Case Study: Illegal Insurance Claims Practice
Some insurance companies use fraudulent tactics to trick accident victims into believing that the company was representing their interests in settling the claim.
In 1997 Janet Jones was severely injured when a teenager ran a stop sign and t-boned her vehicle. The impact of the crash hurled Jones’ minivan onto its side. A defective seat belt caused her to be partially ejected from the van. She sustained severe head and facial injuries, including the loss of an eye. The medical expenses from her initial hospital stay grew to more than $75,000 – exceeding the $25,000 liability limit on the teenager’s Allstate policy. Three days after the accident, Allstate claims adjusters contacted Jones with a form letter promoting its “Quality Service Pledge.” Allstate said it would serve as Jones’ claim representative for the accident.
Allstate’s claims adjusters continued to contact Jones and asked the Jones family to “trust” Allstate and reaffirmed the company’s commitment to make an “appropriate offer of compensation” for her injuries. However, Allstate adjusters cautioned the Jones family that Allstate would not continue to represent them in the claims process if they retained an attorney.
Allstate then falsely told Mrs. Jones that she needed to settle with the company for the amount of the teenager’s policy limits. But by doing so, Mrs. Jones would have relinquished her claim against the manufacturer that made the defective seat belt, causing her to lose virtually hundreds of thousands of dollars in settlement proceeds. By settling with Allstate, Mrs. Jones’ settlement only benefited the insurance company.
After Mrs. Jones filed against Allstate, her attorney obtained the company’s training manuals. These materials showed that Allstate’s adjusters were instructed to bilk injured citizens. They were trained to contact accident victims immediately after the accident and then portray themselves as representatives for the claims process. Allstate also had a policy of routinely sending accident victims a letter promising a “Quality Service pledge” with a brochure telling accident victims that they “do not need attorneys to receive fair treatment or a fair settlement.” Allstate’s explicit goal was to remove attorneys from the claim process entirely so it could pay out less money to claimants and thereby increase its own revenue.
The Washington State Supreme Court rules that Allstate engaged in the illegal practice of law by advising Mrs. Jones to accept a settlement that only benefited the company.
Fortunately, Mrs. Jones was allowed to recover damages against this insurance company. There have been more than 50 similar lawsuits against Allstate for its claims practices nationwide.
*The name in this case has been changed