How insurers view personal injury claims

How insurers view personal injury claims

Insurance companies are not afraid to take a personal injury case, even a small personal injury case, to court, rather than settle it.

The cost of defending a small personal injury claim usually will not be very high when considered against the outside chance of a substantial verdict against the carrier. Insurance companies would rather not pay $6,000 to defend a claim worth $10,000, but they will do it if they have to or want to. Insurance companies would rather litigate a case to completion or settle just before trial on the courthouse steps than leave the impression that they will settle a claim just to avoid litigation. If liability is a big issue, they will spend $10,000 to defend a case that could have settled for $3,000.

Insurance adjusters prefer to close files, but they will not do so at the expense of settling a claim for much more than it’s worth.

Closing files is a goal of all adjusters. However, an insurance adjuster or supervisor will not substantially compromise the value of a claim just for the convenience of closing the file. Once a suit is begun, the file is simply referred from the adjuster to the defense attorney. The adjuster communicates with the defense attorney and leaves the hard work to the defense firm.

Every insurance adjuster or claims supervisor must justify the settlement to at least one superior at some point in time.

Even a senior adjuster or claims manager will have to justify the payment of a settlement to somebody either before or following the settlement. This means that they can always talk about “getting authority” and will not pay a claim without realizing that the settlement could be questioned or tested at a later date. Every settlement must contain appropriate justification and documentation. An insurance company employee will not run the risk of job security just to close a file or avoid litigation. Therefore, the days of settling a case with one letter and two telephone calls are over. Even the small personal injury claim requires substantial documentation and support; it is your personal injury attorney’s job to provide that.

Insurance defense attorneys make more money by litigating cases as long as possible than they do by settling cases early after suit.

Insurance defense attorneys earn the bulk of their money by litigating. They send the insurance company bills for services based upon hourly participation in the case. They do not work on commissions, and they are not paid huge fees to settle cases early in the game. If your personal injury attorney files suit on your behalf, he or she must be prepared to do some work. Even if the defense attorney knows that you and your attorney may be willing to settle your case for much less than your demand, the defense attorney won’t beg you to do so. Therefore, once your suit is filed, you and your injury attorney must be committed to take it to trial if necessary because the defense attorney will not be going out of his or her way to settle immediately.

Certain insurance companies will seldom settle small to medium range personal injury cases for a fair amount unless you file suit and possibly even go to a full trial.

The names of those companies will be known to experienced personal injury attorneys. Certain national and statewide companies are known throughout the industry as being extremely conservative when it comes to settling personal injury claims. Those carriers have a philosophy, mind-set, and even formal procedure regarding the settlement of claims. They will seldom put forth a reasonable offer to settle the small personal injury claim, especially those involving soft tissue injuries. Such companies know that most individuals unrepresented by counsel will succumb to the “take it or leave it approach.” Those individual claimants believe, want to believe, or are forced to believe that they must accept an insurance adjuster’s offer. The carriers also know that the majority of personal injury attorneys will settle claims rather than commence suit or go to trial. Only a small minority of plaintiffs attorneys are willing to take the time, effort, and expense to go all the way to trial. The conservative carriers know this.

It is usually a waste of time to try to settle with the insurance companies referred to in paragraph 5 above without filing suit.

Cases involving these insurance companies will require probably litigation. Litigation and verdicts are the only language these carriers really respect.

If your case is a soft tissue injury case and your injuries are difficult to document with objective medical evidence, or your injury involves substantial chiropractic treatment, you can count on certain insurance carriers to offer very little for your pain and suffering. The adjuster will question everything in the file and if there is even the slightest liability question, the offer won’t exceed your medical bills and lost wages and sometimes will be even less.

In these cases, it is typically a waste of time for your personal injury attorney to try to convince the carrier to make a reasonable settlement offer with letters, phone calls, documentation, and settlement brochures. Instead, your attorney may opt to simply commence your lawsuit after the initial investigation and preparation.

Plaintiffs personal injury attorneys make a living by settling cases, but they can settle cases only if they also know how to litigate.

A personal injury attorney will be able to settle cases for maximum damages only if he or she also knows how to litigate. An attorney who develops a reputation as a “settling attorney” will receive lower settlement offers than one who is known to be a capable litigator.

Insurance carriers are far more impressed with special damages such as medical bills and well documented loss of income, than they are with lengthy dissertations about pain, suffering, inconvenience, and mental anguish.

To achieve the best result, your personal injury case requires substantial documentation of tangible damages. Explanations of pain, suffering, and subjective complaints alone will not be enough. Insurance companies are just not moved by such intangibles as pain, suffering, inconvenience, loss of consortium, and mental anguish. Facts, figures, objective signs of injury, and substantial documentation are the necessary elements to convince insurance carriers to settle cases.

For example, suppose two back seat passengers suffer the same injuries in a rear-end collision. The first passenger goes to a medical doctor who prescribes six weeks of physical therapy. This passenger takes approximately eight weeks to recover from his acute injuries and misses work for a period of two weeks. His medical bills and physical therapy charges are approximately $2,500 and his lost wages are approximately $1,800. His residual injuries are minimal and he has virtually recovered after six months.

The second passenger goes to the local hospital emergency ward which recommends that he see a specialist. Instead, he visits a chiropractor for four or five visits and, because of his unwillingness to miss work, he loses only two days of wages. However, he is in considerable pain, is unable to interact with his family, has difficulty performing his activities at work, and misses all his leisure activities for almost an entire year. His medical bills total approximately $500 and his lost wages approximate $300. Many of his friends, family, and work associates write letters concerning the incredible pain and difficulty he has had for the one-year period since the accident.

The insurance company will settle the first passenger’s case for an amount approximating $12,000 or even better, and they will offer the second passenger no more than $3,000 to $5,000 maximum, if he is lucky. MORAL OF THE STORY: Insurance companies believe facts and figures more than they believe letters from friends about pain and suffering.

Most capable defense attorneys can find weaknesses in your case that have either been overlooked by the adjuster or could not be discovered by the adjuster without engaging in formal discovery procedures.

When your personal injury attorney attempts to settle your case directly with an insurance adjuster, your attorney controls most of the information that the adjuster receives. Once litigation is commenced, the defense attorney will use every possible opportunity to scrutinize your case in its entirety to find weaknesses. By using formal discovery methods that are available once your suit is filed, such as medical releases, independent medical examinations, depositions, interrogatories, and requests for production of documents, weaknesses in your case will be disclosed. These weaknesses include, among others, prior and subsequent injuries not caused by the accident, alcohol use before or during the accident, a criminal record, and no injuries other than soft tissue injuries. (See The 9 most common personal injury case weaknesses.) Therefore, your case can get weaker rather than stronger after you file suit. If your case has significant potential weaknesses, make sure you are truthful with your injury attorney about them so he or she can attempt to settle the case prior to litigation.

Weaknesses or shortfalls in your personal injury case that the adjuster knows about will reduce the settlement value and must be considered during settlement negotiations.

The insurance adjuster will use any weaknesses in your personal injury case that he or she knows about to reduce the value of your potential settlement. If the weaknesses are significant, you and your personal injury attorney will need to consider them in determining the settlement value of your case. When adjusters are aware of significant weaknesses in a case, the settlement offer may be surprisingly small. If several of the weaknesses discussed in The 9 most common personal injury case weaknesses exist in your case, you must understand the difficulties inherent with the settlement, and the eventual trial of the case.

Defense attorneys will usually have more settlement authority or knowledge of settlement authority than they will admit to.

During negotiations after litigation has been commenced the defense attorney will almost always refer to the necessity of obtaining permission or authority to settle from the carrier. In point of fact, most defense attorneys know the potential authority in almost every case. One way your injury attorney may be able to estimate the authority figure is by asking the following question: “Mr. Defense Attorney, what would you do if you were in my place? What do you think this case is worth?” Your injury attorney can then add another fifty to one hundred percent depending upon the size of the case, the nature of liability, and the extent of documented damages. As the case approaches trial, the figure from the defense attorney may approach accuracy, but, the defense attorney will always try to save the carrier some money.

Defense attorneys obtain and maintain insurance company clients by settling cases for less than authority and by winning defense verdicts.

Insurance defense firms do not attract business by being best friends with personal injury attorneys. Therefore, do not expect them to bend over backwards to settle your case. They will only pay top authority if they believe they may get clocked with a substantial verdict at trial. If the defense attorney believes he can win on liability or damages, the roll of the dice will be much more attractive.

If your small personal injury case is settled without litigation, you may have second thoughts, but on the whole you will probably be happier than the person who has to go all the way to trial to win a verdict in a small case.

The philosophy that “a case settled is a case won” is very appropriate in small personal injury claims. Some personal injury clients will always have doubts about the adequacy of their settlements. But most agree that the difficulty and emotional stress associated with litigation are seldom worth the few thousand dollar difference that may come with a plaintiff’s verdict. A $15,000 settlement is far better than a $17,000 verdict with interest after two years of discovery, depositions, harassment, and the ultimate emotional drain of a jury trial.