Accident Victims, Insurance Agent and Consumer Advocates Call for Greater Insurance Company Accountability
Sacramento — Victims of reckless drunk drivers, who have been ignored by the at-fault drivers’ insurance companies, will testify to the importance of SB 1237, authored by Senator Martha Escutia (D-Montebello), at the California Senate Judiciary hearing today. The innocent victims join the Foundation for Taxpayer and Consumer Rights and other consumer advocates who are calling for a measured renewal of the right to sue an insurance company that lowballs, denies or delays payment of a legitimate insurance claim.
“Since the accident I have had constant back pain. It is very intense when when I walk too much, and it hurts to pick up my grandchildren,” said Sheryl Landsverk of the San Fernando Valley. Sheryl was hit by a drunk driver in June of 1997 and has 911 tapes documenting the accident and demonstrating that the drunk driver, was clearly at–fault. Despite this and the at-fault driver’s $100,000 liability coverage, the insurer has never offered Sheryl a settlement. Sheryl remains in need of back surgery as a result of the accident but cannot get the insurance company to pay for the procedure. “Knowing the insurance company won’t pay, I can’t get the surgery I need. It is a big injustice that as an innocent accident victim that I have been treated the way I have.”
Arthur Rosetti, an insurance agent from Escalon, CA., in his testimony to the Committee, describes his own experience with “the now common ‘deny and grind‘ strategy so many companies have adopted. . . They stated that they would never under any circumstance settle out of court.” From his experience as an agent, Mr. Rosetti believes insurers have too much power in relation to accident victims: “The pendulum has swung too far the other way. This is what happens when the consumer has absolutely no leverage with insurance companies. To be held accountable by even a limited right to sue for bad faith would be an invaluable tool in correcting a system that has overcorrected.”
Bob Burnett, of Woodland Hills, was rear-ended by a drunk driver in September 1997 and still has not been offered a settlement from the driver’s insurance company. “The driver’s insurance company has not paid for the ambulance, medical bills or even the damage to my truck,” said Burnett. “It is really hard to battle an insurance company for months on end if you’re just trying to get by. They are trying to drag it out thinking that I will just give up. But they went to the wrong person for that.”
SB 1237 allows accident victims, who have won a judgment against the at-fault driver, to take the driver’s insurer to court if the insurer denies, delays or underpays the claim. A 1988 California Supreme Court decision held that innocent accident victims could not sue the insurance company of an at-fault driver, even if the insurer unfairly withheld or undervalued a legitimate claim.
At present the responsibility of enforcing appropriate claims behavior in the insurance industry is left to the Insurance Commissioner. According to advocates with the Foundation for Taxpayer and Consumer Rights (FTCR), the Department of Insurance does not have the resources to enforce system-wide accountability and Commissioner Quackenbush has not been willing to punish misdealing insurers in a manner which would end the low-balling of claims
FTCR recently issued a report which found that since 1988 the values of auto claims in California dropped by 29.1%. The ten year pattern of insurance company low-balling has left Californians with insurance settlements that are 25% lower than the national average. (Copies of the report are available.)
“Access to civil justice is the key to fairness in the insurance system,” said Doug Heller, consumer advocate with FTCR. “Insurers will not reimburse accident victims what they deserve until the companies know that they are accountable to the same standards of fair play to which we hold most industries. The deterrence created by this law will go a long way towards ending the low-balling of accident victims.”
SB 1237 will allow an accident victim to receive damages from an insurance company which does not properly pay a claim after a judgement against the company’s insured driver has been entered through arbitration or a civil trial. If an insurer continues to delay or deny payment on a claim, the innocent accident victims would have the right to sue the insurance company for acting in bad faith.