Insurance Company and Small Auto Accident Claims

Personal Injury Law

CNN Investigation Reveals How Insurance Companies Cheat Auto Accident Victims Out of Claims

Major insurance companies have developed a strategy for denying and underpaying claims in accidents where there is little visible vehicular damage, but costly, painful, and debilitating injuries. If you have suffered serious injuries from a minor car crash, you can expect to have a hard time collecting compensation for your injuries, and may be bullied by insurance companies, or offered a pitiful pay out.

CNN's 360 with Anderson Cooper conducted an 18 month investigation, revealing how the two largest auto insurers in the U.S. have conspired to rip off car accident victims, how it is done, and what they stand to gain. You can watch the story here:

Part one

Part two

According to internal documents obtained by CNN, Allstate and State Farm worked with consulting company McKinsey & Co. in the mid-1990's to develop the strategy for denying small claims, focusing on those which cause soft tissue injuries. It's pretty basic and very effect, often referred to as the "three D's":

Delay as long as possible
Deny the claim
Defend the denial in court

Why focus on soft tissue injuries?

Soft tissue injuries don't show up on X-rays and other common diagnostic tests. While the pain and debilitation is very real, and treating the injuries can be very expensive, there are no sensational images to show to a jury proving injury.

How do insurance companies benefit from this strategy?

When victims pursue their claims to the fullest extent, the process can last for years and wind up in a costly court battle. On the surface that sounds like it would cost the insurance companies more than simply paying out on valid claims.

In reality, according to insurance industry insiders, about 80% to 90% of accident victims accept settlement offers. Settlements are often as low as $50.

In the long term, they can avoid paying most of the remaining 10%-20% of victims by making the cases unappealing to lawyers by:

Focusing on claims that are fairly small compared to the cost of going to trial
Focusing on accidents with minor visible vehicular damage
Dragging out the process, so that the victim no longer appears injured when it goes to trial

Most people don't trust insurance companies, but juries are very suspicious when it comes to accusations of fraudulent claims, believing that insurance fraud is common and results in a rise in premiums. Insurance companies play on these fears, delaying claims until victims have healed to the point that they no longer appear to be injured, and using photos of minor vehicle damage to convince the jury that major injuries could not be possible.

According to a former Allstate attorney, the long term goal is to make pursuing the claims in court "so expensive and so time-consuming that lawyers would start refusing to help clients."

Fraud prevention or bad faith?

The insurance companies claim that they use this strategy not to deny innocent victims, but to prevent fraudulent claims and keep premiums to a minimum.

If fraud prevention and keeping premiums down is the real reason behind these tactics then why, according to the Insurance Information Institute, have premiums actually risen by 30% since the strategy was implemented 10 years ago?

In the CNN report, University of Nevada insurance law professor, Jeff Stempel tells us, "We can see that policyholders individually are getting hurt by being dragged through the court on fender-bender claims, and yet we don't see any collateral benefit in the form of reduced premiums even for the other policyholders. So I think now we can say to continue this kind of program is in my view institutionalized bad faith."

We don't back down to bad faith insurance practices

If an insurance company has denied your claim in bad faith, you can win in court. When these cases are proven, juries are enraged and respond accordingly.

For instance, Roxanne Martinez, who was interviewed in the CNN report, was awarded $167,000 plus interest, by a jury. Before going to trial, Allstate had offered to pay her $15,000, but that was little more than half of what the accident had cost her. If it had simply been willing to pay for her losses, the only reason insurance exists in the first place, it could have saved over $100,000.

Jacoby & Meyers is not intimidated by bad faith insurance companies. If you have a legitimate claim and an insurance company is trying to cheat you out of just compensation, we can help.

If you filed a claim against an auto insurance company, yours or another driver's, and if the insurance company is refusing, delaying or underpaying your claim, email or call Jacoby & Meyers at 1-800-411-4LAW to speak with an experienced insurance bad faith lawyer.

Jacoby

Jacoby & Meyers has offices and attorneys throughout the United States, with regional offices in Southern California, and New York.