What would happen if your pharmacist's attitude was: "You don't need these drugs. You don't really have any aches and pains. But give us your money anyway."
What would happen if your favourite restaurant's attitude was: "You aren't really hungry. But give us your money anyway."
What would happen if your property management company's attitude was: "You don't really need us to mow your lawn. But give us your money anyway."
What business takes your money in advance and then doesn't provide the services you thought you paid for — and perhaps even brags about how much money they make in Canadian Underwriter and still files for premium increases? Answer: insurance companies.
For over 20 years, I have been a civil litigator and have represented more than 1,000 clients injured in car accidents or who have suffered damages to their property from theft, fire, flood or the like. When people come to see me in my office, they are already frustrated and often in pain.
What I tell them right away comes as a big shocker: "What you bought when you purchased an insurance policy is actually the right to sue." Sue who? "Your insurance company." Why? "Because their default position is that you are trying to defraud them, and that you are not really hurt or suffering financially."
An insurance policy is a contract between the policy holder and the insurance company. There is an offer, there is acceptance, and money changes hands.
There are many of us in the civil litigation practice who make a living getting insurance companies to fulfill their obligations. The insurance industry has done a brilliant job of portraying us personal injury lawyers as "ambulance chasers" trying to exploit the misery of our clients.
Here's the reality: when an insurance company receives a claim, their first reaction is to reject it. They may reject it a second and a third time, too. That's why people hire personal injury lawyers: to fight with insurance companies to enforce the contract that the policy holders believed they were paying for with their monthly premiums. Plus, insurance companies are always looking for loopholes to avoid paying, and they know where to find them because they wrote the contracts.
Insurance companies will drag out claims for as long as possible, knowing full well that they hold all the cards.
When it comes to insurance companies, the reality is the polar opposite of their advertising. And it has become worse after many insurers de-mutualized, meaning that profits are now paramount — not the best interests of policyholders.
One simple example: my clients had their home robbed of about $50,000 in electronics, jewellery and designer handbags. The insurer took the position that because the wife's cousin was living in their home, that the "risk profile" was increased. Since the clients had failed to notify the insurer of this new resident, the insurer denied their claim. This was notwithstanding that the break-in was, according to the police, the work of a gang that had committed a neighbourhood spree of break-and-enters, and further that my client was not seeking recovery for any losses sustained by the wife's cousin.
My clients sued the insurance company and a year later, agreed to settle for 35 cents on the dollar.
Typically, insurance companies will drag out claims for as long as possible, knowing full well that they hold all the cards. Many of my clients choose to settle for a fraction of what their policy is worth (or what they believed they would get if they were injured and filed a claim), because they are desperate. Out of time and out of money.
A recent case I had is a perfect example of how insurers work. After almost eight years of litigation, my client had a case that was worth close to $100,000. Months before trial, the insurer offered an amount that resulted in my client settling for less than $20,000 in her pocket. I strongly urged my client to proceed to trial, certain I could obtain a six-figure award, plus legal costs. My client told me she was "tired of fighting" and that she "just wanted this over with."
According to the Insurance Bureau of Canada's website, "auto insurance fraud costs Ontario drivers an estimated $1.6 billion each year. This means that $236 of a driver's auto insurance premium pays for the illegal activities of fraudsters."
But in the grand scheme of things, fraud is a very minor piece of the puzzle. And it certainly does not explain why legitimate claims are denied or why insurers spend legal fees which far outstrip the costs of the claim. They then tell the government and the media about how high the "cost per claim" is, while obscuring the fact that the cost per claim includes the excessive legal fees they pay out to insurance defence law firms — get this — to fight their own customers!
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It is time for the government to step up and protect Ontarians from their own insurance companies.
Sadly, the lawyers and victims' groups have not been listened to at Queen's Park. Instead, insurance companies have managed to manipulate the government and the media into believing that there is so much fraud they must investigate and deny every claim, increase premiums and pay out pennies on the dollar to deserving victims.
With a provincial election looming, it's a good time for the party leaders to tell us what they intend to do to help victims and not insurers.
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