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Dealing with Insurance Companies

Why do so many people hate insurance companies?  The answer is easy.  Insurance companies are easy to hate.   When the loss occurs, the insurance company refuses to pay the benefits it promised to pay.  Then the insurance company makes excuses not treating you in a fair and reasonable manner.

People pay a lot of money to be insured in the event of a loss.  Insurance companies spend millions of dollars advertising and sponsoring sporting events and TV shows claiming they pay claims quickly and fairly.  However, the reality TV show is far from what people are promised.  Insurance companies have a well-earned reputation of being unfair, and unreasonable.  They make excuses to wrongfully deny or to delay payment of valid claims.  While that is not always the case.  Unfortunately, it occurs far too often. 

The experience most people have when they make a claim is they believe they are getting the run-around, the claim process is a hassle and people come to realize that the insurance company often cannot be trusted.  I cannot begin to tell you how many times over the years that I have had a client tell me the story of how they believed that their case was simple, and that they do not understand why the insurance company is not paying the claim.  After all, the client is not trying to get more than they deserved. 

Most of the time, the story starts with the client telling me that they trusted that the insurance company.   They trusted the insurance company would treat them fairly and would pay them a reasonable amount since they have a valid claim.   Eventually, they came to realize that the insurance company was not treating them fairly and that the insurance company refused to make a reasonable offer.   Many times, these clients tell me the story that they trusted the adjuster and gave a recorded statement to the insurance company before they hired an attorney.   The adjuster convinced them that they did not need to hire an attorney, the adjuster just needed to take a recorded statement that would help the adjuster resolve the claim faster.   However, when I go back through the statement, I can usually show the client several different ways the adjuster was trying to get the person to say something that would hurt their case so that the insurance company could either deny the claim completely, or give the insurance company a reason to pay less on the claim.  It is moments like those when people understand that the insurance company has betrayed their trust.

Insurance companies are not in the business of being compassionate about how your injuries have truly devastated your life.   Insurance companies want to pay as little as possible to resolve claims.  That is how they are set up.  The true goal of the insurance company is to make as much of profit as it legally can.   As a result, that puts pressure on adjusters to look for ways to deny claims and to pay as little as possible on those claims they do pay.  In the end, insurance companies make money by collecting premiums, not by paying claims, and certainly not by over-paying on claims.

Insurance companies will look for excuses to pay less than is owed on a valid claim.   Insurance companies will sometimes delay in making reasonable settlement offers.  They know that delaying payment can give them leverage to settle for less because the injured victim is dealing with the stress of lost income, is worried about paying a mortgage, paying a car loan, putting food on the table for the family is worried about how to pay for medical care that is needed.   Especially in today’s world, even for people who have health insurance, the deductibles for health insurance are so high that people cannot afford to get needed medical care through their health insurance.  Insurance companies will even sometimes simply ignore obvious facts and information that verify the claim is valid and should be paid.  If this is how you feel about the way the insurance company or an adjuster is treating you, you need an attorney you can trust.

Your rights vary greatly depending on whether you are making a first party claim or a third party claim.   If you are making a claim against your own insurance policy, that is a first party claim.   If you were involved in an accident where another driver ran a red light or rear-ended the vehicle you were in, then you are making a claim against the policy of the at-fault driver which is a third party claim.

Bad Faith:

On first party claims, the insurance company owes its insureds a duty of good faith and fair dealing both at common law and under the Texas Insurance Code.  Despite the fact that the insurance company owes you a duty of good faith and fair dealing on a first party claim, many insurance companies are taking the position either that there is no such duty or that it is impossible or practically impossible to hold them accountable for their bad conduct.   As a result, insureds often feel more like they are being treated like the enemy and in “bad faith” than as a paying customer who should be treated with good faith.   

Despite requirements in the law on first party claims for the insurance company to in act in good faith to effectuate a prompt, fair and equitable settlement of a claim with respect to which liability has become reasonably clear, more and more insuance companies are fighting first party claims because they believe there is no penalty for their behavior in trying to force the insured to accept less than is owed on a valid claim.  As a result, we are seeing more claims than ever before where the insurance companies are wrongfully denying or delaying payment of valid claims, and without conducting a reasonable investigation.  I have even had an insurance company representative tell me that the trial is their investigation of the claim.   If trial is the investigation of the claim, then you know that insurance company is not paying claims in a timely manner!

Sometimes the insurance company will even wrongfully deny a claim in hopes that the person just goes away and gives up on their claim.  Sometimes, insurance companies will make unreasonably low settlement offers knowing that the offer is unreasonably low. If you feel betrayed by your insurance company that you have been paying thousands of dollars to for years, you are not alone.

The Stowers Doctrine:

On third party claims, the law provides some hope incentive to insurance companies to pay what is owed.   If an insurance company negligently fails to settle a valid third party claim when the claim could have been settled within policy limits the Stowers Doctrine may provide a legal remedy to hold the insurance company accountable for their negligence.  

Under the Stowers Doctrine, an insurance company owes a duty to its insured to use ordinary care in handling the claim.   The insurance company must not be negligent in failing to settle a claim that is being made against the insured when a reasonable insurer would have settled the claim when presented with a valid Stowers Demand which provides an unconditional demand of settlement within policy limits that would provide the insured with a full and final release of all claims and liens that could apply to the settlement proceeds.   G.A. Stowers Furniture Co. vs. American Indemnity Co., 15 S.W.2d 544 (Tex.Comm. App.1929, holding approved  The Stowers Doctrine has developed into a very complex set of rules and holdings from several different cases over the years,

If you or your loved one has been involved in an accident that has resulted in a serious  injury, you need a lawyer that you can trust will understand how your injuries have affected you, and that you will have confidence in to fight for your rights and to maximize your recovery.