I get calls and emails all the time from people who were injured in a motor vehicle crash and are getting the runaround from the other driver’s insurance company.
The first question I ask them is “what is the name of the insurance company?”
Invariably, I cringe as I hear the words “Direct Auto,” “American Access,” “American Heartland,” or several other names that constitute what we in the know refer to as substandard insurance carriers. After cringing, I usually give them news they don’t want to hear.
What are substandards? Why do they exist? What games do they play? Why is dealing with them almost always bad news?
What is a Substandard Insurer?
This is no term of art, and there is no fixed definition. But there are certain factors to look for in determining whether a carrier is to be deemed substandard. Among them:
- The carrier writes all, or nearly all of its policies for the state minimum amount of liability of $25,000 per person/$50,000 per incident
- The carrier is known to target those with poor credit, poor driving records, and often targets immigrant populations and those who are Black and Brown
- The carrier has a well-deserved reputation as non-responsive, as in you will NEVER get a phone call back (and many make it difficult to even locate a phone or fax number), you will NEVER receive an offer, and, if you do, it will be ridiculously low
- The carrier often plays games such as “not receiving cooperation” from its insured; meaning it denies coverage exists
- The carrier relies upon flimsy “exclusions” to coverage
Why Do Substandard Carriers Exist?
Because they can.
Illinois is a mandatory insurance state where all drivers are required to maintain liability insurance. Unfortunately, the bare minimum of $25,000/$50,000 doesn’t cover much. The vast majority of people are not knowledgeable about insurance and have no idea whether the folks who bring you Mayhem, Flo, Dr. Rick, or emus are “on their side” or bad news. In fact, I would venture that no one except injury lawyers, insurance coverage lawyers, insurance brokers, and about three other people care or understand much about their auto insurance policy, the companies that underwrite them, or the implications of those factors.
Many people are required to obtain insurance after being ticketed for having none. Often, their only options are the substandard carriers. Others have lousy credit and cannot pay for insurance except through financing, which substandards are only too happy to offer. Still others are unaware of the options available, and respond to targeted ads that the substandard carriers litter the airwaves and internet with.
Games People Get Played
Going back three decades to the early part of my career is where I find one of the most poignant and ridiculous substandard games.
In those days, the minimum policy limit was $20,000/$40,000. My client was a passenger on his friend’s motorcycle. Friend lost control of the bike and hit a tree, killing him instantly and causing my client to suffer a fractured leg, fractured arm, and permanent brain damage. Forgetting the permanent traumatic brain injury (TBI) for a moment, the hospital bills alone were nearly $100,000.
You’d figure the offer of the policy limits of $20,000 would be forthcoming rather quickly, right?
Nope. I received a letter with a citation to a section in the policy excluding all coverage for “specially modified vehicles.” What special modification were they claiming excluded coverage?
The owner had removed a reflector.
So in order to force them to finally pony up the money, we had to file a second lawsuit asking for a Declaratory Judgment for the court to determine coverage existed. The lawsuit and attachments (in the days before e-filing, meaning lots of trees died!) ran to about 150 pages. I then finally got a call, but not offering the full policy coverage amount. Eventually, we did get it, but that shows you the depths of depravity insurers are willing to sink to in order to save money.
Other common tactics are:
- “Owners only” policies that only cover the “owner of the policy,” and no one else in the household
- The good old “insured won’t cooperate,” so we don’t owe coverage at all
- The laughingly low offer (or no offer) forcing a lawsuit and years of wrangling, depositions, and trial (and the costs that go with that!)
- Absurd time or type limits such as one carrier that “requires” a report on its own form, within 30 days, sent via certified mail
- And let’s not forget the value of money over time. Just by “delaying, denying, and not paying” a claim for two, three, or four years, the carrier has already “won,” by earning interest on premiums invested.
Can You Beat Them?
Not without a lawyer.
The only way to handle a case involving a substandard insurance carrier is to file suit immediately and prepare for trial. If you do get any offer of settlement, it sure won’t be until you are at trial or on the courthouse steps.
What some aggressive lawyers will do is set these cases with significant injuries up as “bad faith” cases, meaning the insurer has not treated the claim and made a good faith attempt to settle. This means that IF you go to trial, and IF you get a verdict that exceeds the policy limits you already demanded prior to trial, you can now proceed with a second lawsuit asking for attorney’s fees as well as all the money of the verdict.
Quite frankly, that’s a giant pain in the rear. It takes time, money, and is not a guarantee of success. Many lawyers simply don’t want to spend the time and effort on these Sisyphean exercises.
The substandard carriers bank on that.
One More Thing…
It seems obvious that everyone should heed this screed and NOT purchase substandard insurance and also adhere to my maxim of purchasing insurance from an insurance broker and buying as much coverage as possible. It’s not like I haven’t mentioned this a million times. But for every person who thinks she is “fully insured,” I will show you someone with a low limits policy from a lousy company.
That means that if the at fault party has no insurance or low limits and you get injured badly, you will have NOTHING available to pursue.
Assume that everyone’s coverage is low, lousy, or non-existent.
Cover yourself or take the risk that you might get nothing if you get hurt, even if it’s not your fault.
- Substandard insurers exist, much to my chagrin
- Substandard insurers often play “coverage games” to avoid paying claims
- Substandard insurers almost never pay on claims fairly
- You will not defeat a substandard insurer without a lawyer on your side
- Purchase insurance through a broker and in limits as high as you can afford
Contact Chicago Personal Injury Lawyer Stephen Hoffman
As in all cases involving injury, medical malpractice, or other injury and potential liability, if you have been hit by a vehicle, immediately get medical treatment, report the crash to police and your own insurance company, and contact a lawyer with expertise in your type of case, such as bicycle accidents or pedestrians hit by cars.
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 over 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 claims on a contingency fee basis, which means you don’t pay anything up front, and he only gets paid if you do. Don’t wait another day; contact Stephen now.