WHAT YOU SHOULD KNOW ABOUT YOUR INSURANCE AGENT, INSURANCE PREMIUMS, RATES AND CLAIMS, AND INSURANCE ADJUSTERS
A Special Report
In addition to knowing about the three common mistakes that you are most likely to make, I would be short-changing you if I did not cover other problems that you must know about.
YOUR INSURANCE AGENT
Your Insurance agent is probably a very nice person.
He or she makes their living by selling insurance coverages to you and people just like you; life insurance, homeowners insurance, car insurance and many other insurance coverages.
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Your insurance agent is paid on a commission basis. Simply, that means that he or she receives a percentage of the premiums that you pay to your insurance company. It only makes sense for your insurance agent to be nice so he/she can sell you as much insurance coverage as possible and collect as much commission as possible.
Your insurance agent not only gets paid a commission, but he or she also gets paid an extra amount based on what is known as the loss ratio for each year. Your agent’s loss ratio is determined by comparing the premiums that you pay to the insurance company and the money that the insurance company pays out for claims against you, for example, when you cause a wreck.
In the perfect world for your insurance agent, you vehicle insurance company would collect the premiums that you, the customer, agreed to pay and you, the insured, would never have anything happen which would cause a claim to be made against your insurance company for payment: no fires, no hail storms, no wrecks, no fires, or other claims.
Your insurance agent wants this perfect world of no claims is because he or she is going to get extra “loss ratio” bonus.
The more claims that are filed and/or paid on your insurance policy, the less bonus there is for your agent.
What this means is that, when you have a wreck claim which is covered by your insurance policy, your agent may or may not tell you about the benefits that are available to you that you have paid for because of his or her conflict of interest because of the loss ratio bonus.
Let me give you an example from my experience:
A young, married, working woman, with a husband and children, was injured in a car wreck. She and her husband came to see me, in part because of her injuries but primarily because they were having such a difficult time paying their everyday living expenses, since she was out of work, and that her medical bills from the wreck were piling up dramatically.
They brought with them a document “The Declarations Page” which showed the different insurance coverages that they had on their own vehicle. The Declarations Page showed that they had paid a separate premium for coverage to pay her medical bills from the wreck and to pay her wages lost while she was unable to work.
After we discussed her coverages, she was very upset and told me: “My insurance agent never said anything about that.” Their agent did not want them to collect the medical payment benefits and the lost income benefits because it could affect his or her bonus at the end of the year.
You see, your insurance agent—If you have these additional coverages that you paid for by separate premiums—will nearly always have a choice to make in explaining your vehicle insurance benefits. And this choice may have bad financial consequences for him or her.
In my experience since 1975, nobody understands the coverages they pay for on their vehicle(s).
If your agent tells you about what your vehicle insurance covers, then you will benefit by collecting them because you paid for those coverages. But, that may hurt his or her bonus.
If he or she does not tell you about the benefits that you are entitled to, then you do not know to ask for those benefits, and his or her bonus is increased.
Your agent may think the bonus is more important than you obtaining the benefits of your insurance policy.
In addition, in my experience, the insurance company that he/she works for, or sells for, may have specific rules which prohibit him or her from giving you the information that you need to claim these benefits.
The point is that you may not receive accurate and complete information, when you need it, from your insurance agent about your insurance benefits.
INSURANCE PREMIUMS, RATES AND CLAIMS
You should have a document from your car insurance company that lists your coverages. That is the Declaration Page. This document will break down into the different kinds of coverages that you have on your vehicle or vehicles. You should have your Declaration Page in your vehicle or at home. If not, you can obtain it from your agent.
The first item listed is always “liability” for personal injury and for property damage. Liability is a coverage which every vehicle is required by law to carry. It provides compensation if the driver of your vehicle is at fault and causes personal injury to some other person and/or to their vehicle or property.
Policies for newer vehicles usually then list “comprehensive” or “collision coverage” with or without a deductible. Then the declarations page will list other coverages such as medical pay coverage, income disability coverage, wrongful death benefit, uninsured motorist, underinsured motorist, rental car, emergency road service, towing, etc.
The important point about these different coverages is that your insurance company charges separately for them and you pay a separate premium for each one of these separate coverages.
Let’s suppose that your vehicle breaks down on the interstate and you have to have emergency road service and a towing bill and you have paid your own insurance company a premium to cover those charges.
Obviously, you should have your insurance company pay them. In other words, you paid for the coverage and your insurance company should pay what the towing company charges you.
In Arkansas, an insurance company cannot raise your rates because of a wreck that was not your fault.
Just above I discussed insurance agents. Your insurance agent is a nice person who sells you insurance. They make their living based on their success in persuading you to buy insurance from their company or from another company.
Now, let’s discuss insurance adjusters. They’re very different from agents. Their job is to close a file as cheaply as possible for you and to do it as quickly as possible.
Insurance companies are very simple to understand. They take money in as your premiums and they pay money out for salaries, buildings, advertising, utilities, etc. and for CLAIMS: Money in, money out.
Insurance companies spend billions of dollars every year to tell you how nice their sales agents are. And they are.
What they do not tell you when you make a claim is that their claims adjusters are not nice.
An insurance adjuster is usually bright, articulate, well educated, well trained, personable and capable. This has not always been like this. I started representing injured people in 1975. In those days there were a lot more jerk adjusters than now.
Adjusters work for an insurance company or as a third party for an insurance company. Their job is to close your claim as cheaply and quickly as possible.
They are not your friend.
They are usually not my friends. They know that my responsibility is to get you every dollar of compensation that you are legally entitled to receive. However, since 1982 I have never knowingly made a claim for a client that was not fully justified based on damages and the fault of another. Doing that I have gained friends who are adjusters.
Why You Shouldn’t Talk To An Adjuster Yourself
You should never attempt to resolve or settle a claim with an insurance adjuster by yourself for many reasons. The primary reason is that he or she knows exactly what they are doing and you don’t have a clue.
Remember, his or her job is to get you to settle your claim as cheaply and as quickly as possible. His or her loyalty is to their employer. He or she is not interested in what is fair.
The second reason is that the insurance adjuster settles claims based on company values which are not compatible with your values.
An adjuster is looking for weaknesses not virtues. If you are less educated, unemployed, elderly, a minority person, living in a manufactured home (trailer), then your claim is worth less to him or her than if you are well educated, employed, middle class, white or living in a brick home in suburbia.
When you communicate with an adjuster by yourself, you are making a serious mistake because your tone of voice, grammar, accent, choice of words, volume, etc., may provide him or her with information. The more information they have about you, the less valuable is your claim.
Even if you are well educated, rich, self-assured and live in a mansion, you still should not communicate with an adjuster. You may unknowingly have a trace of arrogance, suspiciousness, impatience or other slight flaw which can be exploited by the adjuster or an insurance defense attorney and which will reduce the value of your claim.
The third reason that you should never talk to an insurance adjuster is because it is extremely difficult, especially for men, both psychologically and emotionally, to to ask to be compensated for injuries. It is asking for help. Think about how hard it is for a man to stop and ask for directions!
The problem of not wanting to ask for help is within each one of us. Nearly all of us have family, friends, co-workers, members in our church, etc. who would be glad to help if they were only asked. The reluctance to ask for help prevents help.
There is something that is very powerful about having an attorney ask for compensation for your injuries.
The attorney/client relationship empowers the client to ask for compensation for injuries, and it empowers the attorney to demand and obtain help, i.e. compensation, for the clients’ injuries.