Insurance is supposed to relieve the financial hardships of getting into a car crash for everyday people. However, many people who have had the unfortunate experience of getting into a car crash can probably tell you a horror story or two about making insurance claims and negotiating with insurance companies.
Allstate has earned the reputation of being particularly difficult to deal with regarding personal injury and property damage claims arising from car crashes. Not only does Allstate make it difficult for the victims in car crashes, they make the claims process inconvenient, frustrating and difficult for their own insureds who cause car crashes.
A report from the American Association for Justice in 2008 listed Allstate as “the worst insurance company in America,” citing practices and policies such as rewarding adjusters for keeping claim payments low, even if they accomplished it through deceitful tactics. Furthermore, a recent news report indicated that Allstate directs claimants to automobile repair shops that provide substandard repair work that would not pass industry standards for vehicle safety.
When it comes to third party claims, insurance companies have little incentive to engage in fair, good-faith settlement practices. Typically a victim of a car crash will have to file a lawsuit before they get any reasonable compensation.
Automobile Liability Insurance
Insurance coverage can be divided into two categories: first-party and third-party insurance coverage. First-party coverage involves claims where the insurance company pays benefits to cover losses sustained by a person insured under the policy. A good example of first-party coverage is property loss under a homeowner’s policy. The policyholder usually files a claim with their insurance company for benefits to cover the cost of repairing or replacing their damaged home. Simply put, a first-party claim is when a person brings a claim against their own insurance company. There are typically more protections for insured’s bringing claims against their own insurance companies since they have a contractual relationship. There are Texas laws to protect insureds from Unfair Settlement Practices by their own insurance Company.
Third-party coverage—also known as “liability coverage”—involves claims where the insurance company pays benefits to cover losses sustained by a third party for which an insured is liable to pay. For example, if a policyholder negligently rear-ended another driver’s car and injured them, the insurance company is liable for defending and covering the policyholder against any legal action brought by the the injured driver (“third party”).
For the most part, insurance companies primarily owe certain legal and contractual duties to persons insured under their policies. When it comes to liability insurance, insurance companies owe a duty to defend policyholders against third-party claims and to cover damages for which the policyholder is liable to pay the third. However, Allstate takes it a step to far. Allstate not ony drags the insurance claims process out frustrating the injured driver, but Allstate needlessly drags their own insureds through the process when in many circumstances Allstate should have paid the claim before a lawsuit is filed.
In all lawsuits, the defendant (“At fault driver”) has an interest in minimizing their liability for the plaintiff’s (“Injured driver”) claimed injuries. Under third party insurance coverage, the insurance company, like Allstate, has an interest in minimizing what they owe third-parties in damages to save money, typically needlessly inconveniencing their own insureds.
Unfair Claims Settlement Practices
A third-party claimant who was lowballed by an insurance company has the right to sue the negligent driver (“third party”) but cannot directly sue the negligent driver’s insurance carrier. This results in both the injured driver and negligent driver having to resolve the dispute in a lawsuit. Insurance companies such as Allstate are typically well aware of the risks associated with making low settlement offers to injured third parties or denying them altogether. After being confronted with an offensively low settlement offer or denial from an insurance company, third-party claimants have only two choices: (1) walk away with what the negligent driver’s insurance company offered, if anything at all; or (2) take their case to court by suing the negligent driver.
However, trying a case in court can be expensive and time-consuming. For many people, they neither have the financial resources or time and patience to continue litigating their claims in court. Insurance companies like Allstate understand and rely on this fact to bully injured third parties into taking low settlement offers often to the inconvneince of their own insureds.
Because insurance companies are incentivized to lowball injured third-party claimants and have the resources to strong-arm them in litigation, third-party claimants are at a substantial disadvantage.
Consult Farah Law for Comprehensive Legal Representation
If you’ve been injured as a result of another person’s negligence, you are entitled to recover damages as compensation for the injuries you sustained as a result. At Farah Law, our attorneys will zealously advocate for your right to receive a legal remedy for your injuries. We can guide you through the negotiation and litigation process and protect you from unfair and bad-faith insurance practices.
Call Farah Law at (888) 481-9359 or contact us online to schedule a free consultation about your case. We have offices located in Texas and New Mexico.