The Dirty Little Secret that the Insurance Companies Don't Want You to Know

Most of us are good citizens and purchase liability insurance to cover us in case we cause an accident. Some people purchase minimum liability coverage and some people purchase more.

When you buy this insurance you are doing it to not only comply with the law, but to protect you and your assets in case you cause a car, motorcycle, or other motor vehicle accident.

Now let’s say that you get into an accident that is your fault; you report the accident to your insurance carrier; you think that your insurance company will cover you pursuant to your insurance policy right? WRONG!

If you read the fine print in your insurance policy you will notice a bunch of language that most non-lawyers would not understand. The gist of the language in plain English is that by accepting the insurance policy, you agree to cooperate with the insurance company if they decide to litigate, and the insurance company is the one who decides whether a case will be settled, not you.

The insurance companies are all about making tons of money and paying as little as possible. Since the advent of legally mandatory insurance coverage (Proposition 213 in California) the insurance companies have become very cavalier because their coffers are full of your money.

Instead of settling meritorious claims, they are forcing claims to be litigated in Court in an attempt to stop personal injury lawyers from obtaining a just recovery for their clients. They know full well that personal injury lawyers do not have as much money to litigate as they do, so their ploy is to starve out the personal injury lawyers and ultimately make it harder for people who are injured in accidents to obtain a recovery. In the end it is the consumer and persons injured in accidents who are hurt, while big business makes more profit at your expense.

Even people who cause accidents and have proper liability insurance to cover the claim are being victimized by the insurance companies.

The insurance companies are experts at deception. With your money, insurance companies contribute money to politicians, and run media ads which blame the personal injury attorneys for making insurance rates so high. What they don’t say is that the backlog in Court is due to the insurance companies not settling claims like they should in the first place.

Now let’s go back to the example of you causing an accident. If the insurance company is unreasonable and refuses to settle a case at or below policy limits, you will then be dragged through the legal system. You may have to answer discovery, appear for depositions, and even take time off to go to trial. This is a long and arduous process that you did not think that would have to deal with when you purchased liability insurance. Surprise!

If you lose at trial, the insurance company will in most cases pay the judgment, but guess what; YOU WILL HAVE A JUDGMENT AGAINST YOU ON YOUR CREDIT REPORT, and in the Court file! Thanks to your insurance company your credit has just been dinged due to no fault of your own.

Is this fair? I submit to you that it is not. You paid for insurance; the insurance company could have settled the case for you within your policy limits; instead, they decided to litigate in an attempt to minimize what they have to pay out so that their profits remain high. They did so without any regard for your credit report, or having your name appear in the public record as having a judgment against you.

Many insurance companies have in-house lawyers; some use outside lawyers. These lawyers are supposed to have a duty to you to do what is in your best interest. The reality is that they do what is in the insurance company’s best interest. This is the ultimate conflict of interest. Ethically the attorney that the insurance company uses to represent you has a duty to you, not the insurance company. The reality is the attorney gets his marching orders from the insurance companies.

A worst case example is the recent Hurricane Katrina disaster. Have you read about all of the poor people who are getting screwed because they are not being covered by their insurance companies for insurance that they paid for?

It’s time for America and consumers to wake up and smell the roses. It is not the trial attorneys that are the problem; its big business wanting to screw the little guy so they can obtain more profit at your expense. Some have made this a political issue. I have even heard President Bush talking about Tort reform, and blaming the trial attorneys for the nation’s health care woes.