Insurance 101
I was inspired to write this short piece by a thread posted by SEIndSAM “INSURANCE SUCKS”
First let me explain that I worked as a claims adjuster in different areas of claim from 1986 until 2010 when I finally had all I could take of the business. Also I agree Insurance Companies do suck but just a little knowledge of just how they suck may be of benefit to some of you out there. I’m sure there as some of you who know more than I do about this subject but there are a lot who don’t so here goes.
First insurance companies loose money every year on their premium v. claims ratios. They make money by investing all of those premiums until they have to be reserved and paid out.
Secondly, while compliance is iffy at best claims agents are bound by law to deal with you on an open and honest basis. They can loose their jobs for misrepresenting.
Next Claims:
There are two separate classes of individuals (companies etc) that claim deal with the first is the insured. The insurance company’s responsibility to the insured is spelled out in pretty good detail in the policy. There is a written contract between the company and the insured. Therefore if the policy says that the company will pay the full cost of repair and the initial settlement was less than the full cost of repair the company will normally honor the additional cost.
The second group is claimants. When you purchase a policy that contains liability coverage the company agrees to defend you against applicable liability suit and claims and to pay those claims up to a policy limit if you are deemed to be liable. There duty and obligation is still to the insured This gets a bit dicey because the company has no written obligation to claimants only civil and common law determine what can and cannot be done. The insurance company’s attorney is actually the attorney for the insured but being paid and controlled by the insurance company. It is the claimant’s sole responsibility to present and prove his claim in order to get relief from the insured through his insurance company.
If you find yourself in the position of being a claimant v. an insurance company or their insured the only obligation the insurance company has is to make your claim go away. That is normally accomplished by having you sign a release in exchange for a cash settlement. It is your responsibility and or you attorneys to first convince the company that the insured truly does owe damages. (That could be another lesson or book) and secondly to present all proper damages and claims for damages to the insurance company for consideration.
It is very important to realize that he insurance company is not going to go out looking for claims to pay. Nor are they going to pay your expenses up front. They will often settle the property damage portion of a claim i.e. pay for your damaged car up front. This is done primarily to lull you into a false sense of security. But they will not in most cases pay your doctor bills, attorney bills. Chiropractor bills, loss of use, loss of consortium or other legitimate claims until your claim is settled.
If you are represented by an attorney, then he will or should take responsibility for presenting all of the components of your claim to the company or courts. You are still responsible to get these items to the attorney, you must participate.
Upon settlement of the claim the claim settlement check is usually sent to the attorney and he pays the specials ( bills) they takes his agreed cut and sends the remainder to you the claimant. Expect to get 1/3 to ½ of the settlement if you are lucky.
Again, I am not an insurance executive nor am I an attorney merely a lay person with more experience in claims than most. I am merely sharing my thought and opinions not provide legal advice to anyone.
