If you are injured in a car accident involving an at-fault driver who rear-ends your car, the careless or inattentive driver’s insurance company will handle the claim if the other motorist is insured. Although the insurance company does not represent your interests, the company has an obligation to negotiate a settlement of the claim in good faith. While a person injured because of the negligent conduct of another will almost always recover more with the benefit of legal representation, many people try to handle small property damage claims on their own. If you are considering this option, you must be able to distinguish legitimate adjustment and negotiation practices by an insurance company from bad faith tactics.
Since the representative that injury victims will be dealing with most directly and extensively is an adjuster from the negligent party’s insurance company, an understanding of the adjuster’s role is essential. Claims adjusters are employees of the insurer who have the following job duties:
- Investigate claims by reviewing the circumstances of the incident/accident and the claimant’s injuries
- Assess liabity for the incident
- Assess damages
- Determine the appropriate settlement range
- Extending offers to settlement
Many adjusters have few limits in terms of the types of tactics they will use to reduce the amount paid out on claims. Adjusters receive special training in “claim evaluation techniques” with description of the educational curriculum essentially amounting to “denying claims and minimizing any payout.” Even when insurance adjusters are compelled to actually negotiate because their insured is almost undeniably at-fault, the adjuster will still look to minimize the value of an injury victim’s damages. Even if the adjuster seems friendly and helpful, this employee of the insurance company is not on your side. The objective of this individual is to mitigate the liability of the insurance company.
When the adjuster does not engage in good faith, the insurance company might be liable for attorney fees, court costs, and punitive damages, depending on the facts and circumstances. Insurance companies across the U.S. are ordered to pay millions upon millions of dollars annually by courts for bad faith practices. Bad faith negotiation of a third-party claim typically involves denying a claim without a reasonable basis. Another common form of bad faith negotiating involves refusal to settle a claim for the policy limits when given an opportunity to do so.
While the specific tactics amounting to bad faith will depend on statutory authority and case law of your state, the law typically require insurers to have systems and standards that guide an adjuster’s evaluation of car accident claims. Common examples of conduct that is considered a bad faith practice in most states include:
- Denying a claim without conducting a reasonable investigation
- Intentionally citing inappropriate legal authority to justify denial of a claim
- Switching adjusters to delay resolution of a claim once negotiations have begun
- Failure to pay or deny a claim within a reasonable time
- Lack of a clear justification in writing to explain a claim denial
- Misrepresenting the statute of limitations to deny a claim
- Hiding known information that is relevant to settlement of a claim
- Stalling the adjustment process or withholding information, so the statute of limitations runs
These are only a handful of bad faith practices out of what amounts to more than a hundred types of bad faith conduct used by insurance companies to mitigate their liability.
If you are involved in settling a claim with a negligent driver’s insurance company, you also should understand the meaning of the term “reserve amount.” This term refers to the maximum monetary amount the insurance carrier has set aside for settlement of a claim. Insurance companies rely on insurance programs to calculate the estimated maximum and minimum settlement value of a claim. The maximum amount is set aside by the insurance company. These amounts are calculated based on thousands of prior settlements and the specific facts and circumstances of the claim. Adjusters who negotiate more claims close to the minimum amount save their company more money, so negotiating amounts closest to the minimum amount over many claims result in promotions and positive job evaluations. In some cases, insurance companies have even been known to provide bonuses and other compensation to reward adjusters who deny and underpay a disproportionate number of claims.
Our Miami insurance claims law firm invites you to contact us if you are having difficulties with your insurance company. Florida insurance claims lawyer J.P. Gonzalez-Sirgo handles claims against insurance companies in Miami and throughout Florida. The Law Firm of J.P. Gonzalez-Sirgo, P.A. offers free consultations and case evaluations. No Recovery, No Lawyer Fees. Call 305-461-1095 or Toll Free 1-866-71-CLAIM.