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The dirty little secret insurance companies don’t want you to know

Most of us are good citizens and carry liability insurance to cover us in the event of an accident. Some people buy minimal liability insurance and others buy more.

When you purchase this insurance, you do so not only to comply with the law, but also to protect you and your property in the event that you cause a car, motorcycle or other motor vehicle accident.

Now suppose you have an accident for which you are responsible; you declare the accident to your insurer; you think your insurance company will cover you according to your insurance policy, right? WRONG!

If you read the fine print of your insurance policy, you’ll notice a bunch of terms that most non-lawyers wouldn’t understand. The gist of plain english language is that by agreeing to the insurance policy you are agreeing to cooperate with the insurance company if they decide to take legal action, and the insurance company is the one who decides whether a case will be settled, not you.

Insurance companies are there to make tons of money and pay as little as possible. Since the advent of legally required insurance coverage (Proposition 213 in California), insurance companies have become very cavalier because their coffers are full of your money.

Instead of settling well-founded claims, they force claims to be taken to court in an effort to prevent personal injury lawyers from obtaining just recovery for their clients. They know full well that personal injury lawyers don’t have as much money to litigate as they do, so their scheme is to starve the personal injury lawyers and ultimately make it harder for injured people in accidents to get a recovery. In the end, it’s consumers and people injured in accidents who get hurt, while big business makes more profit at your expense.

Even people who cause accidents and have proper liability insurance to cover the claim are victimized by insurance companies.

Insurance companies are experts in deception. With your money, insurance companies pay politicians and run ads in the media that accuse personal injury lawyers of raising insurance rates. What they don’t say is that the backlog in the courts is due to insurance companies not settling claims as they should in the first place.

Now back to the example of you causing an accident. If the insurance company is unreasonable and refuses to settle a case at or below the policy limits, then you will be dragged through the court system. You may have to respond to discovery, appear for depositions, and even take time off to go to trial. This is a long and arduous process that you never thought you would have to deal with when you purchased liability insurance. Surprise!

If you lose at trial, the insurance company will in most cases pay the judgment, but guess what; YOU WILL HAVE A JUDGMENT AGAINST YOU ON YOUR CREDIT REPORT, and in the court file! Thanks to your insurance company, your credit has just been damaged through no fault of your own.

Is it right? I submit to you that no. You paid for insurance; the insurance company could have settled the case for you within the limits of your policy; instead, they decided to take legal action in an attempt to minimize what they have to pay so that their profits remain high. They did this without regard to your credit report, or your name appearing on the public record as having a judgment against you.

Many insurance companies have in-house attorneys; some use outside lawyers. These lawyers are supposed to have a duty to you to do what is in your best interest. The reality is that they are doing what is in the best interest of the insurance company. This is the ultimate conflict of interest. Ethically, the lawyer the insurance company uses to represent you has a duty to you, not the insurance company. The reality is that the lawyer receives his marching orders from the insurance companies.

The worst example is the recent Hurricane Katrina disaster. Have you read about all the poor people who get tricked because they aren’t covered by their insurance companies for the insurance they paid for?

It’s time for America and consumers to wake up and smell the roses. It’s not the prosecutors who are the problem; it’s a big company that wants to fuck the little guy so he can get more profit at your expense. Some have made it a political issue. I’ve even heard President Bush talk about tort reform and blaming prosecutors for the country’s health problems.

Whenever you are here in tort reform, remember one thing; you are about to be screwed! Whenever your right to claim damages in court is violated, you will be the victim, while big business will rake the mula!

By Norman Gregory Fernandez, Esq., © 2007

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