Don’t believe insurance companies when they tell you you don’t need a lawyer because they’ll take good care of you. They won’t. Insurance companies are in the business of collecting money for premiums and paying out as little as possible to increase profits. Allstate has been criminally convicted of practicing law without a license because they were sending letters to people injured in an accident telling them that they don’t need a lawyer because Allstate considers them as future potential customers and will treat them fairly.
State Farm Insurance has mailed letters (I received one) stating, “Here’s the bad news… people are suing each other more today than ever before.” The purpose of the letter is to scare people into buying an “affordable Personal Liability Umbrella Policy”. The letter ends with “Think about it. Hardworking people like you are prime targets for [a] personal liability claim.”
This is false information presented as a scare tactic to sell you an extra policy so State Farm Insurance and the State Farm Insurance agent can make extra profit. It may be a very good idea to have a Personal Liability Umbrella Policy but really for other reasons. First of all, the most obvious is that you can relax knowing you have sufficient coverage. But most people don’t realize that your insurance policy also provides you with coverage to pay a lawyer to defend you. This can be costly if you had to pay for it yourself. Umbrella insurance will provide you with the assurance that you won’t have to pay any legal fees if you are sued.
The fact is that there are fewer personal injury law suits than ever before. Any process server can tell you their business is down 35% in the last few years. It has become so bad, that I have heard defense lawyers starting to argue for plaintiff friendly laws because they are going out of business. One defense firm I heard about has laid off 2/3 of it’s lawyers. The least experienced defense lawyer in the firm now has 8 years of experience. That is unheard of. Imagine that! Personal Injury defense lawyers are now crying that they don’t have enough business.
Contrary to the news media, insurance companies and politicians tell you, there is no need for tort reform. We have de facto tort reform instituted by the insurance companies’ refusal to settle small cases. By the way, it is these small cases which have disappeared that cost the insurance companies the bulk of their money because there were so many more of them than big cases and because of the cost of administrative overhead. The big cases cost the insurance companies much less because there are so few of them and because they can accurately predict the amounts they will pay out and the premium they need to collect.
Apparently State Farm has noticed the decrease in law suits because my car insurance premiums have been slightly reduced this year. I doubt my insurance premiums would have been reduced if “people are suing each other more today than ever before.”
Why haven’t they been reduced proportionately? I believe, because State Farm has 1) retained more profits (insurance companies are earning record profits); 2) retained some of the savings to offset storm related losses; and 3) because while overhead must have been decreased, it may not have been decreased proportionately.
As a personal injury lawyer representing people who are legitimately and seriously injured, I strongly resent State Farm’s tactics. With the average law suit costing me several thousand dollars and three years of work, I only represent people who are 1) legitimately injured; 2) seriously and permanently injured and 3) hurt due to someone else’s negligence. Furthermore, I have many friends who are personal injury lawyers and none of them take cases just because someone wants to sue.
State Farm’s claim that “people are suing each other more today than ever before” implies that even if the population were the same as “before”, more people are suing each other for no good reason. However, the population is continually increasing. Even considering the fact that the population has increased since “before”, the U.S. Department of Justice Bureau of Justice Statistics sates that in U.S. district courts, “after reaching a peak of 3,600 trials in 1985, the number of tort cases concluded by bench or jury trial has declined by nearly 80%.”
Umbrella insurance is a good idea because you might get sued for an accident where someone is injured but you don’t need to be scared by threats of frivolous lawsuits. Frivolous lawsuits are rare and even rarer large jury verdicts in frivolous cases result in appeal reviewed by judges instead of a jury.