How Insurance Companies Approach Liability Claims
Insurance coverage is generally a concept that many people are aware of. It is simply the practice of insurance companies receiving periodic payments, usually monthly, from its policyholders in exchange for the insurance companies agreeing to pay for the damages caused by the policyholder if/when the policyholder is responsible for damages to another person (such as medical bills, property damage, lost wages, pain and suffering, or loss of enjoyment of life) down the line.
Insurance Companies are For-Profit Businesses
Seeking compensation from your insurance company sounds easy enough and very straightforward, but often it is anything but simple in how it is implemented. The reason for this lies in what the motivation of the insurance companies actually is. The motivation is not to compensate those who are injured by fault of its policyholders, but rather it is to make as much money as possible from the premiums received from its policyholders. The way that this is accomplished is if (1) claims are not made, i.e. that their policyholders do not cause any injuries to others, and (2) when claims are actually made against their policyholders the insurance companies pay the smallest amount on these claims that they believe they can get away with.
To illustrate, if an insurance company insures 1,000 drivers who pay $50.00 per month under their policies for liability coverage, and there are no accidents leading to claims against any policyholders requiring a payout against the insurance company, the insurance company just made $50,000.00 (1,000 x $50.00) that month. If only one claim is made and the insurance company pays $10,000.00 on that one claim, the insurance company just made $40,000.00 that month, $10,000.00 less than it had hoped for.
Insurance companies combat the financial impact of paying out on claims illustrated above by either denying claims outright or by attempting to pay out on the claim for less than it is actually worth.
Paying nothing on a claim is always the ideal end result, so how is this accomplished by insurance companies? It is often accomplished by the insurance company claiming there is a lack of evidence showing their policyholder(s) is at fault. To give one example in the context of a car accident, if there are conflicting accounts from the parties involved in the accident given to the responding law enforcement official, and no independent witnesses, the accident report may state that fault is not attributable to any one party. The insurance company will always view the evidence in the favor of its policyholder (in favor of not paying for a claim) and will always be on the lookout for the ability to argue for a lack of evidence showing their policyholder is at fault. In cases where there is typically not a post-accident report performed, such as an injury occurring on a homeowner’s property or on the premise of a business or store, the “lack of evidence” argument is even more commonly used.
How do insurance companies handle claims when the liability of their policyholder is clear? Once more in the context of a car accident, they will look at the accident with an eye towards finding evidence that gives them a chance to argue: “sure our policyholder caused this accident, but it really wasn’t that bad.” They will look for whether the air bag deployed, the severity of the damage to the injured person’s vehicle, where the injured person’s car came to rest after impact, and any other physical evidence to spin the facts in a way that fits into the argument that the collision was minimal. They will also attempt to challenge the amount of medical bills they are responsible for, which is discussed in Seeking Medical Treatment After Being Injured: The Defense’s Catch-22.
Call a Lawyer for Help with Your Insurance Claim
It is important to keep in mind the financial incentives of insurance companies when you have a claim against one of their policyholders or intend to bring a claim. It is a reality of the insurance business that they will pay as little as possible on your claim or deny it altogether. If your claim has been denied in full or is not being fairly considered, then contact an experienced attorney to see if some of the above tactics are being used in your case. At Schiller & Hamilton, we take pride in our experience handling personal injury claims and use our experience in dealing with insurance companies to protect your rights and hold insurance companies accountable to you and not to their bottom line. Call today for a free consultation to see if your claim is being handled fairly and your interests being protected.