(Newswire.net — October 1, 2019) — As the owner of a vehicle, you’re required by state law to carry a certain amount of car insurance. Others drivers are as well. But if you find yourself involved in a serious accident with significant injuries and damages, you may be surprised to find that these same insurance companies – the ones customers pay for coverage – are hesitant to shell out money. Instead, many insurance adjustors will attempt to manipulate car accident victims and lower the payout amount.
The Economics of Insurance
Car insurance companies are huge profit generating machines. They’re in the business of betting on risk and, in most cases, they’re pretty good at what they do. But contrary to popular belief, these companies don’t make the majority of their money on premium payments. Instead, they make their money from investment income.
When a client pays their insurance premium, the company takes the majority of the premium and pours it into stocks, bonds, mutual funds, and CDs to increase their revenues. They even loan out money and charge interest to other clients.
“Insurance companies have an out, too, if their investments go south – they just hike the price of their premiums and pass the losses on to customers, in the form of higher policy costs,” former Wall Street bond trader Brian O’Connell writes. “It’s no wonder that Warren Buffet, the Sage of Omaha, invested so heavily in the insurance sector, buying Geico and opening its own insurance firm, Berkshire Hathaway Reinsurance Group.”
The business model is flawless – except for one little hitch: Those pesky payouts they have to pay to their clients when they’re injured in car accidents. When a client is injured and seeks compensation, the insurance company will do whatever they can to reduce the amount they pay (which keeps more money plugged into investments). They see claims as threats to profitability and will do whatever it takes to preserve the bottom line.
4 Tips to Avoid Being Manipulated
If you’ve been hurt in a car wreck, it’s important that you don’t get victimized twice. Here are some tips to help you avoid being manipulated by the insurance company:
1. Don’t Talk to the Insurance Company
Salvi Schostok & Pritchard give all of their clients the same advice: “Do not speak with the insurance company unless you have first talked with an attorney. You do not want to say or sign anything that will cost you the chance to obtain a just recovery for your losses after a car crash.”
Insurance companies salivate at the thought of talking to an injury victim who hasn’t already partnered with an attorney. It allows them to work their magic and get the victim to say something on the record. Don’t make this mistake!
2. Hire a Car Accident Attorney
If you’re not supposed to talk to the insurance company without first speaking with a lawyer, this means you need to hire a car accident attorney as soon as possible.
When looking for a car accident attorney, try to find someone who specializes in auto accidents and personal injuries. This will ensure you get access to the experience and skill that’s needed to properly negotiate with insurance adjustors.
3. Don’t Take Medical Advice From the Insurance Company
Insurance companies aren’t allowed to give you medical advice, but they’ll often do so in an indirect fashion by telling you they won’t cover certain treatments. Rather than straight-up refuse to pay it, they’ll deem the treatment “unnecessary.” But don’t let these tactics scare you off. If your doctor tells you a treatment or procedures is necessary, then it’s necessary. Any insurance adjustor that tries to usurp a medical doctor is just asking for trouble. Your lawyer will handle this for you.
4. Get Everything in Writing
As a general rule of thumb, assume that nothing is official unless it’s in writing. If you and your attorney negotiate a settlement offer to $10,000 and are comfortable with the figure, don’t just hang up the phone and high-five each other. Until you get a written statement, the insurance company can suddenly decide to turn $10,000 into $4,000. Get it in writing!
Gain the Upper Hand
Car insurance settlement negotiations are all about leverage. The person with the most leverage is generally the one who comes out on top. In light of this, let your lawyer handle your case for you. Not only does this increase your chances of obtaining a favorable outcome, but it also gives you the ability to focus on reaching a full recovery.