Insurance companies have one goal—to create profit for their shareholders. Just take a look at CEO compensation for these insurance giants and you will understand that profit is the primary motive of insurance companies. Thomas J. Wilson, CEO of Allstate, made $17,069,187 in total compensation in 2017. Allstate is the worst of the worst when it comes to dirty insurance tactics and lowball settlement offers, but Allstate is not alone. Forbes notes that insurance executives make an average of $7.9 million annually.
How then do these insurance companies make all of this money? You guessed it…they drive up premiums for their insureds and they deny and minimize the amount that they have to pay in claims. I have seen dirty insurance tactics every day since I started exclusively representing injury victims 14 years ago. I have seen every trick in the book. So now, I am going to give you those tricks so that you will not fall prey to the insurance adjuster. You may not need a lawyer for your car accident case, but you definitely need to know the system. Here are the main things insurance companies do to shortchange clients:
1. The Quick Settlement
Do not take a quick settlement with the insurance company. This is a tactic to pay you as little money as possible without you knowing the full extent and nature of your injuries. It is also a tactic to stop you from hiring a personal injury lawyer to assist you with your case. Adjusters know that the involvement of a lawyer leads on average to a 3.5 times higher settlement amount.
2. Signing Insurance Company Forms
The insurance adjuster will try to get you to sign a lot of forms when you contact the insurance company. Beware of signing these forms. A medical authorization is always included in these packets. If you sign the medical authorization, you are giving the insurance company “carte blanche” to look into your past medical history. They will use these medical authorizations to gin up any type of excuse to claim you had a pre-existing condition that was the cause of your injuries. The insurance company may also try to sneak waivers or releases into the documents that they want you to sign. Read everything and assume nothing. Don’t sign the forms!
3. The Nice Adjuster Who Wants to Help
Repeat this (silently to yourself) every time you speak with the adjuster: “The adjuster is not my friend.” This is 100% true 100% of the time. The adjuster has two goals: to deny or minimize your claim. They are going to try to figure out ways that you were at-fault for the accident.
They are going to ask you how you are feeling in hopes that you will tell them you are “OK” or weren’t hurt in the accident. They are going to be nice and tell you lies like, “We can just handle this together,” or, “You don’t need a lawyer.” They may “accept liability” and then lowball you when you don’t go see a lawyer or get the right medical treatment for your injuries. If you do one thing, be extremely suspicious of any insurance adjuster that tries to play nice with you. I am not giving you permission to be a jerk to the adjuster, just know their goals.
4. Insurance Company Spying
The insurance company will spy on you to claim that you are not injured in the accident. They may send private investigators to your house or business. If you are claiming a serious back injury, they may try to catch you outside doing yard work or lifting heavy objects. BEWARE, your social media is under attack. If you have a Facebook page, make it private. Don’t talk about your injuries and the accident on social media. Be very careful about your posts and do not put anything on social media that may be subject to interpretation (like a picture of you dancing at your cousin’s wedding).
5. Delay, Delay, Delay
Adjuster’s slow play is another trick used to frustrate injury victims. They may not return your call for a week, they may not return your call at all. The insurance company knows that you are probably in a tight financial bind after the accident, and they will use any excuse to delay your claim in the hopes that you will become frustrated and take their first lowball offer. They also may string you along by “accepting liability” and then lowball you when the time comes to settle.
6. Requesting Too Much Information
Delay’s first cousin is the request for additional information. Adjusters will need you to get more information than is necessary to evaluate the claim. Once you send information, the insurance adjuster will ask you for some other piece of trivial information, and on and on and on. For this reason, I am only willing to provide (i) accident report; (ii) photos of vehicles and injuries; (iii) all medical records and bills related to the accident; and (iv) lost wage information, like a letter from an employer or copies of paystubs in a typical settlement demand. That is all that an insurance adjuster usually needs to know to evaluate a claim.
7. Recorded Statements
You do not have to give a recorded statement or written statement (no forms!). I can count the number of times on one hand that I have let my insured give a recorded statement to the insurance company of the at-fault driver. Even then, I made sure that the statement was later inadmissible. You don’t have to give a recorded statement and it will most likely hurt you if you do.
NOTE: If you are dealing with your own insurance company to get benefits after the accident, then you have a duty to cooperate, which may mean giving a statement or signing paperwork for your own insurance company.
8. Copay Settlements
Here is a nasty little insurance trick. The insurance company may try to settle with you by reimbursing you for the copay or co-insurance that you had out-of-pocket. Here’s how it goes: the insurance company asks you if you have health insurance, then the adjuster tells you to go ahead and use that health insurance and she will give you a settlement to reimburse you for all of your out-of-pocket costs.
Here are the problems with this scenario: number 1, the insurance company is on the hook for all of your medical bills, whether you have health insurance or not. The adjuster is attempting to severely diminish the value of your claim by offering to reimburse out-of-pocket expenses. Number 2, the adjuster didn’t tell you that your health insurance company has a right of reimbursement for anything the at-fault driver’s insurance pays to you. You may get a settlement of your out-of-pocket expenses and then turn around and be forced to give every penny of that money back to your health insurance company. The adjuster isn’t going to tell you these facts.
9. Disputing Medical Treatment
This is a favorite tactic of the insurance company in pre-lawsuit negotiations and in litigation. An insurance adjuster with no medical training will nickel and dime the medical charges in an attempt to provide a lowball settlement offer. When caught, they will blame the “computer” that analyzed your medical treatment.
10. Misrepresenting Insurance Policy Limits
The insurance adjuster is not under an obligation to disclose its insured’s insurance policy limits to you (unless you file a lawsuit, at which time they will be forced to do so). Especially if you are seriously injured in an accident, you need to know every source of insurance available. Beware when the insurance adjuster makes a policy limits settlement offer.
You need to get a certified copy of that policy and an affidavit from their insured that he or she does not have any additional coverage. Let me give you an example. My firm represented two individuals who were seriously injured in a rear-end collision. The at-fault driver had a $500,000 individual policy that was offered to settle the claims. We filed a lawsuit, thinking that the at-fault driver (who was a wealthy businessman) had additional coverage. We were able to discover an additional policy of $10,000,000. Instead of the $500,000 offered, we ended up settling the case for substantially more (millions) than the initial amount.
11. Taking the First Offer
The insurance company’s first offer is almost certainly not their final offer. The only first offer I take is when the insurance company offers to pay their insured’s insurance policy limits to settle a claim. For this, I recommend a lawyer. You probably aren’t that experienced in negotiating on a day to day basis. We go to the grocery store and pay the price on the milk carton. Just know that this isn’t the grocery store and negotiation is expected.
12. Failing to Disclose Hospital Liens and Other Medical Liens
The adjuster probably won’t tell you that you may have to pay back a hospital lien or your health insurance company. They will offer you a global settlement. Then when you get the settlement check, you may be surprised to know that the hospital where you went to the ER is also listed on the check. When you settle, you have to make sure that all valid hospital liens and health insurance company liens and interests are satisfied. I could write an entire book on this topic alone.
Negotiating these liens is among the top reasons you need to hire a lawyer (a good one that knows what they are doing) if you have a significant injury claim. It is incredibly complicated and you probably need a law degree to figure all of it out. But if you chose to ignore this advice, before you sign the release, at least ask the adjuster if they are on notice of any liens to the settlement and how much. Then, call the hospital or health insurance company claiming a lien and try to work out a discount.