Fair dealing with insurance companies.

hand-819279_1280Fair dealing with insurance companies.

One of the more frequent topics I find myself involved with as a civil litigator is not just the actions or inactions that cause an accident, but the actions of an insurance company and the claims representatives who handle injury claims.

It might seem obvious, but the less an insurance company has to pay to claimants, the more profit it has. As someone who pays insurance premiums, I am sympathetic to the argument that the less claims made against my policy (or policies in general) the less my insurance is going to cost. But is that really true? Do insurance companies pass on the savings to insureds? What do insurance companies say to their shareholders about this?

In a letter dated February 25, 2012, to Berkshire Hataway shareholders (of which GEICO group of insurance companies is a major asset) Chairman Warren Buffet advised:

 Our insurance companies continue their delivery of costless capital that funds a myriad of other opportunities. This business produces “float” – money that doesn’t belong to us, but that we get to invest for Berkshire’s Benefit. And if we pay out less in losses and expenses than we receive in premiums, we additionally earn underwriting profit, meaning the float costs us less than nothing. Though we are sure to have underwriting losses from time to time, we’ve now had nine consecutive years of underwriting profits, totaling $17 billion. Over the same nine years our float increased from $41 billion to its current record of $70 billion. Insurance has been good to us.

As my Dad used to say when there was not much to be said; “welp, there ya go.”

Now don’t get me wrong, a business should be able to make a profit. But I don’t think the average American let alone just the average person on this planet really has an idea of how much $17 billion is. Lets put it this way. If you just had one year of the 9 year profit boom or, about $2 billion ($2,000,000,000.00); you could spend a million dollars every day for five and a half years.

Here comes the obligatory buy me a boat reference

Well, with all that money, you would hope that when you have a claim they will treat you fairly, right? You might want to read the Sherrill v. Farmers case and then tell me if you still believe that. In case you want the TL:DR version ( that’s shorthand for too long didn’t read for non millenials) Sherrill, a former Farmers Insurance adjuster alleged she was fired because she didn’t follow Farmers policies including:


  1. Contacting claimants within 24-48 hours of an accident and then making in person contact.
  2. Requiring Adjusters to settle a certain percentage of bodily injury claims within 60 days for $1,500 or less.


The New Mexico Court of Appeals said whether these Farmers procedures are against public policy is a question for a jury and as of this post, this case is still pending.


You might be wondering, “what is wrong with contacting a claimant within 24 hours?” Well, what if they are in the hospital? What if they are still in pain? What if they need money badly due to medical bills and don’t know their rights? The strange thing is, the New Mexico legislature thought of those questions too and actually prohibits taking statements or negotiating settlements when a person who has been injured and under the care of a person licensed to practice the healing arts within 15 days of the accident.   Check out the statute yourself https://law.justia.com/codes/new-mexico/2006/nmrc/jd_41-1-1-ee21.html

But nonetheless, you might get a call within 24-48 hours from the date of your accident wanting to know what happened because an adjuster’s job may depend on it.

So, if your own insurance company isn’t going to look out for you when you’re hurt, who is? That’s why there are personal injury attorneys. Most personal injury attorney’s work on a contingency fee basis. What a nice dynamic. Unlike insurance, which the less they pay you the more they get; generally the more you are compensated, the more I am compensated. I truly hope you never need an attorney. I will find another line of work when no one needs attorneys. But until the financial incentive for insurance companies sticking it to claimants, including their own insureds, is removed, I’ll be holding their feet to the fire.

Don't fear the deposition

One of the best truth seeking tools in a civil case is called the deposition.  If you are about to be deposed or maybe you are conducting a deposition for the first time, I think Arnold Schwarzenegger  summed it up best in the following clip.

That’s right.  An attorney gets to ask questions of a deponent (the person giving the testimony) and they have to be answered (generally).

No consulting with your attorney before answering, no running to the bathroom, no responding “well whats that got to do with anything?”.  Your attorney can object to the form of the question or foundation, but generally can’t instruct you as to why they have objected.  This is what is known as a ‘speaking objection’.  While many attorneys do use speaking objections, it is not permitted by the rules.

The main time your attorney can object and instruct you not to answer is to protect privileged or confidential information.  For example, asking what a deponent and their attorney talked about would reveal protected information and the attorney should object and instruct not to answer.  Generally most attorneys avoid that line of questioning.

But what about when the deponent is asked for their social security number or any criminal convictions they have had in the past?  Well, as usual the answer whether those questions should be answered is: is it worth it to object and instruct not to answer.  Courts have protected confidential or private information even though it is not privileged information.  For example in Martin v. Ametek, Inc., a court denied a motion to compel in house counsel to answer questions about an her alleged romantic relationship with the corporations human services director.  This isn’t privileged information protected by law but a court said the deponent didn’t have to answer.

But an objection and instruction not to answer has to be decided by a judge which can add time and cost to the case and may irk the judge that the question wasn’t objected to and subsequently answered.

So if you have something you are worried about in your past or that may come up at a deposition, talk to your attorney.  Give them a heads up.  That way if it seems like the deposition might be headed that way, at least they can be prepared to object and instruct not to answer and have considered the consequences prior to the day of the deposition.