why do insurance companies delay settlements?

Why Do Insurance Companies Delay Settlements?

When someone is injured in an accident or event that is the fault of another party, they usually have to obtain reimbursement for their losses from the other party’s insurance company. But even if the facts and evidence of the claim are pretty straightforward and there is no dispute about who was to blame, it can still be very difficult to recover the just compensation you deserve.

Filing an insurance claim is a complicated and confusing process, and this is largely by design.  Insurance companies will tell you that they need to have a complex process in place with specific steps to follow, otherwise, too many people would get away with filing false claims.  But another reason the system is set up this way is so they can delay the process and wait as long as possible before having to pay out a claim.

Why do Insurance Companies Delay Claims?

Insurers market themselves to the general public as “good neighbors”, “good hands people”, and other feel-good terms that are designed to give you the impression that they are looking out for you. But the truth is, most insurance carriers are for-profit entities whose primary goal is to protect their bottom line. They want to pay out as little as possible when an injured party files a claim, and as such, their interests are not aligned with that those of the claimant.

One of the common tactics an insurance company may use to mitigate their losses is to unnecessarily delay a claim. There are several points during the process when this may be done. For example, the insurer may be very slow in responding to your claim or communicating with you about various aspects of it. Another tactic they might use is to ask for information from you that they do not need, knowing it will take a lot of time and legwork for you to obtain it.

Perhaps the most egregious delay tactic is to simply “go dark” and stop responding for several weeks or months after a claimant refuses a lowball settlement offer. Instead of negotiating in good faith to come to a reasonable settlement, the insurer stops communicating with the claimant, hoping to frustrate them into accepting whatever paltry offer they present.

How Insurance Companies Profit from Delaying Claims

Whatever delay tactic they use, this all works to the insurance company’s advantage in the following ways:

  • Generates more Revenue: The first and most obvious reason an insurer wants to wait as long as possible before paying a claim is so they can hold onto the money longer and earn more interest on it. Many people do not realize that a significant portion of the profits an insurance company makes come from interest on savings and returns on investments. So naturally, an insurance carrier is never in a big hurry to take money out of an interest-bearing account and hand it over to a personal injury claimant.
  • Motivates the Claimant to Accept Less: Insurance companies know that, when someone is injured in an accident, they are usually out of work for an extended period of time and finances are tight. And as we eluded to earlier, by presenting a lowball settlement offer and dragging their feet during the process, they hope to frustrate the claimant into believing that this is all they are going to get and that they had better accept it.
  • Runs Out the Clock on the Statute of Limitations for Injury Lawsuits: Whether a claimant accepts an unfair settlement offer or not, the insurance company does not mind holding onto the money, earning interest on it, and letting the weeks and months tick by. Because they know that the statute of limitations for filing a personal injury lawsuit will eventually expire, taking away any leverage the claimant has to secure a more favorable settlement.

Insurance Company Delaying your Claim? Call Burns, Cunningham & Mackey, P.C. for Legal Help

If you or someone close to you has suffered injury in Alabama and you are having trouble with your insurance claim, call Burns, Cunningham & Mackey, P.C. for immediate assistance. Insurers use delays and other tactics to try to deny injury victims what they are rightfully owed, and we put our extensive experience to work to successfully thwart these tactics and recover maximum compensation on behalf of each client we serve.

Contact our Mobile office today at (251) 260-3815 or message us through our online contact form to schedule your free consultation.