Delays in insurance payments must stop

Published Wednesday, April 11, 2007

The owner of a local small trucking business was driving through east-central Minnesota when a young man crossed over the yellow line and hit the truck head on.

The other driver was apparently intent on committing suicide. The truck driver had no fault in the accident.

The accident totaled the truck. The owner had just put $24,000 of work into it and had planned on using it for his source of income for five to six years.

The truck driver’s insurance company knew that he would be anxious to get back on the road and back to earning a living for his family and offered him a settlement for much less than truck was worth.

Because the insurance company told him that the other driver’s insurance would be responsible for the difference, the driver accepted the offer.

He then borrowed money from his bank to help purchase a replacement truck and incurred interest expense, expecting the at-fault driver’s insurance company to reimburse him at any time.

Instead of settling the claim, the insurance company offered the truck driver a few thousand dollars to make the situation go away. The truck driver was forced to hire an attorney.

The attorney and truck driver agreed to go through mediation with the other driver’s insurance company.

The insurance company sent someone who was not prepared for the mediation and who had no more authority to resolve the case than the company originally offered almost 10 months earlier.

When the attorney said it was time to take this to trial, the insurance company finally settled up.

It should never have come to this.

The truck driver fell victim to the insurance industry’s tough “take-it-or-leave-it” strategy when dealing with some cases.

According to University of Nevada insurance law professor Jeff Stempel, this has resulted in billions in profits for insurance companies and little, if anything, for the policy holder.

In fact, in 2006, the top executive of a national insurance company received an 82 percent pay raise, bringing his total compensation to $12 million.

The same insurance company had a record profit in 2006 of $5.32 billion, a year after insurance companies were "devastated" by Hurricane Katrina losses.

The fact of the matter is it is consumers who are devastated when insurance companies delay and deny claims of consumers who have faithfully paid their premiums.

The local truck driver lost time on the road and was forced to pay legal fees that would not have been necessary if the insurance company had paid this legitimate claim.

To bring justice to Minnesota, this session “ Good Faith” legislation has been introduced. Good Faith is a fundamental consumer protection that Minnesotans deserve.

Insurance companies should be required to honor, rather than deny, policyholders’ legitimate claims.

This legislation, which is a law on the books in 46 other states, would not impact those insurance companies who already treat their policyholders fairly.

Consumers should get what they pay for — a covered loss should be paid unless there is a reasonable basis for delaying or denying the claim. We must send a clear signal that there is no place for a take-it-or-leave-it policy, abuse of consumers, or insurance greed in our state.

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Stephen Rufer, Fergus Falls - Dan Carlisle, Wadena attorneys