Hiring An Attorney Lowers Net Auto Claim Payout 

 

The Insurance Journal reported July 8, 2014 on the results of a study of more than 35,000 auto injury claims from 12 insurers representing over 52% of the auto insurance market. The study was entitled, "Attorney Involvement in Auto Injury Claims" and what 

they found may surprise you. People represented by attorneys:

  •  Were much more likely to obtain an MRI and to go to a pain clinic than claimants with who did not have an attorney but had similar injuries.

  • Had to wait longer for the claim to be paid.

  • Were more likely to be involved in "apparent claim abuse."

  • On average, received a lower net payment (after subtracting for "claimed economic expenses and applicable legal fees")

 

 

I have been the insurance world since 1988 and only once have I had to recommend to a client that they need to sue their own insurance company (that was an excess & surplus lines carrier on a "high risk" homeowner's policy.) The two reasons I will almost always recommend against a lawsuit is that first, you will have a much slower claim settlement (as soon as you say you have obtained counsel then all communication comes to a screeching stop between you and the carrier and all communication only happens through the law firm) and secondly, the good possibility of a lower net settlement. First of all, the vast majority of insurance companies are fair and approach the claim from a viewpoint of "how can we extend coverage?" So from my shoes it is very rare to need an attorney. As attorneys are doing more and more marketing and do get clients, it does have an effect on rates. The senior vice president of the Insurance Research Council , Elizabeth Sprinkel, said in a press release: “The role of attorneys is implicated in many of the factors driving up the cost of auto insurance.”

 

If the claim is not being handled the way your think it should be, there are a number of things that can be done to solve problems before resorting to a lawsuit: talk to your agent (this is yet another good reason to not use a direct 800# carrier to buy insurance - you have no agent to help you!). Your agent can start by talking to the claim rep.; 99.9% of the time that gets it resolved but they can also talk to the claim supervisor, ask to have the claim re-examined by the carrier's claim examiner (their most knowledgeable claim reps who audit other claim reps. work for accuracy of settlement . Having worked mostly in Underwriting but involved in assisting with claims during regional disasters, I have a few more tricks up my sleeve if need be but like I said, this should be extremely rare indeed. If all that fails then an attorney might be necessary and helpful.