Don't Fight The Insurance Company Alone

A highly cited study from the Insurance Research Council (IRC) titled “Claiming Behavior and Its Impact on Insurance Costs” analyzed the relative compensation received by insurance victims with attorneys versus victims without attorneys. The results found that 85% of all money paid out by insurance companies went to claimants who hired an attorney.

Further, the study found that auto accident victims that retain an attorney get larger settlements- 3x larger- according to a study from the Insurance Research Council (IRC).

In a separate study, the All-Industry Research Advisory Council (ARAC) found that accident victims that have attorney representation receive a higher rate of reimbursement per dollar of economic loss. They also found that 70% of injury victims were satisfied with the overall performance of their attorney and that a majority believed that the settlement was above and beyond what they could have received without representation.

Insurance companies know that most personal injury victims have never been through the process before. They also know that many people associate the filing of a bodily injury claim with frivolous claims and unwholesome greed. This sentiment was exacerbated by news coverage of the McDonald’s hot coffee verdict in the 1990s. Media coverage of other lawsuits where the plaintiff has “gotten rich quick” has not subsided since. (Side note: If you ever look into the Plaintiff’s injuries in that case, you will see that her burns were a lot more severe than reported and that McDonald’s could have prevented them by serving coffee a few degrees cooler. The large trial verdict was also greatly reduced an appeal. Even so, see my post on punitive damages to learn why big verdicts against companies serve a necessary social check on corporate behavior).

Many people think that by filing a bodily injury claim they are pursuing the individual that hit them. Many of my clients that have never been in an accident have this misconception that makes them hesitant to make a claim. The reality could not be further from the truth. Most claims are made against the insurance policies that the at fault party paid for. By making a claim, you are merely taking advantage of a contract between two parties that was made for your benefit. A contract required to be undertaken in order to legally drive on Missouri roads no less.  

Generally, the at fault party is only personally liable for judgments in excess of the insurance policy. Such judgments are difficult to obtain, and it is unlikely that the at fault party will pay this judgment in full even if it is obtained. Most insurance companies require that the Plaintiff sign a Release of Claims form in order to receive funds from the policy. The Release of Claims form contains language releasing BOTH the insurance company and the at fault party insured from any further claims. By accepting the insurance company payout, the Plaintiff usually agrees to not pursue the matter further against the at fault party.

Taking advantage of the at fault party’s contract with their insurance company is something that was considered when they bought the policy. Why go out of pocket or use your insurance when this policy is available to pay for your medical expenses and pain and suffering? Insurance companies are in the business of managing risk and loss. The money that you are seeking by retaining an attorney is already set aside to cover the policy they the insurance company has been receiving premiums on. By refusing to make a claim, the Plaintiff is only denying themselves the ability to obtain compensation and reimbursement for injuries that someone else caused.

Insurance companies have many tactics designed to save them money. One such tactic is the use of two sets of adjusters. One set of adjusters deal with attorneys and one set deals with unrepresented individuals. They hope to resolve cases with unrepresented individuals before an attorney gets involved. Without attorney involvement, they will try to settle the case as quickly as possible, many times before the extent of injury is known for pennies on the dollar. If retaining counsel results in 3.5 times the settlement, the insurance companies will always be highly motivated to resolve cases without attorneys.

One of the strategies used by insurance companies to keep attorneys off cases is to build up trust with the claimant by calling often to collect data early in the case. The theory is that the more times the adjuster talks to the unrepresented claimant, the more likely that trust will be built to resolve the claim without an attorney’s involvement. They make contact early in the process to collect as much data as possible. The claimant will see over the course of these calls that the adjuster seems reasonable and may be more likely to trust their evaluation.

According to a recent Lexis Nexis Risk Solutions study, the effect of collecting data from individuals before they hire an attorney saves insurance companies 47% in expenses on average. This reduces the case life cycle by 5-15% and results in a staggering 25-50% decrease in attorney involvement. In the study, 10 million claim features were divided into two categories, based on the availability of certain data elements immediately after completing the claims reporting process and before assigning the claim to an adjuster. For third party bodily injury claims more data reduced average claim time by more than two weeks and reduced the overall claims cost by thousands of dollars.

An experienced personal injury attorney will not accept an insurance company’s lowball offer. An experienced personal injury attorney should have a solid understanding of knowing how much the case could be worth. They should be able to argue liability and show that all treatment received was both reasonable and medically necessary. Insurance companies are more likely to make larger offers on cases where an experience attorney has defended any holes in the case. Insurance companies know that there is a high cost with litigation and that there is no method to reasonably predict how a jury will decide a case.

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