MSN Money recently published a list of insurance companies’ top 10 “dirty little secrets.” 40 percent of these were related directly to auto insurance claims and policies.
When you are looking for an insurance policy, insurance companies will use information from New Jersey’s Insurance Services Office, Inc. to determine how much to charge you. The data helps them to determine the likelihood of a car accident for a certain type of car. The company takes information and, in a process they consider proprietary, rate approximately 300 different makes and models. These ratings can cost drivers with “higher risk” cars surcharges of up to 25%. The rating information is not available to the public, only to insurance companies.
The second secret insurance companies use in deciding how much to charge you revolves around the use of your personal “insurance risk score” provided by FICO, the same company that monitors your credit. Insurance companies claim this score indicates how likely a person is to file a claim. FICO spokesman Craig Watts has described the insurance risk score as archaic, but about 300 insurance companies nationwide use the score to determine premiums.
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The tricks do not stop after you become a customer of most insurance companies. For example, after you are in an auto accident you may need to make an insurance claim. Many insurance companies use a program called Colossus to determine payments for car accident injuries. The Consumer Federation of America (CFA) argues that this program is specifically designed to pay less and “lowball” claims. CFA Director of Insurance, J. Robert Hunter, argues that in some cases, “Someone in the home office dials it back so that the best offer is really 20% below what it should be.”
This same software also allows insurance companies to rate auto accident attorneys and keep track of information about bodily injury settlements. Basically, this program allows insurance companies to determine whether or not it is financially worth it for the company to fight your car accident lawyer or settle the case for more money.
Another trick during the claims process involves delay tactics. For example some insurance companies are known for forcing clients to play “telephone tag,” calling at off times if they even call and requiring clients to leave messages rather than talking to a person. Other companies may repeatedly switch claims adjusters, forcing you to start your claims process over with the hope that you will give up and either forget your claim or settle it for less money.
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These somewhat shady business practices make it important for you to protect yourself in the event of a car collision. A quality car accident attorney will level the playing field and fight to get you the full amount your claim deserves without the stress of dealing with your insurer on your own. Hiring a strong auto accident lawyer can protect you from insurance company games and high out of pocket costs.