CNN reports on an 18-month investigation into minor-impact soft-tissue injury crashes around the country. The report confirms what auto accident lawyers in Baltimore and around the country have known for quite some time: the insurance companies defend these cases not based on the value of the cases, but to discourage auto accident lawyers and victims from bringing a claim.
Since the mid-1990s most of the major insurance companies – led by the two largest, Allstate and State Farm – have adopted a tough take-it-or-leave-it strategy when dealing with most auto accident cases. The result of this strategy has been billions of dollars in profits for insurance companies and little for the public, according to Jeff Stempel, a University of Nevada insurance law professor. Stempel further stated that “We can see that policyholders individually are getting hurt by being dragged through the court on fender-bender claims, and yet we don’t see any collateral benefit in the form of reduced premiums even for the other policyholders.” He says that he thinks “this kind of program is institutionalized bad faith.”
My last blog entry was a rambling diatribe about how desperately we need first-party bad faith in Maryland. But I do not agree with Professor Stempel that insurance companies’ decisions to aggressively fight claims are tantamount to bad faith in every case. The insurance companies have a right to take a tough posture, particularly in the third-party context. Our personal injury lawyers’ job is to fight back when they do. I do not think we deserve a free ride in third party cases.
Where the policy limit may be exceeded, most insurance companies will notify their insured that there is a risk that the verdict will exceed their policy limit and promise to pay any excess verdict. (Plaintiffs’ lawyers nickname the letters based on the insurance company slogans: you would get a “good neighbor” letter from State Farm; a “good hands” letter from Allstate.) So my feeling is that in the third-party context if the insurance company is willing to pay any excess judgment, they should be able to do whatever they want.
Where injustice comes into play traffic collision cases is uninsured motorist cases. Today, insurance companies are not obligated and do not act fair to their own insureds in Maryland. This is where I believe that insurance companies should be obligated to take off the gloves and deal with their customers in an even-handed manner. They are required to do this in most states. Hopefully, they will soon be required to do so in Maryland. If you agree with me, write your state senator and local delegates as we will wage this battle in the Maryland legislature in Annapolis in the upcoming months.