The Real Reason Why Insurance Companies Settle Cases

Today we're talking about why insurance companies pay to settle cases.

I think there's a misconception often with people who are injured, my clients, trying to understand why exactly is the insurance company willing to pay money to resolve your case. 

Although your lawyer will present your case in terms of your injuries, the traumatic event and how it harmed you and resulted in losses to you. For instance, pain and suffering, income loss, health care expenses, and maybe expenses associated with doing things around your home as well. 

That's how your lawyer presents it to the insurance company. 

Understanding Insurance Company Motivations & Risk
But in fact, the insurance company, when they settle a case with you, they're paying for a release.

They're giving money in exchange for a contract or an agreement, which lawyers refer to as releases in these circumstances that essentially serve to release and relinquish all of your rights to continue your lawsuit in a court of law, to find out what a judge or a jury will ultimately award in a court of law.

The amount the insurance company is willing to pay largely depends on how much risk they have in going to court against you. The greater the risk to the insurance company, meaning the stronger case you have to present in court, the more they're willing to pay to buy your rights to have your case resolved by a judge or a jury.

Case Study: Car Accident and Whiplash Injuries
Let's use the example of a car accident. You have five people who were involved in a car accident. Everybody's heard of whiplash, so let's use that as an example. Every single one of them had the same injury. So you have five people who Rear ended with whiplash injuries. For each of them, it's impacting their life. It's impacted upon their health. It's impacted upon the way they function at work. They all have the same symptoms. They all have the same injury. 

The Importance of a Robust Treatment Team
Now, one of those people regularly goes to the doctor, has seen specialists, has attempted all the treatment recommended, seen specialists, maybe injections, maybe as far as in fact, requiring surgery. They have a robust treatment team. 

And then you get another individual in that group. Let's go to the other extreme. They're having all these symptoms. They've gone to their doctor and the doctor prescribed something. They tried it. They didn't like it. And then they just stopped going and they sort of managed doing some home exercises from time to time.

They're less engaged in their recreation. They're not going to the doctor, they haven't seen any specialists, they're not filling any prescriptions, they're not doing any ongoing therapies. 

Comparing Strong and Weak Cases
Now, the lawyer has both of those cases to present. One case, where the person has a robust treatment team. That's a really strong case to present at court because not only is the jury or the judge going to hear from the injured party, they're also going to hear from all of these people that really have no interest in the outcome of the case.

Their role is to make you better, to help you heal. And they're going to be able to come into court and talk about their role, their involvement, what they've observed and more than that, they're going to be qualified as expert witnesses. 

Benefits of Having a Treatment Team & Expert Witnesses
An expert witness has greater latitude in a courtroom. They can give opinions and they can give evidence that a lay witness cannot give. Opinions on how the injuries harm opinions about the future. The person who has an organic treatment team made up of individuals whose only interest is in treating this person is going to have a far stronger case. 

Now let's look at the other side, the person who doesn't have that treatment team. The only real way the lawyer can present those injuries is to go out and hire an expert to pay for an opinion. So they will, they'll pay for a doctor to see you maybe one time, maybe for an hour or less. to assess you, write an opinion, ultimately, if necessary, come to trial and testify about that opinion. 

While that doctor is still credible and still very qualified, it will become obvious in court that that opinion isn't really supported by a treatment team. It was obtained solely for the purpose of the lawsuit. You're not getting any treatment from this person. They didn't see you on a regular basis. 

And so although They might both have the same conclusions and their conclusions might both be correct, that you are injured and that you require ongoing health care. The ability to present the story or the case in court, in my view, is much stronger for the person who has an organic treatment team, people who know the individual much better and are involved in their care and treatment. 

The person with the treatment team will still likely have an expert that's hired by their lawyer for use of expert opinion. But now that expert is also carrying far more credibility in a courthouse. Their opinion is supported by medical records, treatment and the opinions of all these other people involved in your team. 

Insurance Company Risk Assessment
If the insurance company is negotiating to buy a release, that prevents that individual from taking their case all the way through the verdict at trial. Which one do you think they're going to pay more on? 

In our experience, more than 20 years of doing this. Invariably, 100 percent of the time, the insurance company will pay more money to the person that has a stronger ability to present the case at court. And that's because they're not looking at the pain and suffering and what's right, what's fair and what's reasonable.

Insurance companies don't do that. All they think about is risk. And they look at that particular set of facts and that particular presentation and they say, well, that puts us at greater risk of paying more money than the other scenario. Because the risk is greater to us, we're going to pay more to keep that case from going and being told than we will for this other one.

It's not fair, probably. But it's important to keep in mind that insurance companies aren't required to be fair. They're not a government entity. They're not a disability policy in this context. They're defending someone that caused the car accident. And that insurance company's mandate is to defend and only pay what the exposure is to their insured. And so really they have no obligations to the injured party. 

Advice for Injured Parties and Their Lawyers
So what does that mean for you and your lawyer? You and your lawyer need to make sure you can tell the story well in a court of law. Whether it's to a judge or a jury. That you can present to a judge or a jury that in fact there is an income loss or a risk of an income loss. That there are medical expenses and ongoing health care that you will require in the future and ongoing expenses. That the event did result in a serious harm to you in terms of your health, your function, your relationships, your enjoyment of life, your recreation, things like that. 

These are my suggestions from my experience, litigating personal injury cases, both as a defense lawyer, which I was for many years and as a plaintiff's lawyer representing injured victims, which I've now done for much longer than I have as a defense lawyer.

That's my experience. Of course, ask questions to your lawyer. Get advice, find out what you could do to help tell your story and create more risk to the insurance company so you get paid more money and you're fairly compensated. 

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