Lawyers who represent victims of auto collisions in Texas have always known that insurance companies will use any legitimate means to deny a liability claim against their insured. But in recent years there has been a disturbing trend among some insurance companies of using means that stretch the boundaries of being legitimate. In fact, in many cases, these denials of coverage are just plain fraudulent.
Now the Dallas Morning News has exposed some of these tactics in an excellent article that identifies the suspect insurance companies by name. I encourage anyone who owns a vehicle to read this article. You do not want insurance with one of these companies. A denial of coverage means that you will be personally responsible for any damages you cause in a car wreck, while your insurance company will keep your premiums and say “tough luck” to you.
Some of these shady tactics include issuing an auto insurance policy in the name of a person who is not the owner of the car, with the owner listed as an “excluded driver.” So the vehicle does have insurance coverage (which satisfies the police and keeps the vehicle from being impounded in case of a collision), but the owner of the vehicle is actually uninsured. The result is that if the owner of the car causes a collision, the innocent person he hits is out of luck. Another tactic is to claim the insured person is “refusing to cooperate” with the insurance company’s investigation of the collision. This is actually a legitimate reason for denying a claim. But what the sleazy insurance companies do is just never try to contact their insured, and flat out lie when they say their insured is not cooperating. We have seen each of these situations multiple times.
Please read the newspaper article. Here are excerpts:
Pat Taylor of Mesquite was headed home after a typical workday this summer when another car jolted her Toyota Highlander from behind. The damage to her SUV was serious and, she said, the 20-year-old driving the other car clearly was at fault. Police arrived and the other driver showed an insurance card from a company that Taylor figured would cover her losses, estimated at $1,500.
But after several days, she said, the other driver’s insurer — Fred Loya Insurance Co. — told her that the policy was in his mother’s name and that he was excluded from coverage, and that the company would not pay for the damages.
“It was infuriating,” she said of the accident along U.S. Highway 80. The insurance card from Loya “let him get his annual inspections and license renewals. But when he got into an accident, all of a sudden he had no insurance coverage.”
Taylor’s case is not an isolated example for drivers in North Texas and across the state after accidents involving Loya or Old American County Mutual Insurance — two major companies at the top of the state’s complaint list for auto insurers.
The Texas Department of Insurance says Loya, which collected $271 million in premiums last year, had a “complaint index” of 2.4, nearly 21/2times the state average. The larger Old American, which had premiums of $575 million, had a complaint index of 3.96 — nearly four times the state average.
House Insurance Committee Chairman John Smithee, R-Amarillo, said he has had growing concerns about certain insurers who regularly refuse to pay claims in which their policyholders are at fault.
Typically, Smithee said, an adjuster for the company tells the injured party that if the claim isn’t paid, the person will have to hire a lawyer and will probably wind up with little money for the trouble. At that point, the driver feels forced to take 50 percent or less of the claim for damages. “It has been hard to make some of these companies behave,” he said.
Last year, consumers filed more than 6,600 complaints against auto insurers in Texas. More than half were filed by drivers who said they were not at fault in an accident but had trouble getting an insurer to pay their claims.
Alex Winslow of Texas Watch, a consumer group active in insurance issues, said unethical companies have an advantage because they undercut regular insurers on price largely because of the claims payment practices.
“The business model is they drag their feet and make it as difficult as possible for the claimant to collect in hopes they will take a low-ball offer or give up,” he said.
“I’m concerned the Insurance Department is not being aggressive in policing market conduct. They should be exercising more authority over these companies that are using questionable practices.”
AT A GLANCE: Complaints filed with state
Higher Than Average
These Texas insurers had an above-average number of complaints in 2010, based on Insurance Department complaint index*:
- AAA Texas County Mutual 2.06
- ACCC Insurance 1.28
- Allstate Fire and Casualty 1.16
- Allstate Indemnity 1.29
- Colonial County Mutual 1.64
- Geico Indemnity 1.36
- Home State County Mutual 1.58
- Liberty County Mutual 1.33
- Fred Loya Insurance 2.4
- Old American County Mutual 3.96
- Southern County Mutual 1.95
*The average index for all companies is 1.0; a higher number would indicate the insurer has more complaints than average filed with the state. A company with an index of 3.0 has three times as many complaints as the typical company. Eleven of 25 insurers with more than 100,000 policies in Texas had an above-average complaint index.
SOURCE: Texas Department of Insurance