Are you negotiating with an auto insurance company and you’re surprised at how much the insurance adjuster lowballed you? Check out this short blog to learn why.
Why do insurance companies lowball auto accident victims?
Insurance companies low ball car accident victims over and over again. Not just in your case.
There is one simple answer (with a few explanations that will follow later) – State Farm Insurance and Allstate Insurance or whatever insurance company you’re dealing with is a for-profit business. They make money from (among other things) auto insurance premiums and they save money by paying you as little as they possibly can for your damages.
Your interests are totally the opposite as State Farm’s interests – they want to pay you as little as they can and you want to recover as much as you can. That’s why they low-ball you is to pay you as little as they possibly can for your damages.
State Farm Can Save Lots of Money by Low Balling You
This might sound like a no-brainer to you, but let me explain it a little bit further about the numbers.
State Farm Insurance is the number one provider of auto insurance policies in this country. They have around 44 million auto policies and from them, they bring in about $40 billion per year.
In 2019, State Farm processed about 22,000 fire and auto claims per day (per day!). If State Farm can save $1,000 per claim by low-balling people, they can save $22 million dollars a day. That’s $8 billion a year.
They’re bringing in $40 billion in premiums and they can save $8 billion by just low-balling you by a thousand dollars on your claim.
So, there is a tremendous incentive for insurance companies to offer you less than what your claim is really worth.
How do Insurance Companies Low Ball Car Accident Victims?
So how do they do this? They do it in really four ways:
Insurance Companies Take Advantage of the System
State Farm is processing 22,000 claims a day. This is their business. They know what they’re doing. They know the ins and outs. They know ways to document your injuries, to limit your recovery.
How many times have you had to deal with an insurance company? I’m a Chicago auto accident lawyer and I get calls all the time from people who say they’ve just been involved in their very first accident. So, the battle is uneven to begin with.
One of the ways they take advantage of the system, for example, is that they get you to give a recorded statement. Giving a recorded statement to the defendant’s insurance company is a big mistake because they can use whatever you say against you down the road in your deposition or at trial.
How Insurance Companies Delay Your Claim
The second thing they do is that they try to delay your claim. They’re not in any rush. There’s really no pressure on them to get things resolved. Yes, you can file a claim with your “department of insurance” but it has very little impact on an insurance company.
The pressure is on you because it was your car that was damaged in the accident and you are the one who suffered injuries.
Each insurance adjuster is handling hundreds and hundreds of claims. Your claim is not a priority so they can take all the time they want. Often this frustrates people and they make rash decisions. They settle for an amount that they otherwise wouldn’t have settled for just to get it over with.
How Insurance Companies Deny Claims
They also try to deny claims. I’ve seen it over and over again where an insurance company will deny a claim so the accident victim files a lawsuit. The next thing you know the case is being settled for a significant amount of money.
Insurance adjusters are generally speaking not highly paid employees. They’re just processing claims. So the fact they deny your claim does have a lot of impact on their life.
So, they will deny your claim either outright or the other thing they might do is put a percentage of fault on you. For example, they will say that you are 30% at fault for the accident even though you clearly are not. But they hold the leverage and you do not. So if you want your case to proceed forward, you may have to accept a percentage of responsibility or liability for the accident.
Insurance Companies Try and Diminish Your Claim
Another thing they try and do is diminish your claim. As mentioned above, if State Farm saves $1,000 per claim, they are saving of fortune. That’s profit.
Also as mentioned previously, they might try and put a percentage of fault on you. In Illinois, if you’re not over 50% at fault for your accident, you can recover whatever balance there is remaining in damages.
So, if I’m 45% at fault for the accident, I can recover a 55% of my damages. In some states like California, if you’re 90% at fault, you can still recover for that 10%.
The bottom line is insurance companies will put a percentage of fault on you to save money. That’s all they’re doing. Often in this situation, I’ve seen these cases go to litigation where somebody actually files a lawsuit and the argument that the victim was at fault disappears.
In short, insurance companies are doing all these things that we’ve talked about because they are:
- Counting on people who have no experience working with an insurance company, or
- Who need the money right away, or
- Are afraid of going to court, or
- Do not trust dealing with a lawyer, or
- Just want to get the process over with