In the current time, individuals and businesses are scrambling to ensure they have enough resources to see them through the current crisis. Amongst border closures, people being confined to their homes, and shops being closed, insurance companies are trying to take advantage of a cash-strapped world.
The Department of Insurance from the State of California is fully are of insurance companies taking advantage of Californian’s financial need during Covid-19 skyrocketing unemployment and bankruptcies. The Department of Insurance issued a Notice to all insurance companies regarding “COVID-19 Protection for Policyholders from Unfair Settlement Practices.” The Notice states in part:
“The Department has been informed that some insurers and other persons engaged in the business of insurance in this state are unfairly taking advantage of the COVID-19 crisis and providing unjustifiably low settlement offers knowing financial need is high and recourse to the civil court system in the state is currently severely limited. The Department has also been informed that certain insurers and other persons engaged in the business of insurance in this state are lowering or failing to make settlement offers with full knowledge that, because of the reduced California court schedules, policyholders are unable to obtain prompt redress in the California court system.”
The Notice in its entirety is shown in this article below and at this link, Notice.
Negotiating with insurance companies is an ordeal at the best of times. They will undervalue and underestimate injuries, or just try and prove they were due to your own negligence. That is when they are not ignoring facts essential to your case or using aggressive tactics.
Now that people are facing losses of jobs and businesses, and are strapped for cash, insurance companies have been playing dirty. They are offering offensively low offers on injuries, knowing that accident victims are probably desperate for any kind of financial assistance to get them through Covid-19.
As personal injury lawyers, we have noticed insurance companies offering pennies on the dollar in some cases. While it is common for insurance companies to undervalue the costs of victims’ injuries, they are taking it to the extreme. Insurance companies are preying on injured people seeking financial stability. Some of these people have spent all their savings and are reliant on loved ones or government assistance to be able to pay for food and rent.
With the medical bills piling up, these personal injury clients are relying on insurance settlements to help them get back on their feet. Their circumstances can force their hand and make them accept offers they would not usually take.
As trial lawyers, we have an obligation to fight for the best outcome for our clients. Navigating these situations where a client needs financial assistance, and insurance companies are offering lowball offers, but fast cash is really difficult. We have to look after both the short-term and long-term interests of our clients.
However, as California attorneys, we should stand up to insurance companies and not allow them to prey on those in poor financial situations. Why should the value of a case be halved due to Covid-19?
It is our hope that government stimulus payments will provide financial relief to our clients so we can fight for a fair settlement. By removing the immediate need for money, we can hold insurance companies accountable and ensure they offer fair relief.
With restrictions on how we can conduct business and even do our day to day tasks, it can be difficult for solo practitioners and small law firms. A lot of us rely on a consistent stream of resolved cases to keep our business going. However, there are so many delays in the claims process, so things are taking longer than usual. Our clients need to come first though; it is our ethical duty as lawyers to put them first.
We need to protect our clients from insurance companies and their underhanded tactics, not be pressured into making bad decisions alongside our clients. As lawyers, it is our duty in these unprecedented times to be a voice of reason for our clients. They have no one else to turn to in this frightening point in their lives. Ask yourself, if it wasn’t for the current circumstances, would you allow a client to accept this offer? Demand insurance companies extend a reasonable settlement offer.
Ensure your client knows that once they accept a settlement, they cannot pursue further compensation for their injuries. If they take a lowball settlement of $200,000 when their injuries are worth $600,000, they are leaving $400,000 on the table because of a short term need. They will not be able to go back and claim that remaining money again.
If your law firm is struggling, do not let it affect your cases. There are options available to you. There are local, state, and national associations for trial lawyers. As a former insurance defense lawyer at Bremer Whyte, I learn that insurance adjusters are afraid of complaints against them to the Department of Insurance. However, the adjusters’ fear is not known by plaintiffs’ lawyers. Plaintiffs should make a Consumer Complaint to the Department of Insurance against the insurers and adjusters.
You can also reach out to other trial lawyers – including my office. We all collaborate from time to time, and now is the time for us to support each other and give advice.
Insurance companies are a business, and they use any tool in the arsenal to reduce settlements. This global pandemic is just another tool for them to use to increase their profits. As lawyers, we need to be even more steadfast in our commitment to justice for our community in these times. We need to put our clients’ needs first and push for fair settlements.
**************** Ricardo Lara California Insurance Commissioner ****************
TO: All Admitted and Non-Admitted Insurance Companies, All Licensed Insurance Adjusters and Producers, and Other Licensees and Interested Parties
FROM: Insurance Commissioner Ricardo Lara
DATE: May 14, 2020RE:COVID-19 Protection for Policyholders from Unfair Settlement Practices
The California Department of Insurance (“Department”) is aware that during the COVID-19 pandemic, policyholders attempting to resolve claims with their insurers are facing both economic hardship and lack of access to the California court system. Due to social distancing and “stay at home” orders, California civil courts are presently operating at substantially reduced schedules and certain courts are not currently accepting new filings. Law and motion hearings and jury trials have been discontinued, often with no set resumption date. Additionally, after the California courts reopen, they will likely face a substantial backlog and are expected to give priority to criminal trials and other urgent matters, leaving civil cases essentially on hold for the foreseeable future.
Fortunately, on April 6, 2020, the Judicial Council of California issued emergency rules governing the California court system during the COVID-19 pandemic. Most importantly, pursuant to Emergency Rule 9, the statute of limitations for all California civil causes of action are tolled from April 6, 2020, until 90 days after the Governor declares that the state of emergency related to the COVID-19 pandemic is lifted. The Department has been informed that some insurers and other persons engaged in the business of insurance in this state are unfairly taking advantage of the COVID-19 crisis and providing unjustifiably low settlement offers knowing financial need is high and recourse to the civil court system in the state is currently severely limited.
The Department has also been informed that certain insurers and other persons engaged in the business of insurance in this state are lowering or failing to make settlement offers with full knowledge that, because of the reduced California court schedules, policyholders are unable to obtain prompt redress in the California court system. This lack of access to the California court system puts policyholders who are already in severe financial hardship at a disadvantage and vulnerable to unjust settlement practices. The California Unfair Practices Act sets forth several practices that constitute unfair methods of competition or unfair or deceptive acts or practices, including but not limited to:
- Not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear;
- Compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in actions brought by the insureds, when the insureds have made claims for amounts reasonably similar to the amounts ultimately recovered;
- Failing to settle claims promptly, where liability has become apparent, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage.
Cal. Ins. Code §790.03(h)
Insurers and other persons engaged in the business of insurance in this state are hereby directed to comply with their various legal obligations under the California Unfair Practices Act (Cal. Ins. Code §790.03 et seq.) to promptly and fairly settle insurance claims.
Any person who or which engages in any unfair method of competition or any unfair or deceptive act or practice defined in Section 790.03 is subject to a civil penalty to be determined by the Insurance Commissioner, not to exceed $5,000 for each act, or, if the act or practice was willful, a civil penalty not to exceed $10,000 for each act. The Insurance Commissioner has the discretion to establish what constitutes an act. Cal. Ins. Code § 790.035(a)
Please be advised that Commissioner Lara intends to exercise the full extent of his authority under the Unfair Claims Practices Act to pursue all available administrative remedies including substantial civil penalties against any person engaged in the business of insurance in this state that has been knowingly committing or performing any of the enumerated unfair claims settlement practices set forth in the Unfair Practices Act with such frequency as to indicate a general business practice. Cal. Ins. Code §790.04