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Insurance Company Strategy: How To Abuse Our Civil Justice System

In my post “Major Newspapers Attack Lawsuit Funding: Insurance Company Delay, Deny, and Misrepresentation Tactics Are the Real Story,” I addressed two recent newspaper articles painting a negative image of lawsuit funding companies. These articles were one-sided, aligned with tort reformers and the insurance industry. In this second of a two-part series on the subject, I want to focus on educating consumers with regard to where the real greed begins-with the insurance companies-and what you can do about it.

Insurance companies are increasingly using tough tactics against financially-strapped consumers to increase profits. As difficult economic times continue to weigh upon individuals and businesses alike, the insurance companies look to their own bottom line. As quoted by Jon Haber, CEO of the American Association for Justice, “The current challenges facing American families are only compounded when their insurance company plays hardball in their greatest time of need.”

Consumers might assume they have no choice and no recourse; many will accept the first offer made by the insurance company. It’s time for consumers to stop accepting insurance companies at face-value; it’s time we fight back and prevent abuse by these insurers.

Do you know what insurers’ tactics against consumers look like? Here are some to watch for: Insurance companies…

• Deny claims in an attempt to boost their bottom line. If your claim is denied, you don’t have to accept the denial. Hire an experienced attorney and fight back; if you don’t know where or how to find the right lawyer, contact the Lawsuit Financial Attorney Referral Service at 877-377-SUIT.

• Delay until the policyholder just gives up or dies. Insurance companies make money collecting premiums from you, their policy holders (along with massive amounts of interest on your money). Claims cost money; if they don’t pay claims, they get to keep the money; thus, they will do anything to avoid paying. Even way they finally decide to pay a claim, their unreasonable delays make them money; the longer the delay, the more interest/profit they make on premium dollars. The consumer, sometimes the insurance company’s own client, struggles financially and emotionally, perhaps takes a low offer out of desperation, and the insurance company’s strategy has produced even more profit.

• Confuse consumers with incomprehensible contracts and pricing strategies which many clients sign without fully understanding the risks or their avenues of recourse. How many events are excluded (fail to provide the protection you thought you paid for) from coverage in your insurance policy
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nsurance companies spend billions of dollars advertising the need for insurance. They try to tell consumers that it is a dangerous risk to be uninsured – that accidents, injuries and/or death are a dangerous financial risk without insurance. In a vacuum, that statement is true; but what good is insurance if it isn’t there when you need it, when it severely limits insurance company liability, when it excludes the most obvious potential claims, when it engages in tactics that penalize you for making use of it? In fact, insurance is the only consumer product/service in the world that penalizes the consumer for using it exactly as the consumer is supposed to. We expect our insurance companies and our coverages to be there when we need them most; when we have legitimate, serious claims. But that is usually when our “good neighbors” or the “good hands people” turn on us. Their profits are earned with our money, paid in good faith against their coverage promises. Shouldn’t premiums be used to pay appropriate claims to the injured and disabled? Instead, it is used to increase profits through deceit, delay, denial, confusion and refusals. Then, even more money is made by investing (or continuing to invest) the funds that were inappropriately retained.

When someone files a claim and the insurance company delays and denies, that is when the risk of losing one’s home occurs. Here is a scenario from the American Association for Justice’s website:

You are in your car running an errand for your job, when all of a sudden a pickup truck crosses the center line from the other direction and smashes into you. The accident is catastrophic. You are seriously injured and left in a coma. When you wake nine days later you have multiple broken bones, collapsed lungs, and are destined to spend the next few agonizing months under constant care. And then comes the real kick in the teeth. The insurance company denies your claim. They claim the driver who caused the crash acted in a moment of deliberate road rage, and so the accident was not an “accident.” Your hospital bills pile up, you are too injured to go back to work, and your insurance company deserted you. By refusing to a reasonable settlement, the insurance companies force a trial; a trial that can take months, even years.

The legal process is a marathon, not a sprint; plaintiffs may feel the financial pressures to settle too early in the process, for too little compensation. The insurance company is not pursuing the victim’s best interests; they will attempt to settle with a lowball offer. Waiting out the long, legal process can be in a plaintiff’s best interest because the settlements of solid cases that are ready to face a judge or jury in the courtroom, will typically be more commensurate with the true value of the case. And, if the insurance company is still refusing to see reason, the judge or jury is a handy tool to introduce insurance executives to reason.

Lawsuit funding is another handy tool to insure individual case results. We know, in fact we were founded on the premise that insurance companies always seek to limit liability and recovery on all fronts. To combat this tactic, we provide necessities of life funding to plaintiffs involved in pending litigation. Perhaps, with an appropriate advance of needed financial support, a plaintiff won’t be so desperate that he/she will settle a valuable case for pennies on the dollar. We strive to create lawsuit results that pay for the profits we earn. We refuse to stand by and allow a greedy insurance company to victimize someone who, by having a serious accident/injury has already been a victim. Lawsuit funding is not a perfect solution; it is not for everyone, but it provides an option, in many cases, a viable one, for financially distraught plaintiffs.

Insurance companies and large corporations like to deceive the public by suggesting that “lawsuit abuse” or “frivolous lawsuits” are the problem with our civil justice system. They suggest that these worthless cases are the reason that the system is bogged down. Don’t you know? They say that all of these worthless lawsuits are clogging our courts and costing us money! Just ask the greedy insurance companies, you know, the ones with the billion dollar bank accounts. In truth, the legal system deals with and dismisses anything that is frivolous at very early stages in the process. These cases, a very small segment of any docket, do not “clog” anything. Frivolous defenses, on the other hand, are a significant issue. Unnecessary delays and denials by defendants have a serious impact on expediency. If insurance companies paid what they should when they should, there would be no delays in the civil justice system. And, insurance companies spend our money, against our economic interests, lobbying for tort reform (restrictions on recoveries and access to our civil justice and civil rights system) and producing frivolous advertisements claiming that they are “fast, fair, and friendly”, that they are “on your side”, that you are “in good hands” or that they are “like a good neighbor”. Ask any random Katrina victim if State Farm is a “good neighbor”.

It is time insurance companies redirect their resources to serving customers, appropriately and expediently compensating those who have suffered serious or catastrophic loss. It is time to stop insurance companies from abusing our civil justice system. It is time to fight for our rights.

To learn more about insurance company greed and the “tricks of their trade”, visit the American Association for Justice website.