My Sister’s Auto Insurance Paid to Defend Her Killer?

Social media is buzzing about this blog post, written by New York Comedian Matt Fisher, describing his family’s ordeal settling a claim with Progressive auto insurance over the death of his sister in an auto accident in 2010. I’m taking time out, from my continuing analysis of the latest JD Power auto insurance study, to discuss this difficult and poorly handled claim, and make a few points I think are important to the insurance-buying public.

This story is all over the Internet, but if you click the link to the article above, you can read the Matt Fisher blog post, and some of the comments made by readers do a good job of explaining the issues of coverage and settlement, and why Progressive acted as they did in this case. 08/20/12 Update: This NY Times article has more detail about the legal issues involved.

A lot of people are angry with Progressive about this situation, and the insensitive way Progressive has responded to it. Some Progressive auto insurance customers are switching to a different car insurance company.

You may decide it’s prudent to avoid insuring with Progressive, but I want to give my opinion on what I expect would be the normal reactions and questions from people hearing about how this claim was handled, to help you make a rational decision, and not solely an emotional decision, about your auto insurance.

1. Did Progressive take extraordinary measures to avoid paying this claim, proving it’s a crooked company?

No, the actions of Progressive are not unusual for a claim involving Under-Insured Motorist Coverage, where the customer and the insurance company disagree about who was at fault, or how much should be paid.

Under Insured Motorist Coverage pays only when the under insured motorist is legally at fault for the injury, and the claim is paid based on an appropriate monetary amount to compensate for the injury.

When it comes to Uninsured or Under Insured Motorist Coverage, and you and your auto insurance company cannot agree about whom was at fault, or the proper monetary settlement, you may have to sue the uninsured or under insured driver to have the legal system determine fault and compensation. If your auto insurance company has a degree of confidence the court will uphold their position on the claim, they will allow the claim to go to court, and assist in the defense of the under insured driver.

Choosing another insurance company, instead of Progressive, won’t avoid this situation happening to you, if you are injured in an accident with an uninsured or under insured driver, and your auto insurance company disagrees the driver was at fault, or on the amount you should be paid.

I would wager every auto insurance company has taken the same actions as Progressive, when they dispute an Uninsured or Uninsured Motorist claim, but the general public never hears about it.

2. Okay, I understand this can happen with any auto insurance company. It might be okay when the claim shouldn’t be paid. But Progressive lost the court case, proving they hassled their customer’s family by fighting to not pay a valid claim.

Since the court awarded the Fisher family $760,000 plus legal costs in the case, it’s pretty obvious Progressive was wrong in their assessment of the claim, regarding who was as fault, and the amount to pay as a proper settlement.

However, whether your car insurance company is wrong or right when they disagree with you about responsibility, or the amount you should be paid for a claim involving Uninsured or Under Insured Motorist Coverage, you will have to sue the uninsured or under insured driver to prove the facts of the case in court.

Progressive isn’t the only company to think they rightly declined a claim, only to be proven wrong by a court decision.

It’s more costly to an insurance company, both in terms of the cost of defense & settlement, and the cost of lost business from ill will and bad press, to fight a legitimate claim in court.

If you have a claim, you can bet any insurance company will investigate the circumstances to see if the claim should be denied, or make sure the claim is not paid for more than the insurance company is contractually obligated.

However, did Progressive act in bad faith, to try to avoid paying
a claim it was contractually obligated to pay?

Progressive recently paid the claim, settling with the Fishers for tens of thousands of dollars above the Under Insured Motorist Coverage limit, to avoid litigation for acting in bad faith, or a hearing before the insurance commissioner, as reported here.

Do insurance companies sometimes act in bad faith when settling claims? Yes, this happens. Maybe not as frequently or intentionally as many people hating insurance companies think, but it does happen.

I write a lot about auto insurance companies, and I would love to be able to tell my readers which companies are always honest and fair in settling claims, and which companies have crooked claims practices. But the truth is there are people who have had problems with even the best insurance companies, and have to sue for coverage.

Also, as horrible as this Progressive claim seems to be, I’m sure there are Progressive customers happy with how their Under Insured Motorist claim was handled by the company.

Hearing about this claim may convince you Progressive is crooked, but if you research the personal accounts about any insurance company on the Internet, you will probably be convinced all insurance companies are crooked.

This is what happens when you buy auto insurance without an agent. My agent will fight for me to get a claim like this covered.

No. Agents can provide a lot of valuable assistance to their customers, and help with the claim process. However, the decision to pay a claim is made by the insurance company, and your agent has no input into the decision.

What can you do to avoid having a situation like this with your insurance company?

The best you can do is reduce your chances of having a claims nightmare by choosing an insurance company with a great customer service record and low number of complaints.

Read the insurance company reviews on my website to find insurance company complaint information & customer service and claims satisfaction ratings.

Because you can have a claim like this Progressive claim with any insurance company, I put a high value on getting low rates for auto insurance. Don’t skimp on coverage, but shop with all the leading companies to get the best price for the coverage you need.

You may like your agent or insurance company you’ve had for the last 10 years. Maybe you had a claim, and you were very happy with how it was handled. But almost all auto insurance companies handle most claims well. You never know, should you have a large claim, if you will have to sue for coverage. Choose a good insurance company, but don’t pay a lot more, because you think your insurance company will never treat you like this Progressive claim. It can happen to you.

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