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Contrary to their TV commercials, Insurance companies are shrewd and calculating big businesses. Insurance companies make profit by insuring people who make smaller claims than their payments. To increase profits insurance companies like to insure people who are unlikely to use their insurance and reject those that are likely to use the insurance. Insurance companies also increase their profits by reducing the amount paid out on claims.

In auto insurance cases one of the ways an insurance company reduces the total payout amount is by adding stress to the claimant’s situation. This is accomplished with a simple formula:

1. Make the filing process difficult, so some people quit. This is the “Its not worth the hassle” crowd with smaller claims and busy lives. This is why the claim center is only open M-F 9am - 4pm, you have to miss work. The paperwork will also be confusing and lengthly. The phone numbers will be to difficult switch boards. Everything is designed to slow down the process and make it a hassle to file your claim.

2. Deny the claim. CNN did a great report on Insurance practices and discovered that some insurance companies deny the 1st claim automatically. This causes a few people to drop out and delays everyone else.

3. Stall the payment. The longer the insurance company waits to pay the more financial stress builds on the claimant. If the claiment is in bad financial condition getting some money now, versus full payment later becomes a necessity. This reduces the amount paid out per claim.

4. Some insurance companies make it policy to defend all denials forcing their claimants and customers to enter into the court process. This policy also deters some lawyers to taking smaller cases since they are “forced” to litigate to a conclusion.

The same CNN study found that auto accident victims got significantly higher settlement amounts and faster payments if they retained an attorney. If you need a auto accident attorney contact your local lawyer referral service.