Insurance companies are in business to make a profit. (I discussed this in an earlier blog: “Common Misconceptions Concerning Accident Injury Attorneys.”) Lest you think I am critical of that concept, let me be clear, I am in business to make a profit. In fact, every business seeks to make a profit; without profit, a business will cease to exist. So, with this fact in mind, it becomes instructional to analyze what an insurance company’s profit motive means in considering an accident or personal injury claim.

… analyze what an insurance company’s profit motive means

To do so, let’s put you in the place of the insurance company – we’ll call your company Bob’s  Insurance Company. One of your insureds is Carol’s Delivery Service which has a fleet of cargo vans. One driver, we’ll name Ted, has many deliveries to make. As an insurance company, you realize that insuring a fleet of vehicles which go to and fro in a hurry can be a risky business. However, you’ve hired Alice, an actuary (numbers cruncher for insurance companies), who has developed a rate she is confident will allow Bob’s Insurance to make a profit. This is a balancing act for Alice because she must a) not set a rate so high as to lose out to competitors, b) justify her rate to whichever state allows  Bob’s Insurance Company  to operate within its borders, and c) still anticipate that collected premium for delivery fleets will exceed any loses in that industry plus operating expenses for Bob’s Insurance.

Meanwhile, back to Ted. In attempting to meet his schedule, Ted makes an unwise decision, and runs a light, just as it turns from yellow to red. From the sidewalk on the opposite side of the intersection, out steps a pedestrian, who we will call Skip. Ted slams on the brakes, but to no avail. Screeching tires notwithstanding, Ted hits Skip, who in true fashion, skips across the pavement. At the moment of impact, Ted had slowed to perhaps 5 mph. Still, this was more than adequate to give Skip a ride.

Skip heroically said, “I am okay!”

Now, Skip had always been an athletic sort. His reflexes and conditioning dictated his assuming the fetal position shortly before he skipped – a position which most assuredly saved him from becoming road kill. Amazingly, Skip skipped, rolled, and leapt to his feet, looking exactly like a Hollywood stunt man. Bystanders raced to the rescue and prepared to call 9-1-1. Skip heroically said, “I am okay!”

Ted was devastated! His poor decision nearly resulted in killing another person. He apologized profusely, offered to take Skip to the hospital, and gave Skip his cell phone number, his business card, insurance information, and a rabbit’s foot – for next time. After leaving the scene, Ted, filled with remorse, could not finish his route. He drove directly back to Carol’s Delivery Service, and confessed his misdeed to Carol.

Carol acted very professionally. She promptly screamed at Ted and fired him. Then, she called her insurance agent, Murphy, who, in turn, filed the claim with Bob’s Insurance Company.

The claim was assigned to a claim’s adjuster named Shantelle. When Shantelle was hired, you, Bob, personally trained her, making sure Shantelle understood the concept of insurance, the nature of business, and the need to be profitable, as well as properly and professionally represent the insureds of Bob’s Insurance Company.

Shantelle understood the concept of insurance…and the need to be profitable

Well, it’s time for Shantelle to pay a visit to Skip. By all accounts, Carol’s Delivery Service is liable for damages to Skip. The driver may have been Ted, but he was acting within the scope of his employment. Ted had raced into an intersection against a yellow light which turned red and struck a pedestrian who was obeying the crosswalk voice telling him to “Walk, walk, walk.” Based on eyewitness accounts Shantelle collected, Skip, miraculously, had not been badly hurt. In fact, he walked away from the scene of the accident under his own power.

Okay, Bob…what do you want Shantelle to do? You know your company is on the hook. Claiming there is no liability on your company’s part isn’t an option. What strategy do you expect Shantelle to follow?

Okay, Bob…what do you want Shantelle to do?

Well, Bob, perhaps you said, “I’d wait and see what happens with Skip in the future. It’s only fair that we give Skip’s injuries time to manifest themselves over the course of several weeks, explore what the treatment options are for him in the future, evaluate what the short and long-term consequences of this accident may be, and make sure Skip is adequately reimbursed for any loss of wages, out-of-pocket expenses, all related medical and pharmaceutical costs, therapy, and any pain and suffering he endures.” If you said that, well then, Bob, you are not a typical insurance company.

Nope. Remember, your goal is to make a profit, and have Shantelle help you reach that end. You would realize, Bob, that the longer you waited, the more expensive this claim would likely become. Why? Because while Skip may have been able to get up after his gymnastic stunt work, in a week or so, he may likely be bedridden in pain, with bruises forming all over the place like so many ink blots left by Rorschach. It may turn out that what Skip has self-diagnosed as a bad headache, is actually a concussion sustained when he hit the pavement, and the stiffness in his neck later becomes diagnosed as a herniated disc in his cervical spine.

Nope. Remember, your goal is to make a profit…

How can Shantelle contain costs for you, Bob? Well, it’s relatively simple. Have Shantelle visit Skip as soon as possible. There she can express concern for Skip’s misfortune, give him a check for $1,000 for his troubles, and SIGN A RELEASE FORM OF ALL FUTURE LIABILITY AS RESPECTS BOB’S INSURANCE COMPANY. If Skip is like so many people, he will take the money and run – thinking this accident thing worked out pretty well. A few aches and pains, which Skip is sure will resolve themselves in the next week, is well worth a thousand bucks. Skip is excited, cashes his check, and limps to the bike store, buying a bicycle he’s been drooling over.

What Skip does not yet realize is manifold. After taking the check and signing a waiver of seeking future damages, Skip decides to go see his doctor because the headache just isn’t going away, and he’s noticing his peripheral vision isn’t what it was. Upon check-in, the patient care specialist asks what happened, and so Skip relays the whole story. Then the shocker: “Well, do you understand that since your injuries are related to a motor vehicle accident, your healthcare policy is secondary?” Nonetheless, Skip wants to see the doctor, who immediately sends Skip over to get an MRI, prescribes pain meds, and refers Skip to a physical therapist. By the time Skip leaves the clinic, he’s incurred the following fees: $200 for the visit, $2,200 for the imaging, and $500 for the radiologist. Skip just spent $2,900 and doesn’t yet have the meds nor received any therapy. Out of curiosity, Skip calls the therapy place to enquire how much they charge. Skip finds out that a typical session will run about $150, and his doctor scheduled Skip for 6 sessions. At this point Skip is on the hook for $2,900, and looking at an additional $900 for therapy, and $150 for the pain meds if he follows through. Further, Skip’s doctor wants to see him back in three weeks to re-evaluate. If he hasn’t improved, the doc said he’d probably refer Skip to a neurologist. Skip goes home and stares at his stupid bike.

Did Bob’s Insurance company know this was going to happen? No. Have they experienced it before? Absolutely. So, if you are Bob, what is your company’s strategy when it comes to ponying up for claims caused by your insureds?

If and/or when you are the victim of an accident, do yourself a favor. Seek the counsel of a competent accident and personal injury attorney. It’s not a question of getting rich off an accident. But it is all about having an expert help you understand this “minefield” you did not choose. It is the prudent thing to do. Consult with a reputable and competent accident injury attorney.