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Common Myths Associated With Insurance Claims

Posted on: September 3, 2022

Chi Nguyen
September 3, 2022

Common Myths Associated With Insurance Claims

Myths run rampant in every industry about insurance claims. Whether you’re shopping for a new house, automobile, kitchen appliance, or something else entirely, you’re probably wary of secondhand information, sleazy sales tactics, and industry myths that may derail your decision process.

Plaintiffs and their personal attorneys also struggle with myth busting. At times, they are convinced into believing misconceptions and half-truths about how they should be handling their insurance claims process and its accompanying insurance adjuster. Unfortunately, not knowing how to decipher the myths from tried and true tactics can cost you hundreds of thousands of dollars. Everyone makes mistakes, but making an error in the middle of a trail or settlement negotiation can have extreme ramifications. In this blog, we’ll give you some insight on some of the wrongful assumptions we’ve seen in our industry, myths believed by numerous clients, and some of the tactics and untruths used by insurance companies.

“A lawsuit threat will always convince an adjuster to offer a higher settlement amount.”

Like we’ve said before, every situation, claim, and accompanying adjuster will be different, and a lawsuit threat may work in your favor at times. However, this is not a reliable tactic we’d recommend to the Texans we work with.

When individuals and their personal attorneys choose to employ this tactic and buy into this myth, they tend to assume the adjuster will be somehow penalized or punished as a result. This is simply not the truth. Adjusters typically have the option of handing over their legal woes to a defense attorney who may have experience successfully representing this company in similar situations. Insurance companies understand that settlement negotiations and trials are simply a part of the line of work they’ve chosen, so they are usually well prepared for any situation that must enter a court of law. Because of this, threats to move your claim into full-on trial mode are oftentimes seen as nothing more than an empty threat that carries little weight. Many adjusters are also likely to believe that you have no real legal case up your sleeve. In many situations, they will simply assume you would have filed a lawsuit a long time ago if you truly believed in your case potential. For that reason and many more, we believe t is not often in your favor to threaten an insurance adjuster in an attempt to gain an upper hand in settlement negotiations.

Also, keep in mind that insurance companies are not exactly making their profits from selling insurance policies. Like most businesses, they’ll rarely turn down a paying customer, but most of these companies consistently lose money on their underwriting. This can lead to loss ratios and expense ratios that are well over 100%, which may lead you to wonder how they’re able to stay in business. The answer lies in the fact that many insurance companies are gathering their profits from investment incomes. The earnings from their total investments are then used to offer the total losses and expenses.

We’re not here to tell you what to do, and you may still be ready to threaten a lawsuit during your next round of negotiating. But even if you were successful, most legal experts wouldn’t recommend using this as a last-ditch effort during your settlement process.

“All insurers and adjusters use the ‘three-times’ formula to determine their settlement offers.”

Years ago, special formulas were prevalent amongst insurance adjusters, but in today’s world, this is not at all common. While there are still a handful of adjusters (and insurance companies) who may use special formulas to determine, gone are the days of being able to assume your adjuster will eventually offer you a settlement value that is three times the amount of your total financial losses.

While this may happen in select cases nowadays, it is far from the norm. Today’s insurance adjusters (and their superiors) continue to develop new methods in an attempt to cut their costs, and as a result, new ways to complicate the settlement negotiation process for plaintiffs.

This is one of the many reasons why it is critical for all car accident victims to seek the services of a personal injury attorney. Keep in mind that as time continues to pass, insurance companies will devise new ways to save money, but any and all law in place surrounding auto accidents are subject to change as well, in addition to court procedures, available attorneys, and other factors at play. Because of this, it is always recommended to hire an expert Houston car accident lawyer with experience winning cases similar to yours. Many injury attorneys today charge you no money upfront, and you only pay if they successfully win your case.

“Defending is more expensive than settling! There’s no way they won’t give in to my settlement demands.”

There remains a handful of injury victims who still believe that defending a claim is always more expensive than settling a claim. This thinking then leads them into making outlandish demands during settlement negotiations and realizing they are wholly unprepared once their case goes to trial.

At times, this rambunctious way of negotiating may actually lead to a full recovery. If the proof is “in the pudding” and the insurance company sees no way their defense team could possibly win this case in court and the settlement negotiations remain professional, common sense tells us they’ll typically be inclined to make a payout and wipe their hands clean of this issue. However, as we all know by now, every single case is different.

In addition to this being only a myth, many insurance companies are changing the way they view their legal fees and attorney hiring process. Instead of simply looking at this as a bill that needs to be paid alongside the Internet and electricity, many CFOs are now looking at their defense lawyers as an investment. Because of this, many of them are retaining top-dollar lawyers while being increasingly willing to pay whatever court costs come about as a result of a trial.

Of course, not every insurance company is as buttoned down as the one previously described, but even those establishments may be willing to “take their chances” and defending the case rather than “handing over” a lump sum of cash. An unfortunate truth is that many of the leaders of these companies would rather put money in the pockets of their attorneys rather than pay an injury victim their fair due. Because of this, you should keep in mind there are some companies out there willing to go the distance; win or lose.

“Holding the adjuster to strict deadlines and time limit demands is the best way to speed up the negotiation process.”

Successfully negotiating a settlement requires confidence, nerves of steel, and an unwillingness to back down. But it’s important to keep in mind that not every waking moment of this type of negotiation is complete hardball. It is important for plaintiffs and their attorneys to ensure they are providing whatever type of “treatment” they are attempting to demand. Are you requesting 24-hour turnarounds for document requests and other pieces of information? This is still clearly an unreasonable demand, but you’re not doing yourself any favors if you repeatedly ignore the adjuster’s requests for weeks at a time. In fact, you may even be burn any little bit of good faith that may have been present at the beginning of the negotiation process. Unfortunately, if this is type of punctuality displayed to the defense, they may choose to display similar (or worse) communications right back towards you.

Keep in mind that nobody is saying you shouldn’t ever give the insurance adjuster any sort of deadline. This is simply a way to keep things moving along at a pace that is somewhere in-between “suitable” for both parties. Encourage swift movement by making sure you and/or your attorney are maintaining prompt responses and communications with any claims representatives you are dealing with. Like most negotiations, keep the ball moving and knock it back into their court whenever possible. Don’t make the mistake of waiting until right before the statute of limitations tolls to start making time-limit demands.

“Insurance adjusters get bonuses and commissions when they save money on a claim settlement.”

Insurance companies aren’t this bold, and it’s also pretty illegal. We’ve never encountered an insurer who operates in this fashion, and we highly doubt there are very many out there who are successfully doing business.

Let’s not get anything twisted, though. Insurance companies have incorporated numerous other productivity requirements, performance goals, and bonuses that encourage adjusters to save the company money by any means necessary. However, directly providing an adjuster with a cash commission for every dollar they save the company would set up any corporation for imminent failure via bad faith claims.

If you do find out that the adjuster you are dealing with may be receiving a dicer bonus as a result of how well they do on your case, it is time to hire a personal injury attorney in Houston and start putting together your bad faith case. If you are able to enter a court of law and prove that the defense is motivating by personal monetary gain and has been incentivized to potentially give you less money than you rightfully deserve, it will all start with retaining the services of a quality car accident lawyer.

“Adjusters don’t negotiate as well as attorneys. If that’s the only person evaluating my case, I’ve got it made.”

At times, plaintiffs get a bit overconfident when negotiating with an adjuster who does not seem to be working directly with a defense attorney. They’ll tell themselves that these company representatives are unable to properly navigate a case, and then attempt to negotiate as if they have the upper hand.

This is simply a rookie mistake at this point. In today’s world, the claims representative handles more injury claims in a 30-day span than many attorneys take on in a calendar year. They’ve worked with 18-wheeler accidents, motorcycle collisions, pedestrian accidents, and virtually every other automobile accident. Depending on how many years of experience they have, they might’ve even dealt with all of these issues multiple times, furthering their knowledge and expertise in settlement situations. And like anything else in the world, the more you do something, the better you get at it.

This isn’t to say that an adjuster can ever become an all-knowing presence in this field. Litigation is still litigation, and the ones who remain at the top of this field are all educated, trained, battle-tasted lawyers who have chosen a specific field of law to specialize in. However, keep in mind that the majority of cases do not go to trial. Lawyers are obviously more knowledgeable in regards to trying cases, general negotiation strategies, critical thinking, persuasion, research, and even data analysis. Insurance adjusters, however, may have seen countless Traumatic Brain Injury cases and knows exactly what range is a fair amount for the plaintiff’s motorcycle injury costs. The lesson here: respect your opponent, and hire a legal expert when necessary.

“I can ask an insurer to reconsider my claim. That way, I won’t have to sue them in order to receive my coverage and ensuing recovery.”

Unfortunately, once a decision to deny any claim is made by an insurer, it is highly unlikely anyone from the company will choose to reconsider its rejection or give it a second chance. Claims managers, corporate managers, adjusters, and other representatives all come together to decide whether they will deny a claim, which implies intense research and discussion. If an insurance company reconsidered a claim, it would communicate a message of “Hey, we might not have done our homework the right way. Let’s go back and check!”

In some cases, insurers will deny coverage because they truly believe the law will be on their side during this instance, and they’re fully prepared to go the distance and enter a court of law for a full-on trial. And if this happens, make sure you gather your case as well! Chances are, if you’ve went as far as to make a claim, you have a healthy amount of confidence in your chances of getting compensation for your injuries and losses. Hire a professional Houston car accident attorney today and begin the journey towards recovery from your wrongful damages.

“The insurance owes me an explanation if they choose to deny my claim. Or else, I’ll sue for punitive damages!”

A confident take to have, but an incorrect one at the least. Very few people go through the task of contesting a coverage denial, and even fewer choose to actually go through with a lawsuit once the claim has been denied. Because of this, they won’t take the time to type up an essay on the details of your claim and why they did not see why it was fit for them to cover it.

As far as punitive damages, it is important to remember the law states the denial of coverage must be unreasonable. Because of this, even if your claim was wrongfully denied, it may be extremely easy for the panic at the sight of a lawsuit, and come up with a way to paint their dishonesty as an honest mistake they made. Because of this, it may be extremely difficult for a plaintiff (or their lawyer) to find a way to prove fraud, oppression, and malice beyond doubt.

“Lawyers take on all cases. I’m sure I can find an attorney who will handle my case on a contingency fee basis!”

This isn’t quite correct. If you feel as though you were treated poorly by your insurer and you’re hoping a lawyer will simply convince them into handing over more money, you’ll be in for a rude awakening once you begin “shopping” your denied claim. When injury lawyers are reviewing their ongoing consultations and case submissions, they are first looking for some way to determine the probability of a substantial return on the case. Certain trials can linger on for months, and many lawyers have had a case or two that turned into an 18-month battle. Because this comes into play, if you submitted claim for a mere $7,000 that may cost a lawyer six figures over a yearlong span to successfully fight, the attorney has the right to pass on your case.

“I can be a pioneer. If I successfully sue my insurer for this reason, I’ll be opening the door for future plaintiffs who go through the same thing.”

While this is valiant thinking, it is one of the primary reasons why claims representatives and their managers fight so hard against these cases. If word gets out that there are people making “big money” (which is, in all intents and purposes, merely their recovery for their losses and injuries) then they will quickly become paranoid of drivers and motorists who are attempting to game the system alongside their personal attorneys. Because of this, if an insurer has a reputation for successfully denying claims with minimal contest, they will continue to do so at virtually all costs.

“The adjuster I’m going up against is simply too knowledgeable. I should simply take the first settlement offer they give me and be on my way.”

Many people would assume that a company that is trying to save money on claims would make sure every claims representative is an expert in their craft. However, this isn’t always the case. Though we’ve given insurance companies their credit at points in this blog, we won’t lie and say they are always up to par. At times, you will encounter a newer adjuster who has received minimal on-the-fly training that leads them to being thrown into high-pressure claim negotiations only weeks and months into their position. For companies who are being frequently filed against and sued, they may have this problem more often, especially if they are struggling with staffing and employee retention.

With that being said, certain insurance companies may be swamped with claims without the resources to hire new specialists for training. When this happens, they may transfer a claims adjuster from a different department to handle a matter that falls outside of their expertise. In layman’s terms, you could be dealing with a claims rep that specializes in residential property damage and has not a single day of experience working professionally with auto accident claims.

Now, keep in mind that these claims adjusters are not always truly alone during negotiations. Even experienced and confident adjusters have close mentors, managers, legal consultants, confidantes, and full-fledged defense attorneys they closely speak with as a settlement continues. As we all know, everyone is busy these days, and these professionals will surely have limits on how much consultation they can provide during what may be a minor settlement negotiation. Regardless, it’s important to remember that you and/or your personal injury attorney confidently enter negotiations without any fear when questioning the authority of an insurance company rep.

“My claim is covered and the insurance company hasn’t given me any sort of policy limitation, defense, or exclusion, and insurance regulations state that claims need to be paid within 30 days. Guess my check will be here soon.”

This line of thinking actually makes a bit of sense, but unfortunately, this is rare enough to be considered a myth and wrongful assumption. Insurance companies who do not comply with today’s insurance industry regulations and practices will often time make an attempt to delay claim payments, especially if they are larger sums. For example, if the company believes they will end up owing roughly five million dollars to an injured victim, they may try to use a various assortment of tactics to delay payments. These tactics include requesting additional (needless) information or documentation, re-reviewing certain aspects of the claim, or accuse you, the victim, of not doing your part by “providing paperwork”. If this happens, know you are being pressured into a situation that will make you feel as though you’re being painted in a negative light. This is all an illusion, and you will get your money if it has been ruled to you, but you cannot expect a company to be in a rush to pay you after they’ve lost a settlement negotiation or trial, even though it’s simply money owed to you.

“The bigger and richer the insurance company, the faster I’m getting my claim payout!

First off, remember that these companies are wealthy for a reason, and a driving fore behind many insurance company profits lie within their litigation and settlement proceedings. The biggest and richest insurance companies are able to afford to pay the best claims adjusters, managers, and representatives. In addition to this, they are able to retain the best legal services, which means they will have their pick of defense attorney if the matter ever goes to trial. With that being said, you must tread carefully even if you are attempting to settle with (or sue) a nationwide insurance company.

In addition to this, even if you have successfully negotiated an amount that is satisfactory to you and your team, you still may not be able to expect it to be paid back go you promptly and fully. Recessions in past decades have proven that insurance companies are not bulletproof, and the recent global pandemic we have all experienced has been yet another display of a worldwide crisis that can turn entire economies upside down in a matter of weeks. This means that even if you’ve been awarded your amount and the company you were negotiating with has a track record of quickly paying out claims, times may have changed.

“The insurance company has admitted to their mistakes after not paying my claim, but there’s no way for me to hold them liable for their actions.”

Certain insurance companies will use strategies in an attempt to keep the money that has been agreed upon as your payout or settlement. When this happens, they may try to blame it on an isolated mistake that was completely out of their control, but this rarely holds up, if ever. Even if there was an error made, chances are it was made by one of their own employees, which means the company is completely liable for whatever headaches or lost funds it caused.

At the end of a settlement, it’s not uncommon for you to find that there is no real causation analysis on file, which means there has been no written justification to honor your benefits and provide you with a payout. When this happens, it is clearly not a mistake. It is a prime exhibit of a preconceived plan to withhold your benefits and cheat you out of funds that are rightfully yours.

Pusch & Nguyen Law Firm | Harris County Car Accident Lawyers

Everyone’s knowledge on settlement negotiations, insurance claims representatives, and auto accidents varies. If you’ve read this blog and already knew a bit about the topic, view this as another reinforcement that helps you prepare for any negotiations you or a loved one may have on the horizon. If you weren’t aware of many of the facts on this list, we hope this has helped you determine just how you should proceed with your insurance claim submission.

If you have been hurt in a car accident of any kind in the Houston or San Antonio area, you must be well prepared and ready to battle for what you deserve, but healthy confidence is always a good thing. Go into your trial or negotiation with the elite lawyers at the Pusch & Nguyen Law Firm. Led by experienced personal injury attorneys Anthony Pusch and Chi-Hung David Nguyen, you can count on our team to fully analyze your case and determine its likelihood of success. Call us today at 713-524-8139 to schedule a free consultation with an in-house specialist.

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