Auto Insurance Companies: Built To Disbelieve Customer Claims

Auto insurance companies are for-profit businesses that are incentivized to pay out as little as possible for claims. This means that they will often dispute claims, even if they are valid, to avoid losing money. Some of the most common reasons for claim denials include exceeding the policy limit, lacking the necessary coverage, and breaking the law. Insurance companies may also deny claims if they suspect fraud or if the policyholder failed to report the accident immediately or seek medical attention. In some cases, insurance companies may even go as far as to create their own law firms to defend themselves against claims.

Insurance companies are motivated by profit

Insurance companies will do their own investigations before paying the claims made by their customers. They do that in order to avoid insurance fraud or because they don't want to pay for losses if they don't have to.

Insurance companies will suffer a loss whenever they will have to pay for a claim. To avoid that, insurance companies will thoroughly investigate the claim to decide if they will pay for it. Insurance fraud is quite common and many people have tried to make money by asking for reimbursement after they deliberately damaged their cars.

Insurance companies collect money from premiums and invest the money in the stock market, real estate, and other investment vehicles to increase their profits. So, do insurance companies make more profit by paying insurance claims or by keeping the money in investment vehicles?

Insurance companies will do anything to keep their money in investment accounts to continue accruing interest on your money. Insurance companies only respond to punishment via profit-loss.

Insurance companies operate from a position of maximizing profits. So, maximizing profits requires holding your money as long as possible by denying, defending and delaying claims.

They will do their own investigations to avoid paying claims

Auto insurance companies will conduct their own investigations before paying out on customer claims to avoid insurance fraud and to minimise losses. Claims adjusters are the people who investigate insurance claims, and they will ask the policyholder to provide details about the incident. They will also request evidence such as police reports, eyewitness testimonials, medical reports, medical bills, proof of lost wages, and proof of damage to property. Based on the information gathered, the claims adjuster will decide if the claim is covered under the current insurance policy.

Insurance fraud is common, and many people have tried to profit by deliberately damaging their cars and then asking for reimbursement. Therefore, insurance companies will thoroughly investigate any claim to decide whether to pay out.

Drivers who file a claim should be aware that the claims adjuster will investigate any request to avoid paying more than is necessary and eliminate the risk of insurance fraud.

They will delay payment to accrue interest on your money

Insurance companies are known to delay payments to their customers for a variety of reasons, and one of the key reasons is to accrue interest on the money. When an insurance company delays payment, it continues to generate interest or returns on the money until the check is finally issued to the policyholder. This interest adds to the company's profits, but it comes at the expense of the customer who is rightfully owed the money.

This practice is often referred to as "insurance bad faith" and can have severe financial implications for the policyholder. While the insurance company benefits financially from the delay, the policyholder may face mounting financial pressures, such as the need to repair property damage, cover extra living expenses, or defend against a lawsuit. This may force the policyholder to accept an unfair settlement, as they are in a financially vulnerable position.

To justify the delay, insurance companies may employ various tactics, such as requesting unnecessary information or documents, failing to provide explanations for the delay, or falsely alleging crimes like fraud or arson. These tactics can make it challenging for policyholders to assert their rights and receive the timely and full payment they are owed.

In some cases, policyholders may need to seek legal assistance to resolve delayed payment issues. Experienced insurance attorneys can help navigate the complex claims process and protect the rights of the policyholder. By taking legal action, policyholders can hold insurance companies accountable for their unreasonable delays and seek fair compensation.

It is important for customers to be aware of their rights and to actively pursue their claims to ensure they receive the timely payment they are entitled to. By understanding the tactics insurance companies may employ, policyholders can be better equipped to challenge any unjustified delays and protect their financial interests.

They will deny liability until they get some information from their insured

When an insurance company denies liability, it means they do not accept responsibility for their insured's actions and believe they should not have to pay compensation. This is often a tactic to deter claimants from progressing with their claim or to encourage them to accept a low settlement offer.

In the context of auto insurance, when an insurance company denies liability, they are stating that they do not accept responsibility for their insured's actions in the accident and do not believe they should have to pay for any damages or injuries that resulted. This initial denial of liability does not always indicate the final outcome of the claim. It is common for insurance companies to deny liability until they have completed their investigation and gathered all the necessary information.

The investigation process allows insurance companies to assess the validity of the claim and determine if their insured is at fault. They will often send a claims adjuster to handle the claim, who will ask the policyholder to provide details about the incident and request supporting documentation, such as police reports, eyewitness testimonials, medical reports, and proof of property damage. Based on the information gathered, the claims adjuster will decide if the claim is covered under the current insurance policy.

It is important to note that insurance companies have a legal obligation to their policyholders, known as a "duty of good faith and fair dealing." This duty requires insurers to act fairly and honestly, provide timely and accessible communication, and promptly process claims. If an insurance company denies liability without a valid reason or conducts an unfair investigation, they may be acting in bad faith, which can result in legal consequences.

They will accuse you of fraud

Auto insurance companies will investigate claims before reimbursing policyholders to avoid insurance fraud and paying for losses if they don't have to. They will accuse you of fraud if they suspect your claim is false.

Insurance fraud is a significant problem in the United States, costing Americans at least $80 billion a year. While there are many common scams, fraudsters are also highly creative. For example, they may deliberately cause an accident and then fake an injury, or they may craft a counterfeit vehicle title for a non-existent luxury car, report it stolen and file a claim.

Insurance companies have various methods to detect fraud, including the use of artificial intelligence and private investigators. They will also hand the case to a special investigation unit if fraud is suspected. Here are some of the ways in which they will scrutinize your claim:

• They will analyze your claims history, looking for repeated claims or a pattern of suspicious losses.
• They will look for "suspicious loss indicators," such as a claimant who is unusually calm after submitting a large claim, or who adds insurance coverage shortly before submitting a claim.
• They will investigate your social media posts, which can reveal a lot about the validity of your claim.
• They will cross-check your claim against others in their database, looking for patterns such as multiple large claims going to the same address.
• They will use sophisticated computer systems to detect suspicious billing, such as inflated repair costs or duplicate charges.
• They will evaluate the credibility of any witnesses you provide.

If you are accused of fraud, you may face serious consequences, including fines or jail time, as well as increased insurance rates or discontinued coverage.

Frequently asked questions