When Your Own Insurance Company is Your Enemy

How can my insurance company be my enemy?

“You’re in good hands.”

At least that’s what the famous Allstate tagline promises.

But are there situations where your own interests can actually be adverse to your insurance company?

An Underinsured Motorist Case is a Perfect Example of How Your Insurance Company Can Become Your Enemy

Our client (we’ll call her "Sheryl”) was injured when she crossed the road at the mall on the way to her job after parking her car. The driver who hit her had the then-state minimum insurance limits of $20,000 per incident per person. Inasmuch as Sheryl’s injuries were severe and involved a fractured leg and required several surgeries, you can see that $20,000 would barely begin to cover a small portion of her medical bills, let alone lost wages or pain and suffering, let alone scarring.

Quickly, we collected the policy limits from the at-fault driver.

Then, we filed what is known as an Underinsured Motorist Arbitration. UIM is simply a way to fully compensate you for instances when the person who causes your injuries does not have adequate coverage. In this case, while the tortfeasor who ran into Sheryl only had $20,000 limits, Sheryl and her family had a large insurance policy of $500,000.

Does Sheryl just “get” $500,000?

No.

As a matter of fact, there is no way she could.

The way UIM works is simple. You take the amount of her coverage ($500,000) and subtract the other insurance limits ($20,000) and that gives you the maximum available from her own carrier.

That does not mean they simply hand over $480K!

Your Insurance Company Makes More Money the Less it Pays You

In fact, the longer it takes to hand out the least amount of money, the more money it makes.

Also, there are really slanted and unfair provisions in the insurance policy that allow it to reduce how much it has to pay.

Here, Sheryl’s medical bills and time off work were covered by her employer’s workers’ compensation policy. Her auto insurance policy (and every other policy I’ve ever seen in Illinois) provides the insurer a credit for amounts paid to the insured (Sheryl) from the at-fault party ($20,000) plus any amounts paid by workers’ compensation. That is no small amount, since in this case workers’ compensation paid for two surgeries, many months of rehab, and time off work. That amount exceeded $110,000!

So after figuring all this out, the most her own insurer could pay her for her injury would have been just a shade under $370,000 ($20,000 and $110,000 as credits off the $500,000 policy limit).

So do they just pay that amount?

Fat chance!

Instead, the case must be arbitrated.

How does all that work?

Well, first we choose an arbitrator as “our” arbitrator, the insurance company chooses its arbitrator, and those two conference and choose a third “neutral” arbitrator.

Keep in mind that Sheryl must pay all of the attorney fees and time for her arbitrator (which totaled $5,000 in this case) AND she must pay half of those of the neutral arbitrator.

How Soon Does the Arbitration Occur?

Not very!

The insurer uses its attorneys to delay as much as possible.

Read your policy. It provides your own carrier the right to take your deposition (in a UIM case, it’s called a sworn statement). This means several hours of your life answering questions under oath. Give answers that are at odds with other witnesses or your medical providers and you can be impeached and called a liar at the arbitration hearing!

But that’s not all. The policy also allows your own company the right to take depositions of your own doctors. This costs money to obtain the transcripts and also can minimize your damages if your doctor is not helpful to you. Many doctors like to think they are wonderful and rarely want to testify that you are in bad shape after they have “fixed” you.

But It Gets Worse!

Under Illinois law, if you are seeking more than the state minimum of $25,000 at the arbitration hearing, you must follow the rules of evidence, which means you must take evidence depositions of your own client’s doctors. It can cost upwards of $3,000 per deposition. The doctors hate giving depositions, so they charge healthy fees.

In Sheryl’s case, we negotiated a middle ground with opposing counsel and had her doctor/surgeon write a series of narrative reports to introduce at the hearing. These cost about $1,500, a veritable bargain.

Does She Get Paid Now?

We muddled through the depositions and ultimately had our arbitration hearing, after it had been continued, cancelled, and extended at least five other times.

The hearing itself only took a few hours. Sheryl had to testify, documents had to be introduced (our packet was about 1,500 pages of medical records and other materials that had to be shipped to all three arbitrators separately), and depositions read into the record in part. The other attorney (who represented Sheryl’s own insurance company) cross examined her over prior statements she had made. This was hardly a friendly get together—it was an adversarial battle!

The Result

Later that day, we received the award.

There was an award for Sheryl. It was slightly below the maximum amount available (in our case, while our own arbitrators knew the policy limits and credits, we did not officially tell the panel these amounts — and the neutral arbitrator, a retired judge, did not know these amounts).

After reducing it by a small percentage for Sheryl’s own fault (which is a given in a pedestrian case) and after the previously mentioned deductions for the credits due the insurer, Sheryl received a bottom line number.

From that amount, all the costs we had advanced on her behalf, the arbitrators’ fees, and other costs, had to be taken out. Then, we also had to repay any medical liens or unpaid bills.

Despite all these credits and costs, Sheryl wound up with a sizeable award in her pocket.

While the process was beneficial to her, the bruising battle over nearly four years since the accident soured Sheryl on her own insurance carrier.

She realized you are not always in good hands. Sometimes, you’re fighting them for what is rightfully yours.

Contact Chicago Auto Accident Lawyer Stephen Hoffman

In all motor vehicle accidents involving injury and potential liability, immediately get medical treatment, report the crash to police and your own insurance company, and contact an auto accident lawyer.

If you've been in an accident and have questions, contact Chicago personal injury attorney Stephen L. Hoffman for a free consultation at (773) 944-9737. Stephen has nearly 30 years of legal experience and has collected millions of dollars for his clients. He is listed as a SuperLawyer, has a 10.0 rating on Avvo, and is BBB A+ accredited. He is also an Executive Level Member of the Lincoln Square Ravenswood Chamber of Commerce.

Stephen handles personal injury and workers' compensation claims on a contingency fee basis, which means you don’t pay anything upfront and he only gets paid if you do. Don’t wait another day, contact Stephen now.