Articles Posted in Spotlight On the Insurance Industry

New York law requires all drivers to maintain policies of auto insurance with specific amounts of coverage. Since many drivers do not have the required insurance, state law also requires auto insurance policies to include uninsured motorist (UM) coverage. Underinsured motorist (UIM) coverage is optional under state law. In order for this system to work, the various parties must communicate with one another. An injured party must provide a notice of claim to the insurance carrier of the allegedly responsible party. If an insurance carrier disclaims or limits coverage, they must give notice to their policy holder and the injured person. These notices must be given within a “reasonable” amount of time. The precise meaning of “reasonable” is a matter of ongoing dispute.

Section 3420(f)(1) of the New York Insurance Law (NYIL) requires drivers to have maximum liability insurance coverage for a single auto accident in specific amounts. This provides compensation to others when the insured is at fault in an auto accident. State law also requires auto insurance policies to provide UM coverage in the same amounts. This applies when the insured suffers injuries caused by a driver who is not insured. UIM coverage applies when the at-fault driver’s insurance coverage is insufficient to cover the amount of damage they caused.

In order to make a UM or UIM claim, an injured person must notify their own insurance company of the accident, and of the other driver’s lack of coverage. The injured person must also provide evidence of the other driver’s fault. Before the injured party can notify their own insurer, however, they have to know that the at-fault party’s insurer is disclaiming or denying coverage. This assumes, of course, that the at-fault party has insurance coverage in the first place, and that they have notified their insurer of the claim. NYIL § 3420(d)(2) requires an insurer that is disclaiming or denying coverage to “give written notice as soon as is reasonably possible” to its insured and the injured party.
Continue reading › American Association of Justice recently released their report named “The Ten Worst Insurance Companies in America: How They Raise Premiums, Deny Claims, and Refuse Insurance To Those Who Need It Most.” In the report, Allstate is cited as the worst insurance company in the U.S. The methods by which Allstate obtained its “award” are essentially the tactics that this writer has been seeing more insurance companies adopt each year. That is, they deny claims, delay payment as much as possible, even in the most clear cut cases, and defend cases to trial that ought to be settled out of court. To give a classic example of Allstate and State Farm’s tactics, (State Farm was ranked as 4th worst, but in my opinion, they should be ranked a very close second behind Allstate) in a Brooklyn car accident case about four years ago, my client was in a car that was rear ended by a driver who was later convicted of DWI. He suffered a severely injured shoulder which required surgery, as well as 4 herniated discs. Allstate’s driver had a minimal insurance policy. Rather than settle the case, when their driver was 100% at fault and the injuries he caused were severe, Allstate delayed, fought, and defended an indefensible case, all in an effort to try to get our office to accept a slightly lower offer, which we ultimately refused to do and Allstate had to pay the policy anyway. I would love for someone to explain to me exactly how my client, or Allstate’s insured, were “in good hands with Allstate.”

Allstate began the strategy that resulted in its status as worst insurance company in the mid 1990’s when it hired the “efficiency” consulting firm McKinsey & Company, who specialize in redesigning product delivery systems for Fortune 100 companies to maximize profits. McKinsey created a plan for Allstate’s claims operations known as the “Claims Core Process Redesign” or simply CCPR. According to the author of “From Good Hands To Boxing Gloves”, David Berardinelli, CCPR has generated between $15 to $25 billion in excess profits for Allstate’s stockholders.

The ranking of the 10 worst insurance companies by the AAOJ is as follows: 1) Allstate, 2) Unum, 3) AIG, 4) State Farm, 5) Conseco, 6) WellPoint, 7) Farmers, 8) United Health, 9) Torchmark, and 10) Liberty Mutual.

Almost since the inception of New York’s No-Fault Law in 1974, New York automobile insurance companies, and particularly, Allstate, State Farm, and New York Mutual Insurance, to name a few, have for years, added insult to the injury of our clients’ car accident injuries by seeking to cut off benefits as soon as possible. This, despite the fact that their insureds have loyally paid their premiums for years, and then when they need to be “In Good Hands”, instead they get a letter informing them that they are not covered for their medical treatment as a result of the accident.

The way the system works is this. When you are in a New York automobile accident, you begin to treat with an orthopedist, neurologist, chiropractor or physical therapist for your injuries. Assuming you do not have a fracture, which automatically makes you eligible for no-fault benefits as meeting the “No-Fault Threshold“, the insurance companies, sometimes as soon as two weeks after the accident, will send you to their orthopedists, neurologists, or chiropractors, who routinely and without exception will find that there is no “serious injury“, (serious injury being the legal standard you must meet to be eligible for no-fault benefits) and that no further treatment is required. The reason the insurance companies schedule these so called “IME’s” (meaning Independent Medical Examinations” despite the fact that there is absolutely nothing “independent” about them), is that they know that another way to substantiate a serious injury is through 90 days of continuous treatment within the first 180 days after an accident.

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Joe, a 32 year old Westchester County resident, is driving his 2008 Lexus to meet friends in New York City. On his way south on the F.D.R. drive, he is in a serious car accident with a New York City taxicab with a minimal liability insurance policy. Joe is taken to the hospital with serious back injuries, and ultimately is diagnosed with several herniated discs requiring an operation. Although the taxi company has offered their entire policy, Joe’s injuries are in all likelihood permanent, and even with his own no-fault insurance company paying for the surgery, how can Joe be fully compensated for his injuries in this scenario?

Underinsurance is defined as insurance coverage which protects the driver of a car who is injured by the negligent driver of a car which has minimal insurance coverage, such as a $25,000.00 policy. $25,000.00 is now the minimum required insurance coverage in New York State. Underinsurance coverage allows the insured driver to proceed to recover additional compensation against his or her own insurance company after he or she has collected the policy limits of the negligent driver’s car. The main proviso is that the wrongdoer vehicle must have a smaller amount of insurance coverage than the insured who wishes to collect against his or her own underinsurance coverage.

Underinsurance is a vitally important provision of automobile insurance coverage in New York, and it is shocking how few of our clients actually purchase this coverage when they buy a car. In New York, for only a few hundred dollars a year, coverage of up $500,000 in underinsurance can be purchased to protect against the exact scenario Joe finds himself in. The way it works is this. If the wrongdoer vehicle has a minimal insurance policy-i.e.- $25,000, and your injuries far exceed this amount, the case is settled with the negligent party for their policy limits. With notification of the accident promptly to your own insurance company and their permission to enter this initial settlement, we then proceed to commence a claim against your own insurance company under the underinsurance provision of your policy for the maximum amount of this coverage. This would be reduced by a set off of the amount you already received from the negligent driver’s company. Thus, for example, if there is a settlement of $25,000, and you have $500,000 in underinsurance coverage, there is potentially $475,000.00 in underinsurance available to you to ensure that your injuries are fully compensated.

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For the last six decades, insurance companies have enjoyed immunity from federal anti-trust investigation and prosecution. On February 15th of this year, Senator Leahy (D. Vermont) announced a bipartisan bill that would give the Department of Justice and the Federal Trade Commission the authority to apply antitrust laws to anti-competitive behavior by insurance companies. The insurance industry and its practices have come under serious scrutiny along the Gulf Coast in the wake of Hurricanes Katrina and Rita, said Leahy, who has raised concerns that insurers have been denying claims and delaying payouts to residents along the Gulf Coast instead of honoring their contractual commitments to their customers and helping rebuild that region.

The concern of our legislators in introducing this bill is that by allowing the insurance industry to avoid the scrutiny of anti-trust regulation, this has led to price fixing, agreements not to pay, and market allocations. Americans rely on insurance, and they have the right to be confident that the cost of their insurance, and the decisions by their insurance carriers about which claims will be paid, reflect competitive market conditions, and not private agreements among major insurance companies to deny groups of claims.

Senator Trent Lott, not normally associated with issues such as consumer protection, noted: “One thing I learned coming out of Katrina is that the insurance industry is not subject to antitrust laws,” Senator Lott said. “I’ve looked at the history, and there’s no explanation for why that is – for why antitrust and price fixing in this industry are not covered by the federal government. In this regard, two of the area’s biggest home insurers – Allstate and State Farm – are moving out and abandoning the area. They are not moving out because the companies have hit on hard times — State Farm profits increased 65% in 2006 with earnings of $5.3 billion and Allstate’s 2006 profits rose to a record $5 billion, nearly tripling its profits from the year before.

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When clients are injured in various types of accidents in New York, including motor vehicle, slip/trip and falls, and other accidents due to unsafe conditions, they are invariably required to attend examinations known in the legal community as “IME’S.” Simply put, defense attorneys and insurance companies retain doctors who are well known in the community as virtually never finding any permanent injury, disability or medical condition. Armed with reports by these so called “independent” medical examiners, who are more than happy to charge several thousand dollars to testify to their findings at trial, insurance carriers are emboldened to hold firm with either “no pay” or minimal offers of settlement, in the hope that plaintiff attorneys will not want to expend the time and money to litigate cases through trial–thus, cases settle cheaply.

Our firm has a list of instructions that we provide to our clients prior to these examinations, which we have found to be invaluable in cross examining insurance company doctors at trial. First, in many instances, the insurance company doctor’s staff will request that the client fill out a complete questionnaire, as if your client was a patient. We instruct our clients that other than basic information such as name, age, and medical complaints, they should refuse to complete these questionnaires, which often are used by the insurance company doctors to attempt to obtain inconsistent facts or information not relevant to the case.

Also of great importance, these doctors frequently attempt to conduct a mini-deposition, with such questions as “Where were you looking just before the light changed?” or “Did you see the ice before you fell?”. These deposition type questions have nothing to do with the medical examinations, and are clearly asked by the doctors for the sole purpose of assisting the defense attorney in litigating the case. Clients must be strongly cautioned that the only proper inquiry by the doctor during the history portion of the visit is as to the injuries, treatment, medications, pain, disability, and prior medical history.

Several insurance companies, and in particular, Allstate Insurance Company (“The Good Hands People”) and State Farm Insurance Company (“The Good Neighbors”) use a computer system known as “Colossus” to evaluate their personal injury claims. If Colossus decides that your case has little or no merit, no claims adjuster with the benefit of a police report, medical records, and hospital records can overrule or modify that decision.

Instead, Colossus considers a number of preliminary matters before looking at your individual case and injuries, including performing a “calculation” to attribute “severity points” to claims. As described by Ron Miller at, Colossus assigns a base severity rating, which is the starting point in the personal injury claim evaluation. Additionally, Colossus will evaluate the experience of the attorneys involved in the case and the venue of the action, After consideration of these factors, the system counts up the points and converts them to a dollar value.

By using Colossus, insurance companies try to reduce the value of your case, and won’t take into consideration factors such as the pain of an individual injury, loss of enjoyment of life, the effect on marital or family relationships, or the inability to perform activities of daily living.