The Need for Even More Auto Insurance Company Awareness


In the past, Total Injury has detailed the shady practices of auto insurance companies when handling car accident claims, and it appears that big boys State Farm and Allstate are both up to some old and new tricks.

In California, State Farm is being accused of undercutting policyholders on the value of vehicles that have been totaled in car accidents. Auto insurance companies are required under California law to use comparable vehicles as a point of reference when settling on totaled vehicles. Accepted values of totaled vehicles typically include the asking price or the actual retail sale price of the comparable vehicle, with other factors like mileage and the model year of the vehicle often factoring into the equation.

With that in mind, State Farm has allegedly been circumventing these rules since May of 2007. State Farm has been specifically charged with securing the lowest possible price that a dealer would accept for a vehicle rather than getting the actual sales price or value of the vehicle.

With a lower value attached to the vehicle, State Farm has been able to offer low-ball settlements to consumers. In simple terms, State Farm keeps the difference after shortchanging its policyholders.

Of further interest, the California Insurance Commission has been keeping an eye on the profit margins of auto insurance companies like State Farm. The commission has consistently found that these companies have continually spent less on settling claims while continuing to profit from high premiums.

As a result, the state commission has ordered car insurance companies for the last couple of years to lower their premiums. State Farm has since been accused of undercutting the claims settlements as a means to compensate for this order requiring lower premiums.

In the meantime, California residents who are State Farm policyholders and have filed a claim for a totaled vehicle since May of this year are encouraged to review the amount that they received for the vehicle and to determine whether that amount accurately reflected what the vehicle was worth.

Allstate Insurance Company to Reimburse Thousands of Drivers in Washington

Thousands of Washington drivers will be reimbursed for out-of-pocket expenses under a tentative settlement in a class-action suit against Allstate.

Back in 2005, Pamela Coffell sued Allstate and claimed that the company had arbitrarily limited payments for her medical expenses sustained after a car accident. Coffell had personal injury protection on her car insurance with Allstate and paid premiums on the policy. Coffell asserted that she was led to believe that Allstate would cover the full cost of reasonable medical expenses from her car accident injuries, regardless of who was at fault for the accident.

However, she quickly learned upon submitting her medical expenses in 2004 that Allstate would not cover the full bill. Rather, she was left to pay the difference, which added up to hundreds of dollars in time, without getting a full explanation from Allstate for why she was footing the rest of the bill.

An attorney for Coffell and other plaintiffs in the class-action lawsuit alleged that Allstate used a billing software program to arbitrarily determine the average pay rate for a medical procedure in the state and then paid out only 85 percent of that rate.

While coming to the settlement, which will result in $45 and a percentage of the out-of-pocket expenses for those covered in the lawsuit, Allstate denied any wrongdoing.

What else would you figure the company would do?

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