CNN Uncovers Auto Insurers Unfair Personal Injury and Property Damage Claims Practices and Bad Faith

Scott Smith

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An article on CNN.com determined "[I]f you are injured in a minor car crash, chances are good that you will be in the fight of your life to get the insurance company to pay all the medical costs you incur - - even if the accident was no fault of your own." (CNN.com, Auto Insurers Play Hardball in Minor-Crash Claims by Drew Griffin and Kathleen Johnston, February 9, 2007)

CNN conducted an eighteen month investigation into minor impact automobile crashes throughout the United States. CNN defined small impact soft tissue injury crashes as those collisions where there is little property damage and the individuals who suffered injury involved muscles, ligaments and tendons usually not detected from a normal x-ray. CNN has uncovered what the legal profession has known for years; that is, increased profits of insurance companies at the expense of injured persons.

This unfair practice is lead by the two largest auto insurance companies in the nation, Allstate and State Farm Mutual Automobile Insurance Company. According to CNN, the companies have adopted a take it or leave it strategy. If the injured party does not take the minor offer to settle a personal injury case, insurance companies employ their attorneys to drag the injured party through the court system making it expensive and difficult to recover compensation. CNN categorizes this tactic as "institutionalized bad faith". Attorneys throughout the country have known of this tactic for years.

This practice came about through a long series of marketing strategies designed to impugn the credibility of attorneys and their injured clients. Consequently, the political system was affected. With knowledge the political system and candidates for local, state and national office thrive on contributions, the insurance companies stepped up their contribution efforts. By way of example only, insurance companies contributed over $5,000,000.00 to President Bush's campaign for election in 2000 and re-election in 2004. In return, President Bush continually bashed attorneys who represent the injured and has repeatedly called for new laws that would diminish the rights of the wrongfully injured. The same process has occurred at the state and local level where insurance companies contribute mightily to those running for the legislative and judicial branches of government. Insurance companies pushed for and passed "tort reform" laws that severely curtailed an injured persons right to recover fully for their losses from auto collisions and medical errors.

CNN reviewed more then 6,000 company documents and court records, interviewed dozens of people including former insurance company insiders and came up with one clear insurance claims rule: if you challenge the offer of an insurance company even though it is minimal and does not even cover your out of pocket expenses, you are left with one option; the Court system where you will be dragged through months or years of litigation. It is from this deluge of forced lawsuit filings the insurance companies and legislators spewed propaganda that trial lawyers were clogging the courts with so called frivolous lawsuits. Their motivation was simple, change the system to discourage claims thereby reducing recovery by the wrongfully injured that in turn increases profits. A former Allstate attorney testified the strategy is to make fighting the insurance company "So expensive and so time consuming that lawyers would start refusing to help clients". This has proven successful throughout the nation fostered by laws created to make it more difficult and expensive to recover for injuries and losses from a car crash or medical negligence that was not the injured party's fault to begin with.

It is not uncommon for minor property damage collisions to result in serious personal injuries. Often insurance defense attorneys wrongfully lead jurors to believe no one can be injured in an auto collision unless the car has been substantially damaged or totaled. However, it is an undisputed medical and biomechanical fact a person can suffer serious injury from minimal property damage auto collisions the same as one can walk away without a scratch when the vehicles are totaled. In other words, there is no direct correlation between the severity of an injury and the amount of property damage sustained in an automobile collision.

As usual, the motivation behind the insurance company's tactics is greed. The strategy employed by Allstate and State Farm as testified to by former employees of the companies in the CNN investigation relies on the three Ds: "denying a claim, delaying settlement of the claim and defending against the claim in court". As one would expect, Allstate and State Farm representatives refused requests for interviews concerning their practice for the CNN article. However, simply reviewing Allstate and State Farm's public profit and loss statements over the same time these unfair practices have been instituted speaks volumes to their position.