Back in January, I wrote about Allstate’s on going war with the state of Florida (and Missouri) in which it arrogantly racked up more than $4 million in fines for refusing to turn over documents that they had been ordered to produce and which had been requested by the insurance commission in Florida. On Friday, Allstate not only produced 150,000 pages of responsive documents it had protected as proprietary, but it made the documents available on Allstate’s website.
In defending some of the documents, a company spokesperson said that many lawyers misinterpreted the documents that refer to how Allstate deals with claims from other parties, not from policyholders. The Allstate spokesperson said many of the documents, which had been picked apart by plaintiff’s personal injury lawyers, refer to claims-handling practices for car accident claims that have been incorrectly assumed to be applied to homeowners’ policies as well.
If this is true, I see Allstate’s point. Accident lawyers whine about Allstate’s bad offers in third party cases. In car accident cases in Maryland, I don’t think GEICO, Progressive, Nationwide, MAIF, or State Farm are making offers that are any different than Allstate’s. But that is not my point. The insurance companies have no obligation in third party cases to make fair offers. Insurance companies can do whatever they want. This is why we have lawsuits.
Moreover, the reason why insurance companies will not pay fair value on my accident claims is because two things have to happen before a bad offer turns into a lawsuit: (1) the accident lawyer has to be willing to file the claim, and (2) the plaintiff has to be willing to file a lawsuit and wait for their recovery. With respect to the former point, accident lawyers who fear filing suit rarely tell their clients they will not file suit. Instead, the lawyer tells the client that it is a great offer and they should accept it. The main reason insurance companies make bad offers is because lawyers let them. The idea that insurance companies – again in third party case – have an obligation to be fair is as absurd as the notion that personal injury lawyers should have the goal of being fair. In the adversary system, if your goal is to be fair, you are doing your client a disservice. This is not to say that you should not recommend fair settlements, but it certainly should not be a plaintiffs’ lawyer’s goal.
First party insurance cases where the insurer has a duty to their insureds to fairly provide compensation for their injuries or losses are a different matter altogether. In these cases, I think there is ample evidence that Allstate has failed to meet their obligations and I would not be surprised if these documents intentionally blur the lines between smart strategies in third party cases where the insurance company has a legitimate objective to pay less than fair value on claims and first party cases where the insurance company has a legal and ethical obligation to pay their insureds fair value for their claims.