By Paul Berne
Senior Vice President, Claims
Lancer Insurance Company
Something goes bump in the night. It’s your limousine. And, it’s a bad situation. A high-speed interstate accident resulting in a fatal injury to the other driver, and injuries to your passengers. The scene is cluttered with wrecked vehicles, ambulances, policemen, firemen, EMTs. A local television crew arrives. After several hours, the road is clear, the injured are at medical care facilities, the officials are busy doing paperwork and you’re on your way back to your office wondering what will happen next. You’re worried about your vehicle, the image of your company, your customers, and your insurance rates. It’s hard to find good news given the situation, but there is some. Your insurance company should be able to provide you with excellent limousine claim management through the entire claim process.
What actually is involved in the claim adjusting process? Who does the work? How much work is there? What does it cost an insurance company to adjust a claim like the one described above?
You know that the limousine and livery industry has become a favorite target of plaintiff lawyers. You know that jury verdicts are out of control, and that it is essential to immediately and aggressively investigate and build a strong defense to any claim made against your company. Some insurance companies choose to stick their heads in the sand and avoid adjusting and legal expense. What they pay at the back-end in higher settlements and verdicts more than offsets what they should have spent at the front-end to keep the loss costs under control. Let’s break down where and how the money is spent.
THE FIRST RESPONSE
The media reports chaos, mayhem and a battle scene. A good limo insurance company, such as Lancer’s LimoDirect, is experienced in dealing with the press, and handles the communication in such a way that their interest is diffused within 12 hours of the incident. Within 24 hours, the media has no interest in following the story.
Now the battle begins. The insurance carrier for the driver of the car that hit your limo contends that the accident was your driver’s fault. So does the lawyer hired by the family of the deceased. A lawsuit is filed and punitive damages are alleged. Your insurer, through the evidence gathered at the preliminary adjusting phase, should be able to establish that fault primarily rests with the other driver. The police suspected the car driver might have been under the influence of alcohol. A responsible insurance company will hire a toxicologist to examine the lab records. This expert confirms that the level of intoxication was sufficient to impair driving ability. Not by much, but there is an argument that it contributed to the accident. The insurance company-retained accident reconstructionist produces a video animation that demonstrates that fault could not rest entirely with your driver. Of course, the plaintiff attorney has hired an expert with similar credentials, and his reconstruction indicates that complete fault rests with your driver.
Your company records are scrutinized by the plaintiff attorney to the last detail; your driver file, maintenance records and your safety and training program. Unfortunately, there is an adverse finding. The records reveal that the vehicle missed the completion of scheduled maintenance relating to the brakes. The records also indicate you knew about it, but you were fully booked and just didn’t get to the required maintenance. This creates a huge problem; you are exposed to punitive damages and the jury will be inflamed by what the plaintiff attorney will describe as your “putting profits ahead of safety”. He’ll argue that you had a “conscious disregard for the safety of others”. Your insurer retains yet another expert witness to defend you; this one specializes in explaining to juries why your conduct did not contribute to the accident. The case will be made that any issues with the brakes could not have had anything to do with the accident. The defense knows that will be a tough sell.
THE JURY DECIDES
Cases take twists and turns over the months and years they stay open. In the final analysis, what looked like a favorable liability situation for your company turns out to be a toss-up at best, with a better than 50-50 chance that a jury will find your driver is at least 75% at fault. But, your passengers have been treated fairly and promptly all along. They did not hire attorneys; their claims are settled and closed. Your insurer gets aggressive in demanding a contribution to the settlements for your passengers from the insurance carrier for the adverse auto. Under threat of a lawsuit, the other driver’s insurer finally relents and pays a significant percentage of each claim.
By leveraging the evidence gathered, experts hired and through the skilled handling of your attorney and claims adjuster, the case is settled for $1.2 million two weeks before trial. The total adjusting and legal cost is $124,000. Every penny spent was worth it; had the case not been prepared as it was, the outcome would have been a much higher settlement, or a verdict well in excess of what the case ultimately cost.
Some claims are fairly simple; fixed object or parked car cases, no liability incidents, and low impact fender-benders without injuries. When the bad thing happens however; injuries, fatalities, extensive property damage, it is essential that insurance companies step up the tempo and spend the time and money necessary to build the best defense possible. Strange as it seems, spending money on claims will help keep loss costs under control.