Is an Insurance Company Offering Less than You Deserve?

Insurance is one of the most unwelcome regular expenses. You may feel like you’re just throwing money away, year after year, until one day, you find you actually need it.

It seems straightforward: After an accident, you file your insurance claim, and your insurer pays you for you losses. But that’s often not what happens. Insurance companies, like all businesses, are interested in profits, so they may try to offer you less than what you deserve. The reasons insurers commonly give for short-changing their customers include:

Diminished value – Insurers may say that your car is worthless if it’s been involved in an accident. For example, if your car was worth $11,000 before an accident, and you paid $1,000 in repairs, the insurer may argue your car is now only worth $10,500 and, therefore, you are entitled to reimbursement of only $500 for repairs.

Betterments – “Betterment” means that when an auto body shop repaired your vehicle, they improved upon a part, instead of using a part of similar value. So, for example, perhaps both headlamps were ruined in the crash, and those headlamps have been discontinued or were unavailable. The shop used “better,” newer headlamps to repair your vehicle, so the insurer refuses to pay for the difference in value between the previous headlamps and the replacements.

Your degree of fault – Whether it’s your own insurer or the other driver’s insurer, a company may accuse you of being at fault, partially or wholly, thereby making you ineligible for full reimbursement.

Your damages exceed the policy maximums – This is a legitimate reason insurers may pay you less than your actual losses: They will not pay more than policy maximums. If you currently have a car loan, your property damage coverage should be enough to cover your vehicle in the event of a total loss (although, sometimes it’s not enough to pay off what you owe on your car; many cars lose value faster than loan balances decline). Policy maximums often come into play with medical costs. If your medical costs exceed policy limits, you might be able to use health insurance to cover the difference.

Poor communication – Insurers may say they were unable to reach you, or you failed to fulfill an obligation by a certain deadline and therefore nullified your coverage.

Fraud – There are people who attempt to defraud insurance companies by faking the theft of their cars, staging accidents, or misrepresenting the severity of their own injuries. While insurance fraud is uncommon, insurance companies nonetheless devote considerable effort to detecting any indication of fraud. In cases of personal injury, insurers or agents working on their behalf may monitor the activities of the injured party. Here’s how this situation can be disastrous for the insured party:

• A person suffers a serious back injury in a crash and is more or less immobilized. During a brief pain-free moment, the insured is able to walk outside to check the mailbox. At the same time, a private investigator, working on behalf of the insurer, is watching and snaps a photo. The insurer then uses that photo as evidence that the injured party has exaggerated claims of injury and is therefore attempting to perpetrate fraud.

Insurance fraud is a serious accusation that could come with criminal charges, so if you ever find yourself in that situation, talk to a lawyer as soon as possible.

Watch What You Say

Insurance companies listen carefully when you speak – if you give any indication at all that you were at fault for a crash, that almost definitely will result in your not getting the payout you think you deserve. So choose your words carefully.