The dirty little secret insurance companies don’t want you to know

The dirty little secret insurance companies don’t want you to know

Most of us are good citizens and buy liability insurance to cover us in case we cause an accident. Some people buy minimum liability coverage and others buy more.

When you buy this insurance, you do so not only to comply with the law, but also to protect yourself and your assets in the event that you cause an accident with a car, motorcycle or other motor vehicle.

Now let’s say you get into an accident that is your fault; you report the accident to your insurance carrier; You think your insurance company will cover you according to your insurance policy, right? WRONG!

If you read the fine print on your insurance policy, you’ll notice a bunch of language that most non-lawyers wouldn’t understand. The gist of it in plain English is that by accepting the insurance policy, you are agreeing to cooperate with the insurance company if they decide to file a lawsuit, and it is the insurance company that decides whether a case will settle, not you.

Insurance companies aim to make a lot of money and pay as little as possible. Since the advent of mandatory insurance coverage (Proposition 213 in California) insurance companies have become very impatient because their coffers are full of your money.

Instead of settling valid claims, they force claims into court in an attempt to prevent personal injury attorneys from obtaining fair recovery for their clients. They know full well that personal injury lawyers don’t have as much money to litigate as they do, so their ploy is to starve personal injury lawyers and ultimately make it harder for people who have been injured in accidents, to receive a refund. In the end, the consumer and people injured in accidents are hurt while big business makes more money at your expense.

Even people who cause accidents and have adequate liability insurance to cover the claim are victimized by insurance companies.

Insurance companies are experts at fraud. With your money, insurance companies donate money to politicians and run media ads blaming personal injury lawyers for making insurance rates so high. What they don’t say is that the court backlog is due to insurance companies not settling claims as they should have in the first place.

Now let’s go back to the example of you causing the accident. If the insurance company is unreasonable and refuses to settle a case at or below the policy limits, then you will be dragged through the legal system. You may have to respond to discovery, appear for depositions, and even take leave to go to court. It’s a long and difficult process that you never thought you’d have to deal with when you purchased Public Liability insurance. Surprise!

If you lose in the process, the insurance company will in most cases pay the judgment, but guess what; YOU WILL HAVE A JUDGMENT AGAINST YOU ON YOUR CREDIT REPORT and in your court case! Thanks to your insurance company, your credit has just been destroyed through no fault of your own.

Is that fair? I assure you it is not. You paid for insurance; the insurance company could have settled the case for you within the limits of your policy; instead, they decided to file a lawsuit in an attempt to minimize what they had to pay so that their profits would remain high. They did so without considering your credit report or without having your name appear in the public registry as having a judgment against you.

Many insurance companies have in-house lawyers; some use outside lawyers. These attorneys are supposed to have a duty to you to do what is in your best interest. The reality is that they are doing what is in the best interest of the insurance company. This is the ultimate conflict of interest. Ethically, the attorney the insurance company uses to represent you has a duty to you, not the insurance company. The reality is that the attorney gets his orders from the insurance companies.

The worst example is the recent disaster of Hurricane Katrina. Have you read about all the poor people who are getting screwed because they are not covered by their insurance companies for insurance they paid for?

It’s time for America and consumers to wake up and smell the roses. The problem is not the trial lawyers; its big business wants to screw the little guy so they can get more profit at your expense. Some have turned this into a political issue. I’ve even heard President Bush talk about tort reform and blame trial lawyers for the nation’s health care problems.

Whenever you are here in tort reform, remember one thing; you are about to get screwed! Every time your right to redress in court is violated, you will be the victim while big business plows into the mule!

By Norman Gregory Fernandez, Esq., © 2007

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