Insurance Companies will stop at nothing to keep you from recovering a fair and equitable settlement for your injury claim. You see, the less money they pay out, the more money they get to keep as profit.
Before we get into the lies you might expect from the insurance companies, let’s touch on how the insurance companies actually make money.
How the Insurance Companies Make Money
Insurance companies collect money in the form of premiums from a large pool of people who are trying to insure against a loss of some sort. In the case of auto insurance, the loss could come in the form of property damage (to a vehicle), or bodily injury.
The insurance company is making a bet. They are betting that they will take in more money in premiums than the money they pay out in losses. If they do this, they make money. If they don’t, then they go out of business.
They hire lots of really smart people, called actuaries, to calculate the risk that any given customer is likely to sustain a loss that they will have to pay for. The higher the risk, the higher the premium that customer will pay.
But here’s the thing, none of that matters if you are in an accident. The insurance companies’ job at that point is to pay out the claim. That’s what you contracted with them to do. That’s why we have auto insurance.
But the corporate CEO’s that run these companies know that they need to make a profit. The fewer claims they pay out, the more profit the insurance company makes.
That’s why insurance companies will stop at nothing to pay out as little as possible on the claims side. So even if they offer you a $10,000 check to settle a claim, which may seem fantastic to you at the time, they know the claim might really be worth $30,000. By sending you a check early on the process, before you have had an opportunity to talk to a lawyer, they are betting that they will pay out less overall, thus making more money for their shareholders.
And frankly, this is a tactic that works, which is why they keep doing it.
For years, insurance companies have been taking advantage of hard-working, honest members of the general public who, quite frankly, don’t know any better. Many people assume that the insurance company will do the right thing and every action the claims adjuster takes from the minute they receive your file is geared towards becoming your friend and keeping you from hiring a lawyer.
It is not unheard of for the insurance company to use fear tactics (“if you hire a lawyer, they will just take 1/3 of your settlement check”), to keep people from even talking to a lawyer and getting the advice they need.
But here’s the silver lining in all of this – you may not need a lawyer anyway! (Yes, I realize as a lawyer that it is against my financial interest to tell you this, but it’s important that you understand that not every case needs a lawyer).
That being said, if you choose to settle your case without talking to a lawyer or firmly understanding the rules of the game, then you are fighting an uphill battle that you are certain to lose.
Even though a personal injury case seems relatively simple and straightforward, there are a number of nuances and landmines that could blow up in your face if you don’t recognize them early on.
Medical Liens are a Huge Personal Injury Trap
A great example is dealing with medical liens. In certain situations, you may be surprised to hear that you could be required to pay a portion of your settlement proceeds back to the insurance company that paid for your treatment or to the medical providers that treated you. But how and when you need to do this is not something the insurance company will help you with because they don’t really care about you.
You won’t know what hit you until it is too late.
All the insurance adjuster cares about is closing their file and getting you to sign a release of all claims against them… as quickly as possible.
But those aren’t the only tactics you will encounter. Here are some of the more popular tactics the insurance companies will use:
- Asking for Information They Don’t Need. Insurance companies are worse than lawyers when it comes to asking for information. As soon as they find out you won’t settle your case quick, they will start asking you for unnecessary information. They tell you they need this so that they can properly “evaluate your claim”. This information may have nothing to do with their settlement offer, and in fact wouldn’t affect their offer anyway. But by asking for it, then can delay paying you a check for another couple months and continue earning interest on YOUR money.
- Using Delay Tactics. Getting involved in an accident is going to put you in a financial bind. The insurance companies know this. They know you are out of work, not getting paid, have medical bills coming due, a mortgage, children to feed, etc. Even if you have good health insurance (which is no longer a given in America), it may be difficult for you to pay the deductibles and co-pays. You may not even be able to pay the premiums for your insurance and run the risk of losing your insurance entirely. Because of this, they will take their time with your claim to force you into a low-ball settlement.
- Disputing Your Medical Treatment. This has to be my favorite. I have yet to meet an insurance adjuster that has been to medical school. However, why is it that every single adjuster seems to have a firm grasp on what medical procedures you do and don’t need? Here’s what’s really happening – they are looking at how much they have paid for medical treatment so far and have decided that you must be better based on the amount of money that has been paid out. If you aren’t getting better, you are just receiving unnecessary treatments.
- Misrepresenting How Much Insurance is Available. When you purchase insurance, don’t you typically buy it all from the same company? Auto, home, life, etc.? Yes, you do. So when the insurance company tells you that the person who hit you only has $25,000 in auto coverage – take that with a grain of salt. If a lawsuit is filed you may find that the defendant actually had an Umbrella Policy as well. Amazing how the insurance company forgot to share this information.
- Acting Like Your Closest Friend and Promising You That Everything Will Be Alright. This is probably the worst of the offenses. The adjuster will become your closest friend. They will call you daily. They will show up at the hospital or your home and promise you that they will take care of everything. If you suggest that you are thinking of hiring a lawyer, they will inform you that if you do that, they can’t be your friend anymore. L So you don’t, and they get you to agree to a low-ball settlement. Don’t believe me? Read the following case summary.