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Bad Faith Tactics Used By American Insurance Companies

It should be no surprise that insurance claims representatives do not always fight fair. When an injured victim files a claim and begins negotiating with a claims rep in order to decide on a settlement offer, the insurance company must never negotiate in bad faith.

In the United States, insurance companies are obligated to operate in good faith and fair dealing when dealing with the individuals they choose to insure. However, when corporations fail to uphold their end of the bargain, the insured person has a right to file an insurance bad faith claim.

On paper, the job of a claims representative is to ensure their company avoids paying out any fraudulent claims. However, in reality, many representatives are instructed to do whatever it takes to save their employer money. This means that if you are in the midst of an intense settlement negotiation, you may find that the defending party is beginning to use bad faith and unethical tactics in order to lower your settlement amount. Below are some of the most common types of bad faith tactics we have seen from insurance companies.

Geographical Defense

Claims representatives and adjusters do extensive research, so if you do not live where your lawsuit is taking place, you may find that your claims rep is attempting to use this information against you. Claims representatives understand the financial, physical, and mental stress that goes into regularly travelling back and forth between states. They know that the typical plaintiff will have to pay for housing and transportation, but many injury victims will also have to deal with other costs (such as childcare) in addition to taking time off work.

Expert Shopping

During a personal injury lawsuit, both sides will be able to call upon outside experts to give a new perspective on certain details of the case. Unfortunately, in many instances, insurance companies will “shop around” for experts who (for a price) are willing to say anything that will support the defense.

Having an attorney by your side throughout your settlement negotiations can help you detect untrustworthy experts before they get the chance to negatively affect your case. Quality legal teams who specialize in car accident injuries work around the clock, which means they will be able to expose a “phony expert” while also calling in their own experts, such as accident reconstruction specialists and medical professionals.

Professional Time Defense

Professional time defense takes place when an insurance company representative attempts to offer a lesser settlement amount due to their financial status. High-income victims such as doctors, dentists, lawyers, professional athletes, entertainers, and small business owners typically do not have the time to shut down their livelihoods to pursue litigation.

Keep in mind that maintaining your career and receiving justice for your injuries are not mutually exclusive. Depending on the length of your negotiations as well as the potential length of a full-on trial, you may be able to take time off work to continue your battle in court without sacrificing your income. Experts typically suggest hiring an experienced personal injury lawyer. This type of professional can help you. Perhaps the best news is that many of these types of attorneys are now working on contingency fee basis, which means that you as a client will only have to pay them if they win your case.

Excessive Depreciation

At times, insurance companies will attempt to dispute your property damages by using excessive depreciation tables. While it is common knowledge that automobiles lose their monetary value over time, you need to be able to detect when the insurance company attempts to use bogus data to diminish your case.

In addition to doing your own research and readying yourself for negotiations, retaining the services of a Houston car accident lawyer can help you stay ahead of the opposition.

Insurance companies are in the business of selling peace of mind, but do not be fooled; if they deem your tragedy to be detrimental to their pocketbooks, they will be quick to look the other way as you suffer.

Hiring a personal injury attorney can help you maximize your settlement offers. Quality lawyers understand the tactics commonly used by claims representatives and adjusters, and they are able to create strong, compelling arguments in your favor that can help you receive every dollar you deserve.

Social Duress and Blackmail

As previously mentioned, claims reps do not always fight fair. And sometimes, it gets personal.

In the past, American insurance representatives have shown a willingness to use social duress and blackmail in order to pressure claimants into accepting minimal settlement amounts. A prime example of this is Cain v. State Farm Mut. Auto. Ins. Co. in 1975. During this case, the insurance company received a claim that involved a car accident in which the insured victim was found with “another woman” in his vehicle. Because the insurance company (State Farm) knew the victim was was married, they chose to deny his demands, thinking he would withdraw his claims in an attempt to hide his infidelity.

However, State Farm’s bad faith negotiating tactic ended up backfiring. The woman in question decided to sue the insurance company and successfully recovered $115,000.00 in punitive damage recoveries. The court ruled that State Farm failed to give equal consideration to the interest of the insured victim, and they were also deemed to be in breach of the covenant of good faith and fair dealings that should be the foundation of every insurance policy.

Social Stigma Defense

Claims representatives will stop at nothing to save money for their company, which means many of them are willing to shame victims into avoiding trial. Social stigma defense takes place when a claims rep feels as though a claimant’s lifestyle, livelihood, or social situation will be looked at unfavorably by a jury, and attempts to persuade the victim into taking a settlement offer that is less than full value.

Never let an insurance company make you feel too ashamed fight for what you deserve. When representatives try to convince you that your lifestyle will be looked down upon by a jury, they are attempting to manipulate you into avoiding trial, likely because they know they won’t win. In a personal injury lawsuit, jurors are focused on the case details, not the social status of a plaintiff.

Terminal Illness

Claims reps will not hesitate to use your personal tragedies against you if it is beneficial to the corporation they work for. Individuals who are suffering from catastrophic health problems that lead to terminal illness need to beware of claims representatives who use this to their advantage during negotiations.

Sometimes, insurance reps will postpone a negotiation involving a terminally ill victim because it can potentially save them money. If the victim passes away before a settlement can be reached, their surviving family may be able to seek justice on their behalf by filing a wrongful death lawsuit, but this may bring about diminished returns. Pain and suffering (as well as other emotional damages) cannot be compensated for if the victim has deceased. Because of this, if an insurance rep knows they will have to provide some sort of payout, they will seek whatever options they have to save money, regardless of how unethical it may seem.

Misleading Photos

Major insurance companies have been to known to use misleading photographs in an attempt to save money during settlement negotiations. Many insurance adjusters are expert photographers, and they also have access to structures and equipment that will help them create a deceptive image. For example, certain adjusters use carport-like structures to cast deep shadows onto the vehicles they photograph, which will make them seem far less damaged than they really are. Other times, adjusters will simply omit certain sections of the vehicle when taking photos, choosing to focus on the parts are least undamaged, or left completely undamaged.

Thankfully, This type of tactic has seen a sharp decrease in recent years. In today’s age, virtually everyone has a smartphone that features a high-definition camera. This means that claimants and injury victims are able to take crystal clear photos of their property damage immediately after an accident happens. Today, many insurance companies have created smartphone apps that allow the user to directly upload property damage photos to their claim file in a matter of seconds.

Underestimating Car Repair Costs

Automobile expenses are hard on all of us, but they can be made even harder when you’re in the middle of a settlement negotiation and the insurance adjuster attempts to lowball your car repairs. At times, adjusters may present unrealistic costs for parts in an attempt to convince the other party of the diminished value of their case.

When adjusters use this tactic, they will typically try to point to non-original parts that are not produced directly by the vehicle’s manufacturer. Though these automobile parts may “technically” get the job done, you are entitled to having your vehicle restored back to its condition pre-accident. During your negotiations, be sure to insist on receiving reimbursement for the right parts that will fully restore your vehicle’s integrity.

Incomplete Appraisals

Insurance companies may perform an incomplete appraisal in order to minimize your property damage and persuade you into believing your case is worth much less than realized.

Performing an appraisal requires attention to detail, but sometimes, the person handling the appraisal may intentionally leave out necessary details, such as work that needs to be performed, or necessary parts that must be purchased for replacement.

In certain situations, hidden damage will be discovered during the repair process. If this takes place, the adjuster will can write a “supplement”, which is an additional estimate that is added to the initial appraisal.

This process is in place to protect claimants from not being able to have their hidden vehicle damages repaired, but sometimes, adjusters will use this against them. If an adjuster suspects they will have to write a supplement later on in the process, they may initially try to lowball your appraisal, or they will purposely fail to record certain damages.

Ignoring Hidden Damage

Behind the scenes, many insurance adjusters are encouraged to and rewarded for making the smallest possible estimates and saving their company money. Because of this, many adjusters will purposely ignore “hidden” damage in an attempt to minimize settlements.

Has your vehicle been damaged on its undercarriage? Perhaps you have some trunk damage that wasn’t observed by the adjuster. If the claims representative isn’t acknowledging these damages, be sure to get these damages verified by a body shop. Having this verification on-hand can help you and your legal team make a compelling counteroffer that will help you fully recover from your automobile damages.

Unreasonable Delays

Insurance companies are not in a rush to give you money, which means that their representatives will attempt to create unreasonable delays in order to postpone negotiations or payouts. A common tactic that claims reps will use in order to unreasonably delay the process is requesting information from the claimant bit-by-bit.

This is not a reasonable delay whatsoever. Claims reps deal with claimants for a living, and chances are your case is not their first rodeo. They know exactly which pieces of information to request from you, and when they attempt to make requests little bit little over a period of months, they are not making an honest mistake. They are acting in bad faith.

Financial Hardship Defense

During settlement negotiations, it is not unheard of for claims reps to dig into the personal and financial situations of the claimant. Representatives may ask you about your employment or income history not because they care about you, but because they want to see if they can swindle you into taking a lower offer. Representatives hope to catch claimants in dire financial circumstances so they can retain the upper hand in negotiations.

It is understandable to be tempted to take a low settlement offer when you find yourself really needing cash. However, it’s important to remember that if you are able to hold out until the end of your negotiations or trial, the recovery amount you receive could be life-changing. If you are in the middle of negotiations, consult with your attorney on the potential value of your claim.

Intimidation

Every claimant should have an experienced accident injury lawyer by their side during their negotiations, but as we all know, sometimes victims choose to handle their claims by themselves. When this happens, the claims representative will notice, and they will then attempt to convince the victim that they are on their side.

It is important to remember that an insurance representative is not going to be on your side during a settlement negotiation. They may try to flaunt their years of experience, college education, or even awards they have won for their past diligent work. In addition to this, they may even put on a face and deceive you into thinking they are emotionally invested in your injuries and losses.

Not every claims representative is a deceiver, but the nature of their job prevents them from ever truly being invested in doing what is best or you. If you want to have someone on your side during settlement negotiations, it is in your best interest to hire a personal injury attorney who can work closely with you step by step throughout this process.

Retaliation

Claims reps are not above bullying their opposition into accepting less than what they deserve. In the past, American insurance reps have shown they are wiling to use extortion tactics in order to help their corporations save money. American insurance representatives may examine the legal status of a claimant if they choose to refuse the rep’s initial settlement offer. If the representative finds that the claimant is not a legal citizen of the United States, they could make false threats of deportation, threatening to uproot the victim’s life if they do not take a lowball offer.

Sometimes, insurance reps will even threaten to take legal action against the claimant if they are unhappy with the claimant’s unwillingness to accept a small settlement offer. Many representatives will try to convince uninformed claimants that they are committing fraud by filing additional claims such as emotional damages or lost wages.

Both of these situations can be extremely scary if you are both new to personal injury law, but you may be able to avoid succumbing to these threats by retaining the services of a personal injury lawyer from the very beginning of your lawsuit. Quality accident injury lawyers are familiar with the empty threats that are made by insurance companies. They also know that bad faith negotiating tactics have no place in society, and they’ll be able to help you stay calm and informed if a representative ever threatens to ruin your life over a settlement offer.

The Hard Ball Approach

Hard ball negotiators can be pretty common when you’re dealing with insurance companies. Sometimes, you can run into a claims rep that attempts to diminish your damages while offering you their “best and only” settlement offer. At times, representatives may even choose to take the “sliding offer” approach, which means they will tell you that their offer will only decrease only time.

None of this amounts to anything more than unwarranted pressure. Claims reps want to stand their ground and avoid paying you the full amount of what you deserve. If you find yourself negotiating with a hard ball insurance representative, your best option may be filing a suit and taking your case to trial.

The Nice Guy Approach

Unlike the hard ball approach, the “nice guy negotiator” is quick to be open to negotiations while maintaining a friendly and gentle demeanor. When representatives employ this type of negotiating tactic, they try to make certain concessions upfront in an attempt to gain goodwill and convince the claimant they are ready and willing to give them a fair settlement offer. Representatives do this in order to control your perception of them; they want you to trick you into feeling happy about your settlement while also cheating you out of life-changing amounts of money.

Refusal to Negotiate

Occasionally, you will come across a claims rep who is simply unwilling to participate in any negotiation whatsoever. When this happens, they will typically present you with a single settlement offer and tell you to “take it or leave it”.

In certain instances, refusal to negotiate may only be a temporary problem, and the representative will open up to negotiations after an open and honest discussion with you or your legal team. However, if weeks have passed and they still have not budged, your only options will be to withdraw your claim, contact the claim rep’s manager, or file a lawsuit and prepare for trial.

Claims Maze

Insurance reps have been known to tell claimants false information in an attempt to stall the process. A common technique they use is commonly referred to as the “claims maze”, where a representative will tell a victim their claim must be reviewed by a claims committee or an additional office before negotiations can proceed. These lies are told in an attempt to not only delay the payment of claims, but to also test the dedication of the policyholder and their desire to pursue a full recovery for their damages.

Pusch & Nguyen | Houston Car Accident Lawyers

If you’re dealing with an insurance company who isn’t negotiating fairly, honestly, and openly, there are steps you can take to fight back. Filing an insurance bad faith claim is a step you and your lawyer can take if you feel as though you’re dealing with a claims rep that is negotiating in bad faith.

Serving Houston, San Antonio, and their surrounding areas, the Pusch & Nguyen Law Firm is ready to help you with your personal injury lawsuit and ongoing settlement negotiations. With years of experience serving Texans, we have a strong reputation for helping our clients receive favorable outcomes to their lawsuits. Call us today at 713-524-8139 to learn more about our services; we offer every prospective client a free consultation, and you only pay us if we win your case.

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