Calls on Consumers to Send in Complaints

In what may be the least exposed form of insurer abuse, insurance companies often wrongly determine their own policyholders to be “at-fault” in car accidents in order to boost the premium charged to the policyholder. This is the conclusion reached by consumer advocate Harvey Rosenfield and his Proposition 103 Enforcement Project (“Project”), a consumer advocacy group dedicated to insurance reform. Over the years, the Project has received numerous, angry complaints from consumers about how they were unjustifiably found to be “at-fault” for an accident by their own insurer without due consideration of all the facts.

“What most people don’t realize is that insurance companies are highly motivated to find their own policyholders ‘at-fault’ for a collision,” stated Sabrina Kim, staff attorney for the Project. “For example, if a claim is likely to cost more to defend than it is worth, the insurer may just pay the claim without much investigation, because in the end, the insurer can more than recoup this amount by simply raising the rates of its policyholder over a three-year period,” explained Kim. While this nets savings for the insurer, it means much higher auto insurance rates for the insured over the next three years as a result of “fault points” being attributed to her driving safety record and/or the loss of her Good Driver Discount.

Insurers basically follow three mandates when their policyholder is involved in an accident: first, deny the claim by the other party in its entirety; second, deny any bodily injury claim by the other party; and third, find their own policyholder to be at-fault. “It’s a classic ‘heads I win, tails you lose’ situation between insurers and their own insured,” stated Sabrina Kim. “If the insurer can’t get the other party to pay for the accident, the insurer will collect the amount (and then some) from its own insured in the form of higher rates. This pits the interests of the insurer against that of its own insured, which explains why ‘at-fault’ determinations are so often based on minimal facts, poor follow-up of witnesses, and gross misstatements of the law, such as “the driver who rear-ends another is at fault in the collision.”

Common consumer complaints received by the Project include the following:

• Many consumers complained that their insurer determined them to be “at-fault” for an accident without ever speaking to witnesses or other drivers involved in the accident. One consumer was notified that she was found to be “at-fault” the very next day after the accident.
  
  
• At the other extreme, consumers also complained that their insurer never notified them of the results of the accident investigation, including whether or not they were “at fault.” After being passed around from one claims adjuster to another for month on end, these consumers found out they had “at-fault” points only after calling their insurer to ask why their rates went up upon renewal.
  
  
• Others complained that their insurer settled a claim for thousands of dollars when the actual damage was below $500. Since an insurer may only find its insured to be principally at fault in an accident when the damage caused by the accident is over $500.00, the insurer’s inflated settlement allowed the insurer to find the insured “at fault” and to charge the insured higher rates in the future.

The Project plans to propose new “at-fault” regulations that will allow consumers to better challenge their own insurer for wrongful “at-fault” determinations. But we need more evidence. We need consumers who have been wrongly determined to be “at-fault” in an accident to send in their complaints to us so we can show [the Insurance Commissioner] why stronger regulations are necessary. “Presently, insurance companies have the only say on who is ‘at-fault’ in an accident and consumers can’t do a thing about it. There are probably countless cases of bad faith and breach of contract that are known only inside the walls of claims handling departments. Therefore, we need stronger laws to force insurers to justify their “at-fault” findings to their policyholders,” concluded Kim.

Consumer should send a copy of the “at-fault” notice they received from their insurance company, along with any correspondence between them, their insurer and/or the California Department of Insurance to:

Proposition 103 Enforcement Project


1750 Ocean Park Boulevard, Suite 200


Santa Monica, CA 90405

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