Wall Street may seem far away, but an anemic stock market and stagnant economy can have unexpected effects on your life. Perhaps your insurance premiums have gone up or maybe you’ve experienced difficulty settling a claim. In the last year or so, we have noticed a real trend of auto insurance companies being more restrained, both when it comes to determining liability and in the size of the initial and final settlement offer.
In order to understand how the current economy might affect your automobile claim, it is important to know how insurance companies make a profit. Their business model is simply to make more money than is paid out in claims. This revenue is made in two ways: collecting premiums and active investments. In economically depressed periods, it becomes increasingly difficult for insurance companies to profit from those invested reserves. Some may even take losses. When these investments do well, there is more money to be paid out in claims to customers like you. When the market plummets, so does your chance of getting a fair payout from a cash-strapped insurance company. This is especially true when you try to take on the company yourself.
But it doesn’t stop with the stock market. Increased unemployment and inflation cause decreased demand for auto insurance, especially in states where it isn’t compulsory. This lowers a company’s profits from premiums. Often this results in higher premiums for the rest of us. Insurance companies claim that they see an increased number of fraudulent claims in a poor economy. Though false claims do happen, companies are generally far more likely to deny your claim. Their tactics tend to be delay, deny and defend. First, they delay processing your claim, then they deny it and try to force you to accept smaller walk-away settlements and finally they defend their denial of your claim. They do this under the guise of “fighting fraud” but in reality their primary motivation is profit. In the long run, this costs them more because Sweet James is forced to litigate in order to obtain a fair settlement for our clients.
It is always more difficult going against an insurance company alone. You’ve probably heard of the David and Goliath comparison. In a bad economy, it is even more difficult to get what you deserve because insurance companies push harder against the little guy to stay profitable. They know that the recession has affected all of us, and count on you being more likely to accept a small, fast settlement. Adjusters will pressure you aggressively early on, hoping that you’ll sign a release of your claim before you seek proper medical treatment or consult with a personal injury attorney. Once you accept a settlement from the insurance company there is no going back.
I would also like to remind everyone that your health should be your first priority, even if you’re struggling financially. Don’t let someone else’s recklessness put your future at risk. Now more than ever we have clients worried about seeing a doctor or considering to cut treatment short. Serious injuries can go undetected if you do not receive the necessary care. Be sure that your health is fully recovered before accepting a final settlement offer.
All of us at Sweet James are working harder than ever for our clients and we’re litigating more cases because insurance companies are less willing to pay a fair settlement. If you or someone you know has been in an accident, choose us to successfully get you what you deserve, regardless of the current economic climate.