Claims adjusters use a number of techniques to get quick settlements and give the insured less than he or she may be entitled to.
Following are a few of the most common ones.
This may not exactly be a dirty trick, but it may be less innocent than it sounds on the surface. Adjusters are paid to investigate claims and gather facts. One way they do this is by getting statements from all the parties involved in an accident, along with the statements of any witnesses. After getting all the available facts, the adjuster hopes to make an informed judgment about liability and decide whether to pay a claim, negotiate a compromise settlement, or to deny a claim based on no liability. The linchpin of the investigation is the statement.
Adjusters typically try to get either a signed statement or a recorded one. If they cannot get either, they will often try to obtain an interview.
A signed statement, as the term implies, involves the adjuster asking a series of questions and writing down the answers in the first-person, in the voice of the person being questioned. Insurance and adjusting companies have informational outlines for different types of statements. Adjusters are urged, however, to tailor and customize their questions and outlines to the needs of the individual case. The questions for a truck-car collision will differ in some marked respects from a statement pertaining to, say, a dog-bite claim under a homeowners’ policy.
During a signed statement, the adjuster will write down the information as fast as she can to capture all the answers made by the claimant. At the end, the adjuster will typically ask the claimant to read the statement and make any corrections. The claimant will also be asked to initial any corrections. If the process goes well, the adjuster will ask the claimant to write her name at the bottom of each page. At the end of the statement, the adjuster will often ask the claimant to write out something to the effect of, “I have read these ___ [number] pages and they are true.” and then sign.
The adjuster may sign at the bottom of each page as a “witness” or may get someone nearby to witness the claimant’s signature. The adjuster may or may not leave a copy of the statement with the claimant. Since most statements are written on two- or three-part carbon paper, this is not a difficult process. If the claimant does not request a copy of the statement, though, the adjuster may not provide one. After this point, it may be difficult to obtain a copy of the statement.
A recorded statement, as the term implies, is one where the adjuster records – with permission – the statement given by the claimant. The recorded statement may be taken by phone or in person. Often, the adjuster will use a small cassette recorder for this purpose. With many insurance and adjusting companies pushing for greater efficiencies and economies, recorded statements taken by telephone are often preferred by upper management. In the time it takes to get one signed statement, an adjuster might be able to get four or five recorded statements.
Signed statements require face-to-face meetings, so one must add travel time and expense into the efficiency equation. Recorded statements can be taken in person or – more frequently – by telephone. As a result, over the past twenty years signed statements have given way increasingly to recorded statements. Within the insurance claims industry, this has been met with some ambivalence. Some older adjusters rue the prevalence of recorded statements and think that the quality of claims work and investigations has plummeted with the emphasis on recorded statements and claims processing.
After taking a recorded statement, the adjuster will typically handwrite or dictate a summary of the statement based on memory or notes. Less frequently, the statement tape may go to a typist to transcribe the statement verbatim.
In many cases, adjusters will seek to have the claimant sign a medical authorization form. Such forms are very broadly drafted and give adjusters the ability to delve into the claimant’s complete medical history. This permits them to pry into pre-existing conditions and medical issues that may be unrelated to those at issue in a personal injury claim.
While claimants should be very cautious about signing such sweeping medical releases, many of them do so routinely. Claimants confronted with these forms are often hurt or anxious for some type of financial recovery from the adjuster. They want to be cooperative. They may feel that the more they cooperate with the adjuster, the better chance they have of getting a prompt payment and one that meets their financial expectations. Often they may not know any better.
Others may be sold on the purported convenience. Adjusters will usually insist (with some justification) that they will need copies of the medical reports and bills in order to evaluate and validate a bodily injury claim. The adjuster’s approach is often, “You can run around, trying to gather this information yourself, or you can sign this medical authorization and let me do the legwork for you.” Faced with this prospect, it seems like a good decision for an injured claimant to choose the more convenient option. This is seldom the case. Far from facilitating payment on a claim, a medical authorization form may be used against the unwitting claimant who naively thinks it will accelerate the payment process.
It is important to note that here is generally no legal requirement that a personal injury claimant sign a medical authorization in order to be entitled to recovery under a liability insurance policy. Insured policyholders are obliged to cooperate under a “cooperation clause,” which is embedded in the CONDITIONS section of most any insurance policy. Importantly, though, these CONDITIONS do not apply to third-party claimants with injury claims. Any adjuster who represents that a claimant must sign a medical authorization as a condition of receiving payment or settlement may be misrepresenting the law and the insurance policy.
As a claimant you should:
Adjusters usually want to prevent a personal injury attorney from being involved in a case. This is true because:
Adjusters are frequently judged and evaluated by how quickly they “turn over” their inventory of cases. Performance evaluations, eligibility for raises and promotions may hinge in part on an adjuster’s “turnover ratio.” Restaurants need to turn over tables in order to make money. Insurance companies need to “turn over” claim files cheaply and quickly in order to make money.
Swelling caseloads bring with them the need to hire additional claims staff. To the insurer, this is a fixed cost and a drag on earnings and profitability. An alternative is to outsource some of the excess caseload to outside independent adjusters. Since these firms typically bill on a T&E (time and expense) basis, though, this too represents an unwanted added cost for an insurance company.
Hence, adjusters are under pressures to turn claim files over rapidly and to keep their open “shelf life” as brief as possible. Having an attorney enter the picture by representing a claimant or insured is an anathema to such a goal. Claim adjusters much prefer to deal with unrepresented claimants.
As a result, adjusters may use various ploys designed to persuade claimants to not get an attorney. These might include variations on the following:
One major insurance company encountered legal and regulatory fallout with state insurance regulators for distributing a brochure to claimants addressing reasons why claimants did not need to hire attorneys.
Insurance adjusters typically will get to an injured person before the personal injury attorney. Often they will know about an accident or loss well before the attorney is engaged. As a result, the adjuster is out of the starting blocks quicker and may have a time advantage over the personal injury attorney in investigating a claim. Insurance companies and independent claim outfits put great stock in quick contact with injured persons. This is not entirely rooted in charity but is based on self-interest. Many companies have explicit, written service standards to which the adjusters are supposed to adhere. Many companies have a 24-hour rule: that is, the adjuster is required to contact the claimant within 24 hours of receiving a new claim assignment.
Other claim outfits have what they call a “sundown rule,” that is, the adjuster must contact the claimant before the sun goes down on the day that a new claim is reported. These rules are not adjuster dirty tricks. On the other hand, they may lay a foundation for adjusters to mislead claimants and subtly or not so subtly discourage claimants from seeking legal counsel.
Once a personal injury attorney is retained, the attorney will inform the client that all subsequent communication with the insurance company should go through the attorney and discourage communication between the claimant and the insurance adjuster. If the adjuster wants to take a statement or interview the client, it can be done at the attorney’s office under the attorney’s watchful eyes. The attorney will also ask the client about whether the insurance adjuster discouraged the person from seeking legal counsel. If so, the attorney can file a complaint with the insurance company, the adjusting outfit, and the state insurance commission.
Some insurance claim adjusters fancy themselves to be private investigators. Adjusters occasionally conduct something that they call an “activity check.” Another term for this is “sub rosa investigation” or a variant of an undercover investigation. This involves the adjuster going out to the neighborhood of the claimant and questioning neighbors about the claimant’s physical condition, purported disability, etc. The adjuster may ask neighbors questions such as,
By themselves, none of this may be either damning or admissible. If, however, the adjuster obtains information from neighbors that the injured person is physically active, a number of options may then open up. At this point, the adjuster may hire a private investigator as a way of bringing in heavier artillery. The feedback gleaned from an activity check might flash a “red light” on the adjuster’s dashboard.
To position the claim for a denial or to discredit the claim, though, the adjuster needs photographs or (better still) videotape of the claimant engaging in strenuous activity that would impeach or undermine a bodily injury claim. This takes time — often tedious hours spent hunched over in a hot surveillance van. Adjusters rarely have time for this, so they will usually retain a private surveillance firm for the job.
This is often a bluff. If the case is worth $20,000 today, it will likely still be worth $20,000 tomorrow or next week or next month. In fact, if the claims adjuster withdraws an offer, that may be an invitation to file suit. In that case, the insurance company must hire a defense attorney to defend the lawsuit. This will be an expensive process, often costing the insurer more in legal fees than the amount at issue in the disputed claim.
Thus, one tactic is to point out to the adjuster the additional expense that will come with sending the case into suit. Also point out that the file will now be open for a much longer time and elevate the adjuster’s caseload. Most adjuster caseloads are too high already, and one more open file in litigation is only going to add to the adjuster’s headaches. In fact, in many claim offices adjusters are evaluated in part on the basis of how briskly they turn over cases. Having a high pending caseload and a low turnover rate may compromise the adjuster’s performance evaluation, which can reduce pay raises and bonuses.
Another tack can be for the personal injury attorney to reply that, “In that case, all demands are hereby withdrawn.” Two can play the withdrawal game.
Over half of the insurance companies in the U.S. use Colossus for the supposed purpose of arriving at the supposed fair value of claims. Colossus is a computer program in which the adjuster inserts certain so-called relevant data and a report emerges predicting the settlement value of the case. Unfortunately, despite the carriers’ protestations to the contrary, the program is replete with flaws and biases. It is a virtual certainty that the values of claims are lowered and rarely, if ever, increased.
Simply put, the program hates soft tissue injuries. Injuries are “objective” or “subjective.” The soft tissue injury falls into the subjective category. And it is not coincidental that this category constitutes the majority of claims. On top of this built-in bias, the programmer can insert data in such a way to ensure an even worse result.
The adjuster is required to determine which medical expenses are necessary and/or reasonable. Chiropractors usually have the largest billings in soft tissue cases. Guess what type of bills is looked upon the most unfavorably by Colossus? In short, Colossus is designed for the insurance industry and not to benefit the victim.
Colossus considers a number of preliminary matters before looking at your individual case and injuries. Colossus considers whether the plaintiff’s attorneys have a record of taking their cases to court if they get an inferior offer or whether they usually just take the best offer given by the insurance company. It also considers the jurisdiction in which the claim arises.
Colossus ostensibly provides consistent estimates of injury costs. Insurance company claims adjusters have varying degrees of knowledge and experience, which can lead to varying judgments in the valuation of claims. Colossus performs a “calculation” to attribute “severity points” to claims. Injuries have an injury profile that assigns a base severity rating, which is the starting point in evaluation of the personal injury claim. After consideration of the personal injury attorneys involved and the venue, the system counts points and then converts them to a dollar value.
By using Colossus, insurance companies will try to decrease the value of a claim, and will not take into consideration the X-factors: stress, pain, inconvenience, loss of enjoyment of life, loss of consortium, inability to participate in the things that the plaintiff enjoys most, or any number of other things that a jury, and even judges will consider. Essentially, the problem with Colossus is that it cannot take the place of human beings’ understanding of human suffering. A computer just cannot get that.
Occasionally, this paradoxically helps claimants because Colossus and similar computerized systems that compute approximate values for personal injury cases incorrectly assume that a specific injury had a greater impact on the claimant than it really did. Sometimes an injured person is not greatly affected by a significant injury. This person does better with such an unfeeling system, but more likely, the opposite occurs. There is no computer value that can ascertain pain and suffering and how an injury really affected a person’s life. Accordingly, your accident attorney must adequately articulate why your case is different, or be prepared to file suit and begin the battle with the insurance company. Judges and juries listen to and consider many of the factors that Colossus ignores because it does not understand them. Juries make distinctions based upon whether or not they think the plaintiff is an honest, good person who has truly suffered as a result of injuries.
In fact, juries are in many ways the antithesis of Colossus. A jury might not award damages for a disc herniation because the terminology and the treating doctor’s explanation of the injury did not resonate with them. Nevertheless, that jury, comprised of human beings, will award money damages because the injury victim’s back hurts so much that she cannot hold her 18-month-old daughter without pain.