Does my insurance company look out for my best interests?

Most people assume that by making their monthly insurance payment they have in essence hired a company to protect their interests in the event of a car accident. After all that is what insurance is for right? In a perfect world the answer of course is a resounding yes! Since we don’t live in a perfect world it is just good common sense to explore the relationship between you and your insurance company, so that you can have a better understanding of how to protect your interests in the event of a car accident.  Does my insurance company look out for my best interests?

How does my insurance company generate a profit?

In order to guide you toward the best way to protect your interests, you first need to understand how your insurance company generates profits. Please remember that your insurance company is first and foremost a for profit business! This simply means that they are in business to make money. Of course on the surface there is nothing sinister about this, as they strive to increase profits like all other businesses. The twist with insurance companies is that they are banking on the fact that you will never actually use their service. This is different than all other business models! Insurance companies use highly sophisticated mathematical calculations to determine the risk and probability of you making a claim at some future point in time. Your driving record, age, location, etc., all enter into their calculations. The greater risk of a potential claim you pose to your insurance company, the greater the monthly premium you will pay for their service. Insurance companies generate profits by collecting premiums from as many customers as possible, while at the same time paying the least amount of claims for the smallest dollar amount.

What happens if I am involved in a car accident?

Let me make it clear that there is no viable option for not having insurance coverage. You must have insurance to protect yourself in the event of an accident. The key here is in knowing how to navigate through the claims process to obtain a fair settlement. We can work through a hypothetical example of you becoming involved in a traffic accident and see what can happen as a result. Let’s use a simple scenario where your vehicle is struck by another vehicle when the other driver ran through a red light. As a result of the accident you have substantial damage to your vehicle and were transported to the hospital by ambulance. As it turns out you have a fractured collar bone, severe back pain, and multiple bruises to your face from air bag deployment. Because you are a wise consumer you have full insurance coverage. Shortly after you are released from the hospital, and before you can get really get a handle on things, the other person’s insurance company urgently attempts to contact you with an immediate settlement offer for your damaged vehicle and injuries resulting from the accident.

I will pause here because you are most likely thinking that in this scenario it means the insurance company is really on top of things. Wrong! The first thing you need to consider is why would a insurance company urgently seek to settle your claim and pay you? After all the accident has only just recently occurred and the smoke has barely cleared long enough for you to even process the event in your mind. The insurance company’s claims adjuster is the person who determined what your claim is worth. This dollar figure is based on a sophisticated formula designed to provide the least amount of payout and protect the bottom line interest of the insurance company. By quickly presenting you with a cash offer, the insurance company hopes to entice you to settle your claim for the lowest possible dollar amount. While the temptation to settle quickly may be great for most people, the long term consequences far outweigh any immediate benefits!

How do I protect my interests?

Let’s continue with our scenario and pick up from the point where the insurance company representative has just presented you with a settlement offer. What you need to consider at this point is how did the claims adjuster arrive at the dollar amount for this proposed settlement? Did he/she base settlement calculations on your current injuries, treatment, physical therapy, medications, future medical treatments, medical procedures, surgeries, loss of current employment income, loss of future employment income, the possibility of never being able to work again, and potential permanent disability, or injury? As you can see the costs associated with all these factors can quickly add up to a substantial dollar amount! If the settlement offer does not address all these factors then you can simply take a deep breath and politely refuse. Keep in mind that the insurance company representative may be persistent, and even increase the offer slightly in an effort to get you to quickly settle your claim. Do not succumb to the false sense of urgency presented to you in this situation!

Where do I go from here?

Now that you have resisted the temptation of an immediate cash settlement what happens next? Upon your refusal of their offer the insurance company will then switch from a friendly, helpful, and accommodating mode to one of a defensive posture. They now know that you are aware that your claim has greater potential value than they have offered, so they will then wait for you to make the next move. For you the future may seem uncertain, as you really don’t know the potential costs or future ramifications associated with this traffic accident. At this point you need to obtain legal advice from a qualified personal injury attorney. This is the only way you can level the playing field and protect your interests. Your attorney will work to obtain a true picture of all the current and future costs associated with your injuries. This includes potential future treatment, physical therapy, rehabilitation, surgeries, loss of employment income, permanent disability, etc. Armed with this information a qualified personal injury attorney can negotiate with your insurance company from a position of strength. In many cases a proper settlement can then be reached. If not, your attorney can pursue further legal action against the insurance company to obtain the desired result. Always keep in mind that all insurance companies have a full time legal staff designated to protect their interests. It just makes sense for you to have a qualified personal injury attorney on your side to the same for you!

If you have any questions about your insurance coverage, traffic accidents, or proposed settlements, please contact me via e-mail or call 773-779-9885. I am always happy to make sure people receive accurate information.