How Car Insurance Companies Investigate Accident Claims

Insurance companies are businesses and they are, like all businesses, expected to make a profit.

In the simplest terms, they do so by assessing risk and hoping they will pay less in claims than they earn in premiums. One way they can mitigate that risk is by making sure that they pay only what is necessary on claims.

Yes, they want to be fair, but they will also be conservative with their payouts.

Bottom line? They aren’t working for you or your best interests, so you need someone who is exclusively on your side, not on the side of the insurance company shareholders.

Once A Claim Is Filed…

Adjusters are assigned to a claim file.

Different adjusters may work on a single case, depending on whether or not there are injuries and third party liability at play.

For example, you might talk to an auto adjuster for your car repairs and an accident benefits adjuster for your injury claim. If there is a possibility of exposure due to your being at least partly at fault, there might also be an adjuster assigned to manage third party liability.

The Reserve

Each adjuster sets a reserve for their part of the claim, based on an initial assessment of damages / injuries and liability.

What’s important here is that their initial information be as accurate as possible so that they set a high enough reserve. Why? It’s this reserve that is factored into the profit and loss statement of the company and any increases to that reserve will cut into profit.

Translation: Once the reserve is set, it’s hard to get the insurance company to increase it.

With that in mind, it’s important -if you even suspect some level of injury- to get a personal injury lawyer involved. This way, you can be sure that your case is being represented accurately and that reserves are being set appropriately.

In my case, I used to defend insurance companies, before becoming a personal injury lawyer on behalf of claimants, so I know exactly what they are looking for and how they will proceed.

This is why I know that it’s the industry norm for insurance companies to set a higher reserve on a claim file that has a lawyer involved, because they know that the lawyer will do their due diligence.

Once Reserves Are Set…

Your claim will be investigated, benefits will kick in and, depending on the severity of your injuries, negotiations may begin to determine a settlement to manage the long-term effects of your injuries.

Medical documentation is key, and a lawyer will help you make sure that you have what you need to demonstrate in the strongest possible terms your inability to resume your activities of daily life, including your employment, at the level you enjoyed before the accident.

While my job will always be to strengthen your case with documentation and information, the insurance company will always be looking to decredit it.

Here are a few ways that the insurance company will attempt to discredit your case, to justify a lower settlement:

  • Inconsistent medical information — the insurance company will cross reference anything you say about your situation with your medical reports. If there are inconsistencies because your doctor didn’t note everything or didn’t investigate every issue, that will be used against you.

Similarly, if you don’t report even a suspicion of injury to the paramedics or police at the scene, and their reports don’t mention them, the insurance company will take that as a sign that your injuries weren’t as serious as you make them out to be.

  • Pre-existing conditions — if you have any pre-existing medical conditions, including psychiatric, disclose them to your lawyer and doctor right away.

It might not be the most comfortable conversation you’ll ever have, but if you don’t, and the insurance company finds out about them, they could use the information to a) make it appear that you aren’t forthcoming or trustworthy in your statements and b) that your health situation wasn’t entirely caused by the accident.

  • Income reporting — if you claim that you can’t return to your previous job and that you were earning $60K a year before, be sure that you can substantiate that figure.

This is particularly important for self-employed individuals, whose incomes might vary year over year. What your tax returns and Notice(s) of Assessment indicate should be the bottom line.

  • Do what you’re asked to do — if your doctor prescribes physio two times a week for the foreseeable future, go. Even if it’s annoying or hard to schedule, find the time.

Your willingness to participate in your own recovery, far from hurting your case, will demonstrate that you are cooperating. Anything less will flag the to the company that you may not be as injured as you say you are.

  • Surveillance — part of the investigation by the insurance company, if they feel that they are missing information or that you are in some way not forthcoming, might include surveillance.

For example, if yours is an accident in which there’s not a lot of property damage and yet you are alleging severe injuries, the insurance company may want to test your allegations.

The primary method that insurance companies use is hiring a private investigator to review your social media or capture video surveillance.

These investigators may follow you to get an idea of your activity level, what you’re doing, and what you appear to be able to do. Things like mowing the grass or participating in Yoga in the Park.

It’s typically used in larger cases where there’s more exposure (i.e. they are worth a lot), and the insurance company is looking to minimize the payment. It could very well be based on the adjustor’s hunch that somethings not quite right with your file so they wish to take a closer look.

I know it’s terribly intrusive, but it IS legal, and if you’re honest, surveillance is not going to hurt you. It’s when you don’t tell the truth that surveillance becomes a problem.

Example? A claimant who is asked by the insurance company about cutting the lawn and he says he never cuts the lawn, he can’t – it causes him too much pain. Thus he pays someone else to do it, yet the following weekend, he is seen on surveillance video cutting the lawn.

It could be that the client only did it once to see if he could and the act left him in bed for two days, or that his injuries are improving and he can now cut the lawn once in a while, but he’s nowhere near resuming his full-time job. But none of that matters much at this point, because the client’s credibility is thoroughly damaged. 

Suddenly everything claim ever made is held up to the microscope.

Settling a claim can take upwards of two years, so it’s a slow process that requires you to be on the ball, follow your doctor’s treatment plan, and keep communication channels open with your lawyer.

If there are changes in your condition – good or bad – your lawyer needs to know.

Positive progress with your health may lead to a lower settlement – this is true, but being dishonest about your situation may destroy your chance at any settlement, which is why honesty is always the best policy.


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