Tell us something we don’t know. The Consumer Federation of America (CFA) issued a Consumer Alert today entitled, “Auto Insurers May Be Underpaying Bodily Injury Claims.”

Apparently, the CFA just got wind that many, if not most, automobile insurance companies are using computer programs to generate “lowball” settlement offers on personal injury claims. CFA accuses the companies of “tuning” their computers in such a way as to try to generate “savings” to the company, instead of paying the legitimate values of claims.

In 2010, Allstate entered a settlement with 47 state attorneys general agreeing to change the way its computer program, Colossus, evaluated claims, and also to notify claimants when the computer was used to evaluate a claim. The CFA notes that Allstate is the only company to enter into this kind of agreement, despite the fact that many of America’s largest insurance companies engage in the same computerized practice.

In order to get a more fair shake on claims, CFA suggests the following:

  • Asking the insurance company if a computer was used to generate an offer on your claim. If the insurer refuses (which it undoubtedly will), file a complaint with the state insurance commissioner and request that all insurance companies be treated the same way as Allstate.
  • Demand to see the range of offers generated by the computer. Most computer programs generate a settlement range, but adjusters typically try to get cases settled for the bottom of the range – or less. If the company refuses to share the range of numbers, file a complaint with the insurance company.
  • Do not accept anything less than the high range of offers — or more. Since the insurance company computers are tuned to low ball, even “high end” offers will probably be insufficient. If the insurance company refuses to offer you the high end, CMA recommends that consumers file a complaint with the insurance commissioner, and seek legal advice.

As an Orlando accident attorney, I think it is also important to note that Florida’s current bad faith laws place burdens on insurance companies to use good faith in the way that they calculate and approach paying claims. As I discuss in the video above, strong bad faith laws are a critical component in trying to get insurance companies to do the right thing.

This is not a political issue, this is an issue of fairness and integrity. Businesses large and small, as well as consumers, need to know that their claims will be paid when they can and should be.

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