The Impact of Insurance Companies on Personal Injury Lawsuits

Ever wonder who really has the most power in a personal injury lawsuit?

If you guessed the judge or the attorneys, you’d be wrong.

In reality, insurance companies dictate virtually every aspect of most personal injury claims. How much money will be paid (if any), when it will be paid, and in what form.

The problem? Insurance companies don’t have your best interests at heart. In fact, they have a direct financial incentive to pay out as little money as possible for every claim they handle.

The key to winning a personal injury lawsuit is understanding how insurance companies work. With this information, you can avoid the most common traps and fight for the compensation you deserve.

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How Insurance Companies Work Behind the Scenes

Insurance companies are for-profit businesses, and they will do whatever is legally possible to maximize their profits.

To put it simply, every dollar they don’t pay out to a victim or a victim’s family is another dollar going to the insurance company’s shareholders.

When a personal injury claim is filed, the insurance company’s employees (called “adjusters”) will jump into action. But their job is not to help injury victims receive fair compensation. It’s the opposite. They are tasked with protecting the company’s profits by paying out as little money as possible.

Insurance companies have built themselves into a trillion-dollar industry through these types of practices. In fact, if a Washington State personal injury attorney reviews your case, they can help determine if your insurer is acting in bad faith.

That’s all there is to it.

But where it gets really interesting is that the insurance company’s adjusters are trained, experienced professionals who deal with injury claims every day of the year. They know exactly what to say, and when to say it.

Victims of injuries, on the other hand, are typically going through this process for the first time in their lives.

This power imbalance is something insurance companies abuse at every opportunity.

Insurance Companies’ Secret Strategies

Lawyers use the term “Three D’s” to refer to the insurance industry’s three primary strategies to reduce injury payouts. They can delay, deny, and defend their decisions and minimize the company’s liability in court if necessary.

Delay

The insurance industry’s first strategy is often the longest. They will try to delay the claims process as much as possible in hopes that victims will grow desperate enough to accept a lowball offer just to move on.

The most common ways insurance companies delay injury payouts include:

Requesting the same paperwork over and over again
“Misplacing” documents a claimant has already submitted
Constantly transferring the claim to different adjusters
Taking weeks to return phone calls

As more and more time passes, the victim feels additional pressure. Some people even give up hope entirely.

Deny

If delaying a case is unsuccessful, the insurance company may try to deny a claim outright.

Maybe they argue that the accident wasn’t covered under the victim’s policy. Maybe they claim the injuries aren’t as bad as the victim said. There are a million different ways an insurance company can try to deny a claim, and in some cases, employees are even rewarded for denying the most claims.

Research from Nolo, though, shows that 70% of claimants received settlements when they pursued their claim. In other words, only 30% received nothing in return.

Defend

Insurance companies will defend their decisions in court if necessary.

They have teams of lawyers on retainer and billions of dollars in the bank. Most victims of injuries don’t have these resources, so the insurance company is betting that the victim will just give up and go away before the case ever sees a courtroom.

The truth is that this strategy works.

Roughly 95% of personal injury lawsuits settle before going to court.

The Advantages of Having an Attorney

The number one thing most people don’t realize about personal injury lawsuits.

Having an attorney changes the game for the insurance company.

Insurance adjusters know this too, which is why they typically start by encouraging injury victims not to hire an attorney. “It will only complicate things,” “you’ll have less money after paying attorney fees,” and “it will take a lot longer” are all common refrains from the insurance company’s side.

This is completely and totally false.

A study done by Nolo showed that victims with attorneys receive payouts almost three times higher than those who did not. After paying for legal representation, even those with a lawyer still came out way ahead.

The statistics are very clear-cut:

91% of claimants with a lawyer received a settlement, while only 51% without one did
51% of people who negotiated received a higher settlement, while only 27% of those who didn’t negotiated received one
Settlements were $30,700 higher on average for people who negotiated

The minute the insurance company’s adjusters see a lawyer in the picture, their behavior completely changes. Suddenly, those “misplaced” documents can be found. Suddenly, the phone calls get returned immediately. Suddenly, settlement offers come in much higher.

Insurance companies don’t like lawyers because they know how to fight back against all three of the D’s. Experienced attorneys are experts in insurance policies’ language and can push back on wrongful denials and other underhanded strategies. And most importantly, they are not afraid to take a case all the way to trial when necessary.

Practical Steps to Fight Insurance Companies

Dealing with an insurance company after suffering an injury can feel like a nightmare. But there are some specific, concrete steps you can take to even the playing field.

Document Everything

It’s important to keep track of every interaction you have with the insurance company. Write down the date, time, and name of every employee you speak with and every conversation you have. Keep copies of all the paperwork and other correspondence you receive.

This will all become important evidence if the insurance company is acting in bad faith.

Avoid Recorded Statements

Insurance company adjusters often try to get injury victims to give them a recorded statement right after the accident. They then use anything the claimant says during this statement to minimize or deny their claims down the road.

Politely decline to give a recorded statement until after you’ve spoken with an attorney.

Be Aware of Statute of Limitations

Each state has a specific time limit during which a victim can file a personal injury lawsuit. Sometimes, insurance companies will simply stall and wait for the victim to run out of time.

Don’t let this happen.

Seek Professional Help

Suing a major insurance company is an extremely difficult thing to do by yourself. Personal injury lawyers know how these companies work and have seen every tactic in the book. They are the experts, which means that they know how to push back and fight for your rights.

Most work on a contingency basis, so they only get paid if you win.

Wrap Up

Insurance companies have been refining their strategies for minimizing payouts in personal injury claims for decades now. They will delay, deny, and defend their decisions to protect billions in profits every year.

That doesn’t mean, however, that you have to take it sitting down.

Arming yourself with the right information is the first step to fighting back. You can turn the tide against an insurance company by documenting every interaction, avoiding some of the most common traps, and getting the right legal representation. And when that happens, you have a much better chance at a positive outcome.

Statistics don’t lie:

Claimants with a lawyer received 3x higher settlements
Negotiation leads to significantly higher payouts
Insurance companies will back down when lawyers are involved

Don’t let an insurance company take advantage of you during an already difficult time. With the right knowledge and representation, you can secure fair compensation in any personal injury lawsuit.

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