Will the Insurance Company Pay When Your Car is Stolen? Guess Again.

"SteveLehto" (stevelehto)
08/27/2014 at 13:00 • Filed to: None

106

"My car was stolen and the insurance company won't pay me." This is a phone call I get too often – considering I do not advertise that I handle insurance claim denials. People only call me because they heard I handle "car cases." Close enough.

This area of the law disturbs me far more than the !!!error: Indecipherable SUB-paragraph formatting!!! . I understand that a defective car gets made every now and then. But when your car gets stolen and you had insurance coverage for that, well – you expect the claim to be paid. That seems reasonable to me.

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The vast majority of the calls I get on this are from minorities or from people who live in "bad" parts of town. You know, where cars are more likely to be stolen. Except that's not how most insurance companies view it. The insurance companies figure that you are more likely to have staged your theft to scam them if you are 1) poor, 2) a minority, or 3) live in a bad part of town.

So if 1, 2, or 3 describe you, bear in mind that the insurance you are paying good money for right now might be an illusion. The first case I ever handled on one of these was on behalf of an older woman who lived in one of the poorest neighborhoods of Detroit. Her station wagon had been stolen from in front of her house and recovered a few miles away, burned to a crisp in an alley. An insurance investigator combed through the ashes and decided that the car had been inoperable and rather than pay to have the engine fixed, my client had put the car in the alley, lit it on fire and walked home. My client was 67. They also theorized that – since they said the car did not run – she had pushed the car there. Her husband was an invalid. You do the math. We sued and after some ugly litigation, they paid her.

Another client's car was stolen near Mt. Clemens, north of Detroit, and recovered a few miles away, missing its license plate, battery, radio, steering wheel ( !!!error: Indecipherable SUB-paragraph formatting!!! ), spare, and all four wheels. That case went to trial. The only witness for the insurance company was their investigator who testified that he had recommended the claim be denied because "nothing of value" was taken from the car. On cross examination I asked him, "The license plate was missing?" Yes. "The battery was missing?" Yes. And so on down the list. At the end of the list I asked again, "And it's your testimony that 'Nothing of value' was missing from the car?" To which he answered Yes.

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The judge actually stopped us – held up his hands at the witness and me like a traffic cop – and asked the attorney for the insurance company, "Is this all you have?" This was a bench trial and the judge was going to be the one picking a winner. When they told him it was he said we could make closing arguments if we wanted to but they weren't necessary. He ruled in our favor.

In another case, an insurance expert witness testified that Corvettes "are impossible to steal." He had a lot of faith in the transponder key system and spent his entire direct talking about how they made cars "impossible to steal." On cross I asked him, among other things, "Couldn't I just bring a flatbed tow truck up behind the car, grab it and haul it away?" He said that was also impossible since someone would see me doing it.

Every attorney I know who handles these claims has seen the same thing I have: Insurance companies deny more claims made by minorities, the poor, and those who live in bad neighborhoods. Why? Michigan (like many states) has no "bad faith" law. If you sue the insurance company and win, they pay you the same amount of money, at best, that they would have paid you originally. They have nothing to lose by denying the claim. And if a person doesn't sue, then they come out ahead. In other words, it is in their best interest to deny claims if the odds are that some of those denied won't sue.

Why do they overwhelmingly deny claims of minorities and the poor? Because they are the least likely to be able to afford an attorney. And very few attorneys handle these cases. As we have discussed before, Michigan follows the American Rule in insurance cases – the litigants bear their own legal costs. The insured has to pay an attorney to fight one of these cases, usually out of the proceeds. So, your claim is denied. You sue and win. You get two-thirds of the recovery (after deduction of the costs of the action) and the attorney gets his/her one-third. You call that winning? You just lost a huge slice of the money you were entitled to.

My advice? If you suffer a loss try not to be poor, a minority or living in a bad part of town. If that's not something you can control, then I suggest avoiding insurance companies that price advertise. "We cost less!" Who cares? A better question is: Do you pay claims? Buy from companies with a !!!error: Indecipherable SUB-paragraph formatting!!! of paying claims, even if they cost a little more. After all, if they aren't going to pay your claim, their "coverage" is worthless even if Anthony saved you enough money to buy a new purse.

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Photo !!!error: Indecipherable SUB-paragraph formatting!!!

Steve Lehto has been practicing consumer protection and !!!error: Indecipherable SUB-paragraph formatting!!! for 23 years in Michigan. He taught Consumer Protection at the University of Detroit Mercy School of Law for ten years and wrote !!!error: Indecipherable SUB-paragraph formatting!!! . He also wrote !!!error: Indecipherable SUB-paragraph formatting!!! and !!!error: Indecipherable SUB-paragraph formatting!!! Follow him on Twitter if you liked this post. Twitter : !!!error: Indecipherable SUB-paragraph formatting!!!

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DISCUSSION (100)

minardi > SteveLehto
08/27/2014 at 13:12

What is this thing happening in Ferguson again?

JEM > SteveLehto
08/27/2014 at 13:36

These articles are wonderfully informing, please keep them coming!

Err.. well maybe not exactly so wonderful given the contents of this one but still.

aebome > SteveLehto
08/27/2014 at 13:37

As an attorney who has dealt with insurance companies (and in fact is dealing with two right now) it is always sad to see when states do not have insurance bad faith statutes. Consumers have so little protection in the insurance industry as it is, that this lack of options for recovery makes it easy for insurers to walk all over the people they purport to help. Luckily I practice in Alabama, which does have insurance bad faith claims (shockingly, considering how weird Alabama law can be).

SteveLehto > JEM
08/27/2014 at 13:44

Thanks. My thinking is that we can all learn from the experiences of others (no matter how ugly).

Jordaneer, The Mountaineer Man > SteveLehto
08/27/2014 at 13:45

Does it make any difference how long you've been with your insurance? because my mom has state farm, and has had a policy since the late 70's with them, and hasn't ever had a major claim other than when someone ran into the back of her car as it was parked. It seems to me like it would, but what is your experience with people having the same insurance for long periods of time.

SteveLehto > aebome
08/27/2014 at 13:46

Theoretically, in MICH, the insureds who get screwed over are supposed to complain to the insurance commissioner. Who will do nothing. Ever.

SteveLehto > Jordaneer, The Mountaineer Man
08/27/2014 at 13:50

Irrelevant. Some of the people I have represented had been with the company for years. Some had several policies (home, auto etc). The only common thread I have seen is the ethnicity, poverty, neighborhood connection. At least that is where it gets horribly disproportionate.

aebome > SteveLehto
08/27/2014 at 13:50

Yea, insureds in Alabama face the same problem with the Department of Insurance. I can't even get my calls returned. All the more reason to be grateful for the availability of bad faith actions.

Earl Jones > SteveLehto
08/27/2014 at 14:22

"So, your is claim denied." Claim needs to be swapped with is.

SteveLehto > Earl Jones
08/27/2014 at 14:25

Wow. I re-read this one a million times since I first drafted it a week ago. Thanks (fixed it).

thebullfrog > Jordaneer, The Mountaineer Man
08/27/2014 at 14:25

They couldn't care less how long you've been there. If they deny you, all those decades of premiums is just that much more profit for them.

JBForum > SteveLehto
08/27/2014 at 14:28

I know it may be immoral for them to assume these things. Also the most likely motivation is the % of people who will do nothing because they can't afford to or are not knowledgeable enough to. However, I would still like to see the number of cases where they are actually trying to commit insurance fraud. I could see it being defensible if something like 95% of the time they are accurate in their predictions being true, while it still may negatively effect the same target groups you mention.

lifehackercomment3 > SteveLehto
08/27/2014 at 14:32

I wish you listed the insurance companies who denied the claims (Call the general? Get super cheap insurance that lets you drive around town but never be able to get claims paid) and also the history of people who had these claims, did they have multiple claims?

I hate insurance companies as much as you all do, but I just think there are two sides to these things, yes they always try to recover as much as possible but sometimes you just go with a cheap insurance company and you have to deal with consequences. My coworker was paying about $150/mo for full coverage, in NYC, when his car got destroyed by Sandy, they paid off the car and he was off the hook from lease he was on, and that was a $60k vehicle. Just make sure you have your coverage in place and go through details so you don't have to hire a lawyer.

SteveLehto > JBForum
08/27/2014 at 14:33

It is strictly a profit-motivated action. Among other things, the insurance companies never ask for their claimants to be prosecuted for arson or filing a false insurance claim. Their own behavior indicates - in my opinion - that they know the claimants have not broken any laws (in the bulk of these cases).

SteveLehto > lifehackercomment3
08/27/2014 at 14:39

I'm a little concerned that the ones which are "bad" in MICH are not the same ones that are bad in the other 49. That and I don't want them putting a hit out on me.

I had to summarize the stories here for space but I assure you that the only thing these people had done to indicate that their claim ought to be denied was to be poor, a minority, live in a bad part of town, or some combination of the three.

Having "coverage in place" made no difference here. All of these people had coverage in place.

Luis > SteveLehto
08/27/2014 at 14:45

So - obvious questions who are the "Insurance companies that pay claims"?

Luis > SteveLehto
08/27/2014 at 14:45

So - obvious questions who are the "Insurance companies that pay claims"?

57Chevy > Jordaneer, The Mountaineer Man
08/27/2014 at 14:46

We've had home and car insurance with State Farm since 1969. We got a letter last week saying that our coverage was being cancelled because we'd made too many claims.

To quote: 'Although it is regrettable when a policy cannot be continued, we are unable under the circumstances to continue this coverage.' and 'We are unable to continue coverage due to the loss history.' We made only 2 claims in all that time (2009 & 2013 totaling appx. $6,000).

They end the letter with 'Thank you for allowing us to provide your insurance.'

57Chevy > Jordaneer, The Mountaineer Man
08/27/2014 at 14:46

We've had home and car insurance with State Farm (Okla.) since 1969. Our area of town is definitely declining, but is still considered a desired area for young families. We got a letter last week saying that our coverage was being cancelled because we'd made too many claims.

They end the letter with 'Thank you for allowing us to provide your insurance.'

57Chevy > Jordaneer, The Mountaineer Man
08/27/2014 at 14:46

We've had home and car insurance with State Farm since 1969. We got a letter last week saying that our coverage was being cancelled because we'd made too many claims.

They end the letter with 'Thank you for allowing us to provide your insurance.'

57Chevy > Jordaneer, The Mountaineer Man
08/27/2014 at 14:46

We've had home and car insurance with State Farm since 1969. We got a letter last week saying that our coverage was being cancelled because we'd made too many claims.

They end the letter with 'Thank you for allowing us to provide your insurance.'

StevenG > SteveLehto
08/27/2014 at 14:46

Stupid comment is stupid.

SteveLehto > Luis
08/27/2014 at 14:50

There is a link in the post to a Forbes article on customer satisfaction - which is largely based upon claims payment.

TimG > SteveLehto
08/27/2014 at 14:56

Some really great—and insightful—advice, Steve. I don't happen to meet any of those 3 criteria myself, so I cannot speak first-hand, but it boggles my mind how carriers are legally allowed to operate using these kinds of practices—especially since its a form of profiling (a term I really dislike because it's totally misused, but unfortunately, it holds true here) and because the auto carrier is presumably already charging higher premiums because the insured lives in a bad area.

In your experience, is it ever worthwhile going to the state Department of Insurance to report these kinds of incidents? Seems to me after 20+ years of working cases like this, you'd also have come across a good bit of the "precedence" set by some of these cut-rate insurers. Thanks!

Meatcoma > SteveLehto
08/27/2014 at 14:57

This is how I explain why I pay more for insurance to my in-laws.

1. Because I don't get dropped if I have 2 claims back to back.

2. The fact I don't have to fight with them over a claim.

3. It's a company that I pay for services and they provide them.(crazy concept)

StevenG > SteveLehto
08/27/2014 at 14:58

Are there any more comprehensive lists?
Should we ignore any smaller insurance companies? Mine only operates in my state, but so far has paid when needed. I am not minority, poor, nor do I live in a bad neighborhood. I also would sue them and give every dime to the lawyer if that is what it took.

Jordaneer, The Mountaineer Man > 57Chevy
08/27/2014 at 14:58

that is really obnoxious.

thebigbossyboss > SteveLehto
08/27/2014 at 14:59

Man, that is unbelievable. Good on you for taking these cases Steve.

SteveLehto > TimG
08/27/2014 at 15:00

No, the insurance commissioner in MICH will never do anything about this. The insurance companies have a huge lobby and it's all about money - which they make a ton of.

SteveLehto > Meatcoma
08/27/2014 at 15:01

And we have a winner! (You are 100% correct. Insurance that works is worth more than insurance which does not.)

StevenG > Meatcoma
08/27/2014 at 15:01

How do you know another insurer who might be cheaper won't do those things?
I have a cheaper, but not the cheapest insurance and so far they paid my claims without any hesitation and actually called me 3 times during the process to rate my satisfaction. Once for the initial claim, once for the repair, once for the total event.

SteveLehto > StevenG
08/27/2014 at 15:02

I'm sure there are. But also ask around. I tell these stories to attorneys in MICH and ask them to guess who the insurers are. 99% of the time they get it on the first try.

Meatcoma > StevenG
08/27/2014 at 15:05

I'm not saying they wont, but I know how my insurance responds to claims and I've seen them go through multiple insurance companies from claims and each time they find the cheapest one they can.

StevenG > SteveLehto
08/27/2014 at 15:05

If they get it right that often, is there some reason why a class action is not something to be considered? You should not be able to sell a service and intend to never give it.

This is probably a stupid question, if so I apologize. I am not familiar with the law and the more familiar with it I get the less I like it.

Fleetwood T. Brougham > SteveLehto
08/27/2014 at 15:05

So just to clarify, if I'm white, make good money, and live in a nice neighborhood, I should be covered? Whew!

SteveLehto > Fleetwood T. Brougham
08/27/2014 at 15:07

AND, you can probably steal your own car, file a claim, and have it paid. (Not that I would suggest such a thing - that's just how things have evolved.)

SteveLehto > StevenG
08/27/2014 at 15:09

I don't do a lot of class action work and one of this magnitude (against such a well-financed defendant) would be quite difficult. I've mentioned it to a few attorneys who do classes but they all have the same reaction. It would be an ugly mess.

And you are right about the law. It is rarely pretty.

Thefroogalstoodent > SteveLehto
08/27/2014 at 15:16

Yep. Insurance can often be a rip-off: http://froogalstoodent.blogspot.com/2014/06/5-appa…

Jeff-God-of-Biscuits > SteveLehto
08/27/2014 at 15:16

Curious thought I just had, would it be possible to sue the inspector for fraud? Are all the inspectors employees of the Insurance provider? Would it be possible to show bias on the behalf of the contractor? Maybe point some fingers about rewards given for claims denied, if such a system is in place?

StarControl > SteveLehto
08/27/2014 at 15:22

The US system at work folks. Insurance companies line the pockets of politicians who look out only after their own interests (and those who pay). You happen to be a (now almost extinct) middle class, or god forbid a lower class - well shit you don't even fall under the "we the people" you're just rabble, and as such you will be screwed each and every way possible. Honestly speaking is there a way to fix this? Highly doubt it without a good old fashioned revolution. Of which of course there will be none in the states. So in short: just bend over and take it.

RedFive2012 > Jordaneer, The Mountaineer Man
08/27/2014 at 15:22

Years ago, my parents had Allstate. My dad was driving several hundred miles in the family minivan, and several hours from home, the driver's-door window dropped into the door and shattered. He made it home through a rather cold and wet storm and got an estimate, for which he made an insurance claim (the van was in good repair, but the power window mechanism had failed structurally). Allstate dropped him like a bad habit, though 25 years later I don't remember if they made any claims of loss history like @57Chevy's case.

loneWolfdeLeGrey > SteveLehto
08/27/2014 at 15:24

now that is telling.

SteveLehto > Jeff-God-of-Biscuits
08/27/2014 at 15:29

They are almost 100% employed by the insurance companies but proving fraud would be impossible. They claim (with a straight face) that their honest opinion was that [fill in absurd scenario here]. I doubt they get bonuses for their work - they just get hired and rehired when they "win."

SteveLehto > StarControl
08/27/2014 at 15:30

Which is a pretty good translation of what I wrote.

NorCalAngler > SteveLehto
08/27/2014 at 15:32

I work in underwriting for a carrier in a state with Bad Faith laws. I hadn't thought of a claims environment where carriers could deny claims in bad faith without any repercussion. It sounds awful for the consumer and rests solely on the state's Department of Insurance to fix it.

Is there any difference between carriers with in-house claims organizations vs. those that use third party adjusters?

SteveLehto > NorCalAngler
08/27/2014 at 15:36

Yes, it is simple economics: They save money by denying claims. They save more by denying the ones which are least likely to be litigated.

Not sure about the in-house versus outside adjusters. I have seen both in these scenarios. I believe they know what they are supposed to be looking for (or to find).

cmusic > SteveLehto
08/27/2014 at 15:43

When I was 29 I was heavily into car audio sound quality competitions and had a stereo system valued around $10,000. I went to my "then" insurance company's local rep, which had insured my great-grandparents, my grandparents, and my parents for over 30 years and myself since I was 16 to get a quote on a rider policy for my stereo. I had only had one claim against my policy in the 13 years I had it up till then. I asked for $10,000 in coverage. The rep told me, in a rude and sarcastic way, anyone wanting that much insurance would only have it stolen to collect the money. I notified the rep's supervisor at the company's HQ about what the rep said to me. A week later I got a long apology letter from the rep but he still would not sell me a rider due to there was no official code for added electronic audio equipment in the company. Shortly thereafter my whole family left the company and I now have insurance with a company that will cover additional items in my vehicle at no extra charge.

SteveLehto > cmusic
08/27/2014 at 15:44

Perfect ending to a great story.

Jeff-God-of-Biscuits > SteveLehto
08/27/2014 at 15:46

Yeah, just looking for an angle that might open the door to bigger fish... Oh well.

zenpoet > SteveLehto
08/27/2014 at 15:54

Nice article. I like to see useful information like this provided to non-attorneys.

SteveLehto > zenpoet
08/27/2014 at 15:55

Thanks, I'm glad you liked it. I figure we can all learn a little by studying what happens to others . . .

POSFordRanger > SteveLehto
08/27/2014 at 16:08

Great. I have Progressive. Rated 22nd of 24 on the list.

Victoria D. Hamilton > SteveLehto
08/27/2014 at 16:12

Start working at home with Google! It's by-far the best job I've had. Last Wednesday I got a brand new BMW since getting a check for $6474 this - 4 weeks past. I began this 8-months ago and immediately was bringing home at least $77 per hour. I work through this link, go to tech tab for work detail

www.jobs700.com

mavisky > SteveLehto
08/27/2014 at 16:15

Between this and the no-fault accidents, it sounds like Michigan is a pretty horrible state to be a car owner in.

SteveLehto > POSFordRanger
08/27/2014 at 16:23

And you probably "shopped around" based on price? Not to say they will deny your claim . . . it is just food for thought (but those commercials sure are FUNNY!)

SteveLehto > mavisky
08/27/2014 at 16:24

I routinely tell people that it is a bad state for consumers. And this is one of the reasons why.

Shawn Wayne > SteveLehto
08/27/2014 at 16:30

I know exactly how this goes with claims being denied. My wife had her car stolen a few years ago and we got denied on everything, they wouldn't even give us a rental car during the time it was missing or anything. The car was eventually recovered, but their policy was to not pay out for as long as possible due to the remote possibility that a car would be recovered. It can be a very long process to get an insurance company to pay out. Also it doesn't matter if you are poor and live in a bad neighborhood. This was in a very nice city with a very low crime rate. Insurance companies just don't like to pay out, period.

SteveLehto > Shawn Wayne
08/27/2014 at 16:33

That too. Keep in mind I have heard of them denying claims of rich, white people, who live in nice neighborhoods. It is just that they disproportionately deny the claims of the poor, non-whites, who live in poor neighborhoods (I know my use of commas in that sentence is "wrong," but I did it to accentuate the three criteria).

ReverendLoki > StevenG
08/27/2014 at 16:45

Care to share the company you have a policy with?

StevenG > ReverendLoki
08/27/2014 at 16:47

https://www.nycm.com/

I have made one claim so far. They also insure my home. The home is up for renewal soon, so if you have any horror stories about them please share.

TheCraigy > SteveLehto
08/27/2014 at 17:09

Steve:

I understand if you don't want to name names, but did you ever see this sort of thing occur with a larger, national insurance company like State Farm, Allstate, Geico, etc., or was it overwhelmingly small or fly-by-night discount insurance companies?

Very interesting article, but unfortunately not surprising.

TheEducationalGeek > SteveLehto
08/27/2014 at 17:12

Better call Flo

SteveLehto > TheCraigy
08/27/2014 at 17:14

Ummmm, let's just say I never saw it with a small or fly-by-night company. Someone else pointed out something kind of obvious: Most people consider insurance That Thing You Buy To Allow You To Drive Your Car (and/or Have a Bank Loan). So, we're happy when we GET it, not thinking it is possible we will need it in the future (or that a valid claim could be denied).

SteveLehto > TheEducationalGeek
08/27/2014 at 17:15

The tradeoff - Your coverage might not be that great but the commercials sure are funny! (Or, "Look, I saved you a dollar!")

My Beer Belly > Jordaneer, The Mountaineer Man
08/27/2014 at 17:22

I worked as a claims rep. for GEICO and I can say that it does matter. If a customer of over 5 years asked something that was against our policy, it was much more likely to be considered and granted. Even if they were only a policy holder for 2-3 years then it was more likely to be considered.

An auto insurance company can only gain customers by taking them away from another company so they try to take care of the ones they got (at least the good companies do). It's very common to see people price compare and changing companies every 6 months.

All that said, Michigan has some very strange insurance laws. We had an entire team that only handled Michigan claims. I was licensed for over 20 states but still couldn't handle Michigan.

POSFordRanger > SteveLehto
08/27/2014 at 17:24

That's exactly what I did (err, had my agent do for me).

SteveLehto > POSFordRanger
08/27/2014 at 17:25

If your agent reps more than one line, next time you should ask about who has a better record of paying claims. And if the agent claims "They're all the same," take your business elsewhere.

zenpoet > SteveLehto
08/27/2014 at 17:26

I was in private practice for 8 years before joining an AG office, but was always fascinated by this type of case. Thanks again for shedding some light on it!

SteveLehto > zenpoet
08/27/2014 at 17:27

Are you in a state with a separate tort for Bad Faith?

zenpoet > SteveLehto
08/27/2014 at 17:34

Yes. South Dakota has bad faith tort law, so there are a number of folks here who make a good living on going after the insurance companies who deny claims.

My Beer Belly > cmusic
08/27/2014 at 17:35

Fortunately you were cognizant enough to get a rider on the policy. I have had a previous job as a claims rep for GEICO and can't tell you how many people were furious that their 5k rims and tires weren't covered in an accident, or sound systems, or other modifications.

The policy is given out on the car as it came from the factory. Unless you tell the company you have made additions that increase the value of the car and then pay the additional premium, those additions aren't covered. People just assume it is. They also assume all the items like glasses/computers/gps/phones/clothes and anything else they can fit in their car is covered by their AUTO insurance. At least those things are usually already covered by homeowners/renters even when in the car.

SteveLehto > zenpoet
08/27/2014 at 17:35

And the insurance companies can't just deny claims willy-nilly. Funny how that works.

My Beer Belly > SteveLehto
08/27/2014 at 17:50

As a former claims rep for a large insurance company I feel it could be emphasized more that this is mostly a problem in Michigan due to their awful insurance laws. I know for a fact that there are tons of awful insurance companies out there that only give people the illusion of protection, but I feel confident saying that it's not nearly as bad as this article makes it sound.

Many of the biggest insurance companies I found through experience have the perspective of trying to find reasons to pay a claim, rather than not. Now they have no reason to do more than the policy contract requires, and many won't, but they don't approach claims looking for any detail to not pay a claim. Most complaints about auto insurance simply come from people who don't understand their policy they signed for the next 6 months.

When I was at GEICO, the extensive training and licensing never instructed us to deny questionable claims. It in fact led us to hunt for reasons to actually pay claims. Like guilty until proven innocent. It occasionally angered policy holders that they would be considered at fault for an accident they felt they didn't cause. But even if contested and taken to arbitration, we might be able to get it to 80/20. By then though everyone is fed up that a simple claim took months to settle and then everyone hates you, as opposed to one customer.

There is a reason that the biggest companies are the most successful. I know you weren't naming names, but I feel like the auto industry as a whole gets a bad rap. I'm also no longer employed by GEICO, I actually quit. I promise I'm just trying to provide an honest and unbiased opinion.

That said, you are correct that Michigan is awful to be an insured. We had an entire team that only handled their claims. I handled claims in over 20 states, including ones requiring licenses, yet could not even open a Michigan claim because of how backwards things were done. But I still am seeing tons of comments about people mad they didn't get a rental, or how long it took to get a settlement instead of a payout within 5 days, or how they didn't even get enough to cover the loan. Those are the people who really didn't read their contract and don't understand their own policy. At least the most reputable companies, they will give you exactly what the contract states is required but rarely any more (that's just bad business). Some things simply take time, and sometimes there are laws that govern what the insurance companies can do.

SteveLehto > My Beer Belly
08/27/2014 at 17:58

Thanks for the note. I agree with quite a bit of what you said: I get calls all the time from people who are upset that they did not get something they thought they were entitled to. When I asked them what their policy said, they had no idea.

Insurance, at its heart, is contractual. What is in the policy is what you are entitled to.

I will tell you that GEICO was not involved in any of the stories above. Gotta love the Gecko.

However, I strongly disagree with you about looking for reasons to pay. At least in MICH. I know this is not scientific and I don't get called by people who are happy with their claims. I have just seen too many cases where people had their claims denied because of the reasons I stated. I have taken depositions of the decision-makers in these cases and the reasoning I have gotten was laughable. And, I have discussed this with other attorneys and they all have similar experiences. All I can guess is that the states you were in operate differently than MICH.

Be that as it may, the insurance industry isn't always its own best friend. Remember what happened after Katrina?

Goofnik > SteveLehto
08/27/2014 at 18:22

I've learned — several times, the hard way — that if your car is struck by another party, and the other party is ruled at fault, that sometimes neither insurance company wants to pay for full repairs. Or that if the car isn't repaired correctly (because the labor rate is crap, or because the insurance company demanded third-party parts), that the insurance company expects you to "just deal with it".

In both cases I successfully sued my own insurance company and won, but I think an article on this would be useful in the future.

SteveLehto > Goofnik
08/27/2014 at 18:25

I'll add it to the list (Although collision insurance is not something I deal with as much).

My Beer Belly > SteveLehto
08/27/2014 at 18:36

Very true, you probably never hear from people who are happy with how it worked out. I unfortunately have no experience with Michigan insurance so all of what I said doesn't pertain to that state. It's so different there than everywhere else. From what I understand, their laws do not dictate a maximum medical payout either. This leads to a lot of insurance fraud and so perhaps the companies, without fear of recourse, are trying to recoup their losses? Not defending, just naming a possible culprit.

Also, theft claims are a whole other beast as well. Theft claims are by far the most likely to be fraudulent so all the companies do their diligence on them. I would hope a company would pay the claim if there was no evidence suggesting they shouldn't, but clearly that isn't happening.

KRFC > My Beer Belly
08/27/2014 at 18:36

This is the best post on here.

My Beer Belly > KRFC
08/27/2014 at 18:40

I try to comment on most of the posts related to auto insurance. I only worked in auto insurance for a few years, and it's been a few years since I left. But I think the industry as a whole gets a really bad reputation due to ignorance of the consumers. I try, as useless as it may be, to at least provide a perspective from the other side whenever possible.

pandemicsoul > SteveLehto
08/27/2014 at 18:46

I suggest avoiding insurance companies that price advertise. "We cost less!" Who cares?

Don't you think it's a little hypocritical to explain how poor people are the ones who get their claims denied, and then totally dismiss the fact that poor people choose low-cost insurance companies because they can't afford not to? They're caught between a rock and a hard place, here: Either they choose lower cost insurance or have to cut something else out of the budget, on the off-chance that something might happen to their vehicle. It's not that poor people are swearing off high-priced, gold-standard insurance because they like shit coverage. They're doing it because they don't have any other choice.

SteveLehto > pandemicsoul
08/27/2014 at 18:50

Hypocritcal? I'm not the one selling them the worthless insurance.

KRFC > SteveLehto
08/27/2014 at 18:56

Beer Belly has nailed it. As a former claims rep, he's 100% correct. In most cases, people are upset with their insurance because they have no experience in contractual agreements, and feel as though insurance is just a bank account they can pull money out anytime it's needed.

I deal with claims in Vallejo and Oakland everyday, and i do have to deny a large portion of their claims for usually one reason: lack of coverage.

My favorite popular saying as to why one doesn't have collision coverage: "I don't plan on hitting anyone, why would i have that coverage, you guys just want more money!"

ArmchairDiplomat > Luis
08/27/2014 at 18:59

I am an insurance agent and I can tell you the best ones are USAA, Erie, Auto-Owners Insurance, Chubb, State Auto, Amica.... to name but a few

ArmchairDiplomat > SteveLehto
08/27/2014 at 18:59

I am an insurance agent and I can tell you the best ones are USAA, Erie, Auto-Owners Insurance, Chubb, State Auto, Amica.... to name but a few

Tspring > SteveLehto
08/27/2014 at 18:59

Great article, very informative. Keep em coming!

ArmchairDiplomat > StevenG
08/27/2014 at 19:00

It doesn't matter if they are small, but their credit rating does matter. You wan an A rated company with a good record. But actually, as an agent I have found regional smaller companies tend to be better than the big national ones

SteveLehto > KRFC
08/27/2014 at 19:01

I wouldn't say he is 100% correct (although I said I agreed with him quite a bit). The point of this article (claims adjusters take note) is that oftentimes, in MICH, claims adjusters deny claims - not because the claim is invalid - but because it will save the company money. And to deny the claim, they accuse the insured of fraud, despite having little to nothing to support the accusation.

I have no problem with an insurance company denying an invalid (no coverage) or fraudulent (fraud) claim. What I have a problem with is when a claim is denied simply because the insurer thinks the insured won't fight the wrongful denial.

SteveLehto > ArmchairDiplomat
08/27/2014 at 19:02

And none of those were involved in my story. THANKS!

ArmchairDiplomat > SteveLehto
08/27/2014 at 19:04

I am an agent. They are NOT at all the same. And I tell my customers that, especially when they opt for the 'brand name' or cheapest quote when it isn't in their best interest

J. Drew Silvers > RedFive2012
08/27/2014 at 19:06

Mechanical failure isn't an insurance claim. If a rock was slug from somewhere foreign and shattered the window, it would be, but a failure on the car itself isn't something you claim on insurance.

SteveLehto > Tspring
08/27/2014 at 19:06

Thanks. And if you haven't already, follow me on Twitter: @stevelehto (shameless plug, I know . . .)

SteveLehto > ArmchairDiplomat
08/27/2014 at 19:09

See? Once in a while I AM right!

KRFC > My Beer Belly
08/27/2014 at 19:10

I feel the same way. I was reading some of these claims experiences and just shaking my head. I always tried to find loop holes, grey areas, and lapses in policy languages to pay for clients; and to read how people just chastise the industry and it's principles aggravates the hell out of me. Good Stuff.

KRFC > SteveLehto
08/27/2014 at 19:11

Fair enough, thanks Steve.

Axel-Ripper > SteveLehto
08/27/2014 at 19:20

Also, don't be an unmarried white male between the ages of 18 and 24. They'll cover you and pay all right, but in return you'll be paying 3x what you make in a year.

SteveLehto > Axel-Ripper
08/27/2014 at 19:20

Another problem altogether!

solracer > SteveLehto
08/27/2014 at 19:23

Well GEICO doesn't discriminate, they don't like to pay claims no matter what your income level, neighborhood or race is. Every time I've had to deal with them it's been a battle. State Farm on the other hand has been good with the possible exception of the one time I was rear-ended by another State Farm policy holder which made the claim process slower and more difficult.

SteveLehto > solracer
08/27/2014 at 19:24

Much of this is driven by what state you are in (and this is reinforced by the comments I am seeing).

SNL-LOL > 57Chevy
08/27/2014 at 19:26

Seriously. Fuck State Farm. Some woman clipped my car and their so-called claims rep wouldn't even come to see the damaged car, saying "not their fault, case closed." No lawyer would take the case as the amount involved is too small ($2200).

Between home, car, umbrella, and life insurances we spend quite a tidy sum each year. Hell would freeze over before they get a fuckin' penny of my money.

Squid > SteveLehto
08/27/2014 at 19:28

I'm poor and have a huge mark against my driving record, and I had my insurance company try to deny a claim on me. I had my totaled out car sitting in front of my house for 2 months while the insurance company was trying to figure out whether to pay or not. It didn't help me that the police officer that took the accident report went on vacation for a month and didn't file the report until after he got back. But when all was said and done I got the NADA guide value for retail on my vehicle. This is also with the cheapest insurance I could find at the time. I was actually surprised they didn't drop me after that accident and paid full value for the car. But then again I think California has a pretty good insurance bureau to keep the companies in line here.

As always great piece!