Years ago, when you had an insurance claim you would call your insurance agent and your agent would call the company’s claims office and you would be treated fairly. Your agent makes his or her money on the premiums you pay and they want to keep you as a premium paying customer. So your agent would use whatever influence they had to try and make sure the claims adjuster treated you fairly.
Today, the claims offices are totally separate from the agents and the agents usually cannot influence the manner in which your claim is handled. Some companies have tried to eliminate agents completely. They advertise for you to purchase your insurance online directly from the insurance company. For those online purchases, the company does not have to pay any money to agents who sell the insurance.
So we now have a system where the people who sell the insurance and collect your premiums have no influence on the amount of money the claims department will pay for your claim. The claims department is in the business of having to pay claims and their profit margin depends on paying as little as possible on every claim. Could that mean the claims adjusters also try and cheat the people who buy insurance from their company.
Every attorney who has handled a significant number of insurance claims knows of instances where an insurance company has gone beyond just minimizing what should be paid on a claim and has outright tried to cheat their policyholder. We see it more often when a client comes to us after trying to handle their claim without an attorney. The claims adjusters know an individual without an attorney does not know the ropes and is easy prey for the claims adjuster.
Some companies have adjusters who are specially trained to deal with people who make claims without attorneys. They are trained to be as nice, sweet, and as cordial as possible. Their goal is to get your case settled as cheap as possible and to avoid you consulting with an attorney. For people with injury claims it is crazy not to at least consult with an attorney, as many attorneys who specialize in injury claims offer free no obligation consultations. I am happy to offer that free consultation by phone, if someone prefers not having an in person meeting.
We have seen many instances where an injured accident victim who does not have an attorney is taken advantage of by the insurance adjuster. We have seen where the adjuster claimed there was only $10,000 in available insurance to pay an injured person’s claim, when there was really $100,000 available. We have seen where there have been oral discussions with adjusters who send paperwork to injured victims to sign and that paperwork includes a phrase that eliminates the injured victim’s right to pursue claims. We have seen where insurance companies take advantage of unrepresented accident victims by requiring the accident victim to jump through multiple hoops you are not required to jump through—we call that one the “Bring me the broomstick of the Wicked Witch of the West” requirement. We have seen where insurance companies send unrepresented accident victims to doctors who the insurance adjuster knows from experience will likely provide an opinion that the injured person suffered only a very mild temporary injury, or suffered no injury at all.
Unrepresented accident victims are like a piece of red meat to some insurance adjuster lions. In some companies, adjuster evaluations are based on how little they have paid out in claims when compared to other claims adjusters in the same company. One company was reputed to actually have a monthly award called “The Hammer,” given to the claims adjuster who took the biggest advantage of a claimant during the month.
You will find with most companies that once the company finds out you are represented by an attorney your claims file is transferred to a new adjuster, instead of the one that was there to sweet talk you into not consulting with an attorney to get you to accept a cheap settlement.
Here are the facts in one recent case I handled. Joe (not his real name) owned a dump truck and he was a sole proprietor of his one person business hauling rock and sand. In the wee hours of the morning he would leave to begin his route to pick up a load and then deliver it. At about 2AM, he was on a highway in a downpour and he ran over some kind of debris in the road. About 20 minutes later the oil light illuminated on his dashboard. By the time he could pull over and stop his engine was smoking.
Joe had insurance on his truck and after looking at his smoking engine he called the insurance company. Several hours later a tow truck arrived and towed the truck to a large truck mechanic shop selected by the insurance company. Joe had collision coverage on his insurance policy that pays for all damage done to his truck by a collision with an object.
The mechanic truck shop examined the truck and downloaded the truck’s onboard black box recording. The mechanic shop determined the engine was ruined due to lack of oil. There was a small hole in the oil pan. It appeared that when the truck struck the debris in the road that punctured the oil pan, the oil then leaked out, and with no oil to the engine the engine was damaged and needed to be replaced. The cost to replace the engine was estimated to be $30,000.
The insurance company wanted their own opinion and sent one of their “field representatives” to examine the truck. The representative reviewed the black box information that showed the engine was damaged due to lack of oil. Guess what happened next? The insurance company said the small hole in the oil pan was not large enough for the oil to have leaked out in 20 minutes. The company said it would have taken over a month for the 9 gallons of oil in the oil pan to leak out of the hole. The company said the engine failure was due to a faulty oil pump, as the black box recorder showed the oil pump had stopped working and had “failed.” The insurance company said they did not owe any money to replace the engine because the damage was caused by a faulty oil pump and not by the hole in the oil pan from striking an object in the road. The company offered a full and final settlement of less than $600 to replace the oil pan.
Joe couldn’t believe it, but what was he to do. He did not believe his insurance company would treat him unfairly. He offered to accept $18,000, as he thought he could secure a used engine and do the labor himself and with a mechanic friend to install it. The insurance company replied their offer was to replace the oil pan and nothing else. The insurance company sent Joe a letter stating Joe’s collision coverage did not pay for damage caused by a mechanical failure due to a faulty oil pump. The insurance company stated the only available insurance to Joe was to replace the oil pan, and nothing more.
At that point, Joe and his wife called a couple of large attorney offices they had seen on TV. They told the intake people who answered the phones the facts of their claim. Both offices said they would not accept the case. Fortunately, Joe and his wife did not throw in the towel and give up. Instead they called me for a free consultation.
I reviewed the information Joe had and reviewed his insurance policy. The insurance company that told him his coverage was available only to replace the oil pan failed to mention that Joe’s policy also included language entitling Joe to money for his income loss while the truck was not operable. The policy limited that income loss coverage to $3,000. More importantly, I needed to know if the insurance adjuster had lied to Joe and Joe’s wife when they were told the damage was caused by a faulty oil pump and the hole was too small for the 9 gallons of oil to have leaked out in 20 minutes.
I requested copies of photographs taken by the insurance field representative to see what the hole looked like when the insurance company examined the oil pan. They refused to cooperate. I met with the mechanic shop and reviewed the black box material with the experts at that shop. They did not wish to get too involved, as the insurance company had sent the truck to them and they worked with that company frequently and did not wish to lose that business.
What I did confirm was that if the oil had leaked out of the hole in the oil pan that would have caused the oil pump to stop working as there was no oil to pump. That is one explanation why the black box recorder would have showed a failed oil pump. Whether the oil pump was actually faulty and whether the hole was large enough for the oil to leak out in 20 minutes were other questions that needed to be answered. We had the truck towed to another shop where Joe usually had the truck serviced.
I examined the oil pan that normally held 9 gallons of oil. I have posted a picture of the oil pan and the small hole. I examined the oil pump and met with the head mechanic where Joe had his truck serviced. The oil pump did not appear faulty or defective. I requested the insurance company pay for the replacement of Joe’s engine and to also pay Joe for all income lost due to the truck being down—as it was the insurance company’s fault the truck had not been timely repaired and back on the road. Joe was losing $2,000 a week in income. His truck was his livelihood. The insurance company said the offer to replace the oil pan was their final offer.
With Joe’s permission, I filed a lawsuit for Joe against the insurance company. The company hired a big Miami law firm to defend the lawsuit. The first papers I received from the Miami law firm was 20 plus pages claiming the lawsuit was frivolous and should be dismissed. It appeared the insurance company had decided to fight and pay their attorneys, rather than pay Joe what he was owed under his insurance policy. In cases where you have to sue your own motor vehicle insurance company on a collision coverage claim, if you win the case your insurance company owes your attorney fees and court costs. This allows someone like Joe to get an attorney who can put in the necessary time to fight the insurance company to obtain what’s fair.
We paid the court costs of filing the lawsuit, knowing that if we win the insurance company would be required to reimburse those court costs, as well as pay my attorney fees for all time I reasonably spend on the case. If the insurance company wins the case, then I would receive zero as my agreement with Joe was a “no recovery = no attorney fees” agreement. That was really the only way Joe could have afforded to have the case handled. So the case involved my assuming the risk I could prove the insurance company was wrong and that it owed Joe for an engine and for Joe’s income loss.
If Joe’s position was correct, the insurance company would-be required to pay his claim and reimburse the court costs and pay my attorney’s fees. If we lost, Joe would owe me nothing. It was a risk I took because I believed the insurance company was trying to cheat Joe and had lied to him.
After an hour long court hearing on the insurance company’s motions to dismiss the lawsuit, the judge ruled against the insurance company. That just opened the door for the continued battle to obtain for Joe what was fair. The insurance company sent us page after page of “discovery” that Joe was required to answer, with my help.
As we had the oil pan, I arranged with Joe our own test to determine how fast 9 gallons of oil would have leaked out of the Q-tip size hole. Using a large metal 10 gallon turkey fryer, we poured in 9 gallons of oil and heated it to 200 degrees. We then began to pour the oil from the turkey fryer container into the oil pan. We had a clock timing us. I videotaped the test. It took less than 23 minutes for all 9 gallons of oil to leak out. The insurance company had lied when they said it would take over a month for the oil to leak out of that hole.
In the meantime, I was attempting to schedule depositions of the insurance company representatives to question them under oath concerning their representations to Joe and his wife. They fought the taking of those depositions and they fought our request for written answers to pertinent questions. We had multiple hour long court hearings where the judge patiently listened to the legal arguments and ruled against the insurance company.
The company had not only lied when they said it would have taken over a month for the oil to leak out of the oil pan hole, they also lied about the oil pump being faulty. The mechanics at the first shop where the insurance company representative examined the truck told me the insurance company representative never even examined the oil pump.
We were back in court and the Miami lawyer requested the judge allow an examination of the engine, oil pump, and oil pan, by an expert hired by the Miami law firm and the insurance company. They made this request for two reasons. The first was because they now needed to try and prove the lies they told were not lies. The second reason was they hoped that we had not secured the engine, oil pump, and oil pan, because if we had secured them, then the insurance company could claim our actions prevented their examination and therefore our case should be dismissed. Of course we had secured everything for the examination.
The examination was scheduled for a Saturday morning at the shop where the engine and its parts were stored. I had requested the court allow my presence to videotape the examination. The judge agreed.
The mechanic expert hired by the Miami law firm and the insurance company flew to Orlando from Tallahassee. An attorney from the Miami law firm also flew to Orlando to attend the examination. I videotaped the expert examining the oil pump that the insurance company claimed was faulty and defective. The expert tested the oil pump in a bucket of oil we provided. It was obvious the oil pump was in working order.
The expert measured, examined, and photograph the small hole in the oil pan. We were prepared to allow the expert to pour 9 gallons of oil into the pan to see how long it would take the oil to leak out. I was ready to videotape the test. The expert met privately with the Miami attorney and it was decided by them they would not do that flow test. The examination concluded after about an hour.
At my request, the judge had ordered the Miami law firm to provide us with a copy of the expert’s report. The judge had also ordered I could take the depositions of the insurance company’s representatives, even though the Miami lawyer told the judge he was wrong and “was committing error.” The Miami lawyer had threatened to appeal the judge’s ruling.
Within a week of the insurance company’s examination of the oil pan, the Miami lawyer called and said the company was interested in negotiating a settlement.
By that time Joe had replaced the engine at a cost of $28,000 and he was back on the road. I discussed with Joe my recommendation that he not accept any settlement unless it included payment of the full cost of the engine repair and payment of ALL of Joe’s income loss for the time he was unable to get his truck on the road. The insurance company’s delay due to their false statements caused Joe to lose $41,000 in income loss. Joe agreed and that was the offer we made—pay the $28,000 it cost to replace the engine, plus the storage fees, plus $41,000 to reimburse Joe’s income loss. I told the Miami lawyer this offer was not up for negotiation.
The insurance company’s response was they would pay the engine replacement cost of $28,000, and the engine storage fees, but they would only agree to pay $3,000 towards income loss. The insurance company’s position was since Joe only purchased insurance for up to $3,000 in income loss, their $3,000 offer for income loss was the maximum they had to pay for Joe’s income loss.
Our position was Joe lost $41,000 in income because the insurance company acted in bad faith by making false statements that the engine failed due to a defective oil pump, and not due to the hole in the oil pan from striking something in the road. Our position was since it was the insurance company’s bad faith that caused Joe’s income loss of $41,000, Joe was entitled to recover that amount even though his policy had an income loss limit of $3,000.
We had a court order allowing me to take the insurance company representatives depositions to prove their misrepresentation of facts and their bad faith in the handling of Joe’s claim. Two days after we rejected the insurance company’s offer that limited the income loss to $3,000, the insurance company agreed to pay everything we requested, including issuing payment of $41,250 for all of Joe’s income loss for the months his truck was not on the road. Joe received a check for $72,967.65.
So yes, there are instances where insurance company adjusters do make stuff up to deny claims, including misrepresenting facts to claimants. In Joe’s case he did not give up and at the end of the day he was fully compensated for all of his losses. The insurance company could have settled for Joe’s $18,000 offer before Joe consulted with me. Instead, the insurance company paid almost $73,000 to Joe. The insurance company also paid my attorney fees, the court costs, and they also paid their attorneys and their expert’s fee.
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My father and mother taught me to always treat people the way you would want them you treat you. To put yourself in the other person’s shoes to understand the way they see things. To try to do your best at everything you do. To make as many friends as you can, because you never have too many.
My first job after law school was with the Public Defender’s office in Sanford and then in Orlando. I was in court every week the five years I was an assistant Public Defender. Some of the best trial lawyers get their start as assistant Public Defenders. You learn trial skills, effective communicating, and you develop your reputation in the legal community. The downside is as you become better and better as a Public Defender, you are called upon to represent those accused of more serious and heinous crimes…
Voted by peers as “Best of the Bar” in Insurance Law (Orlando Business Journal)
Voted by attorneys in Florida for recognition as a “Legal Elite” attorney in Civil Trial Law and Insurance Law (from Florida Trend Magazine).