other things that a juries and judges will consider.

A good attorney knows about Colossus and understands the role that it plays in the insurance company’s negotiation of your claim.  Colossus also tracks which attorneys play hardball, won’t settle the claim for unfair amounts, and  are not afraid to take a case to court if the settlement offer is unfair. 

June/July 2008 Newsletter Is Now Available

IN THIS ISSUE: Allstate Is The Worst Insurer For Consumers; Love Without Boundaries; Ask The Attorney; Client Satisfaction Survey; The Race To Heal—Part One; Washington State Cell Phone Law

To get this and other past editions of our newsletter visit our online library.