Worst Insurance Companies

The Worst Insurance Coverage 2009: Worst Companies and Worst Insurance Policies

One of the questions our Dallas car crash lawyers are asked most often is, “Which insurance company is the best?” The truthful answer to that question is complex and can best be derived by answering, first, which insurance companies you should definitely avoid. Every year the STREET LAW FIRM compiles a list of the “best” and “worst” insurance companies in America and publishes the lists on our web site. These lists are eagerly anticipated by our clients, as well as the tens of thousands of consumers who view our site, many of whom base their choice of a liability insurance carrier upon our recommendations. For this reason, we take our responsibility quite seriously and, while our opinions are by necessity somewhat subjective, they are nonetheless based upon our fifty years of experience in personal injury and wrongful death litigation and daily contact during that time with these carriers.

To fully understand and appreciate the criteria that combine to make an insurance company either a good one or one to avoid, a short history of personal injury litigation in Texas will be helpful.

When the STREET LAW FIRM first dedicated its entire practice to personal injury and wrongful death litigation back in 1982, claims settlement practices were much different from the way they are today. Insurance companies actually tried in those days to reach fair settlements. Admittedly, the reason they tried to reach fair settlements had little to do with conscience; it was actually based upon the economic reality that jury verdicts usually went in favor of injured victims in those days. (My, how things have changed. Read on.) Typically, in any average bodily injury claim, an insurance adjuster would offer compensation for past medical bills (the exact amount incurred, not some “audited” amount like today), physical pain, mental anguish (commonly called “suffering”), lost wages, and even future medical care if prescribed by a doctor. A typical settlement was three times the past medical bills, plus lost wages. Thus, a claimant with $3,000.00 in past medical bills and $1,000.00 in lost time from work would be offered $10,000.00. Settlements were usually consummated over the telephone with no lawsuit necessary. Adjusters even called us and made the offers without us having to track them down. More serious injuries, or cases with “aggravating circumstances” (if the Defendant were DWI or driving 100 mph at the time of the accident, for example), yielded higher settlements—sometimes five or even ten times the amount of the medical bills. It was a fair and just way to settle claims, and it provided claimants with enough money to pay their medical bills and attorneys’ fees, plus put a little money in their pockets for their trouble. Unfortunately, those days are gone.

Today, insurance companies are no longer interested in paying what is fair, right or just (in spite of what their ever-present commercials on television claim). It is common knowledge that insurance companies (which are some of the richest and most profitable corporations on earth) make much more money from their investments, on an annual basis, than they do from collecting premiums (although you might be shocked to know how much money they do take in just from premiums. State Farm, for instance, which has only 40% of the automobile insurance market, takes in a staggering ONE HUNDRED MILLION DOLLARS [$100,000,000.00] A DAY in premiums alone!). Therefore, when the stock market is booming, insurance companies make billions. If, however, the stock market is flat or down, as it has been throughout much of the Bush administration, insurance company investment profits plummet. This causes serious ramifications in the way insurance companies pay claims.

Typically today, insurance companies, particularly in Texas, no longer are willing to pay for “pain and suffering.” They seldom pay for lost wages. Likewise, carriers refuse to compensate for future medical care, even when it is prescribed by a doctor. Past, already-incurred medical bills are almost always “audited” to determine what is “fair and reasonable.” (Of course, the insurance company is the one deciding what is “fair and reasonable,” which is like appointing an arsonist to be Fire Chief.) “Fair and reasonable” to an insurance company is really, “How little can we can get away with paying?” So, instead of three times the medical bills plus lost wages as in days past, the typical offer from an insurance company today often starts out at half the medical bills or less. The “final offer” is usually somewhere near the medical bills or perhaps 1 ½ times the medical bills (depending on the insurance company, the adjuster, and what kind of mood they are in at the time of the settlement negotiations). In our example of the claimant who has $3,000.00 in past medical bills and $1,000.00 in lost wages, the typical starting offer today is perhaps $1,500.00 and the final offer will be $3,000.00 to $6,000.00 (at best), with probably the average settlement being about $4,500.00. It does not take a math genius to see that insurance companies have effectively cut in half what they now pay on a typical automobile accident injury claim. (But ask yourself this: Have my premiums been cut in half over the last 20 years? Most insurance companies raise their premiums 10-15 percent every year.)

And that’s not the end of it. Property damage settlements when the automobile is “totaled” are typically $500.00 to $800.00 less than fair market value. The insurance companies no longer use the “Blue Book” value but instead use a computer evaluation service that skews evaluations toward the middle, which effectively drives down the amount offered by the insurance company by 5-10%. With literally millions of automobile accident claims being settled annually, it is not difficult to see how much money the carriers are making by cheating each claimant out of $500.00 to $800.00 on each property damage claim. You’ll also be thrilled to know that our all-Republican Supreme Court has eliminated “diminution of damages” in Texas. This means that you can no longer collect damages for the amount the value of your vehicle has been diminished by an accident. (Of course, when you try to sell or trade a vehicle that has been damaged and repaired, you will quickly see that the value has indeed greatly diminished. You just can’t collect anything for it anymore. Score another victory for the insurance companies, who exercise almost complete control over our Supreme Court.) The former insurance company attorneys now inhabiting our Supreme Court have also eliminated “bad faith” litigation in Texas. This means that, no matter how badly your insurance company treats you, your chances of winning a suit against it for “bad faith settlement practices” are now nil.

In addition, while the “loser” in a lawsuit paid court costs without exception for decades in Texas, now insurance companies routinely refuse to pay court costs, even when the Plaintiff wins or when the case is settled in favor of the Plaintiff before trial. This change alone shaves the amount insurance companies have to pay by anywhere from $500.00 to several thousand dollars per case. Can you imagine how much money this adds up to in a year, all going straight from the victims’ pockets right back into the insurance companies’ already-huge bank accounts?

For decades in Texas, your recourse when an insurance company made an unfair offer was to hire an attorney and have him or her file a lawsuit for you. The filing of a lawsuit almost always resulted in the victim receiving a better offer from the carrier for two reasons. First, the insurance company had to hire an attorney to defend their insured, usually paying that attorney by the hour. This “cost of litigation” caused many cases to settle rather than go through a long, drawn-out (expensive) lawsuit. Second, juries in Texas, while always conservative (compared to more liberal [interpretation: generous] juries in states like California and New York), nevertheless almost always awarded the injured victim more money than the insurance company had offered. The typical jury award was three times the medical, plus lost wages, future medical, and sometimes disfigurement, impairment, and the like, where appropriate. (In fact, that’s where the “three-times-medical” rule of thumb came from: jury awards.) This fear that the jury would award more money than the case could be settled for likewise caused insurance companies to settle, rather than fight, most claims.

Today, however, most large insurance companies have purchased their own law firms (called “captive” law firms) and keep these attorneys on staff to defend almost all cases filed against their insureds. This causes so-called “defense costs” to be arguably zero, which makes it far more likely an insurance company will defend and try a lawsuit rather than settle it.

And now, rather than fearing jury awards, insurance companies actually win more cases than they lose in front of Texas juries. Due to decades of pressure by insurance companies on legislators and judges (and politicians who traded political favors for insurance company campaign dollars) and billions of dollars spent propagandizing the public with feel-good advertisements, juries in Texas no longer follow the “three-times-medical” rule. While juries in some parts of the state (typically along the border with Mexico) still render awards that are fair, juries in the rest of the state (particularly those in the big cities and especially those in North Texas) have become so tight with the money that the majority of motor vehicle accident cases that go to trial in these areas are awarded ZERO, and the remainder are often awarded less than their medical bills. (Most of you will be shocked to read this and will probably have a difficult time believing it. However, we have studied the jury reports for years and can assure you it is true. In many counties in Texas, 75% (3 out of 4) of car wreck cases that go to trial result in a zero award, while the other 25% are awarded only their medical bills or a very small amount above their medical.)

How did this happen? How did we go from fair awards of damages to awards that do not even cover the claimant’s medical bills? The answer to those questions is complex, but it can be summarized in two words: “TORT REFORM.”

Of course, “reform” means “to change for the better.” Whether or not the changes made to our tort law system have been for the better (and for the better of whom) is subject to interpretation.

The “tort reform” movement in Texas was spearheaded by a group of businessmen based in Houston. These men, who owned businesses as diverse as home building, automobile dealerships, and oil production (ENRON CEO Ken Lay was one of them) decided that there were too many lawsuits (especially those directed toward them!) and that jury awards were out of control. These businessmen (who, not coincidentally, were heavy contributors to George W. Bush, the Republican party, and its candidates) decided to push the legislature for changes in the laws of Texas that would operate to stifle the ability of injured victims to file lawsuits and also restrict the ability of juries to award unlimited damages. Their efforts resulted in monumental, sweeping changes to numerous laws in Texas that had the effect of lessening the amount of money victims and families of injury and death could receive and, contemporaneously, vastly increasing the wealth of insurance companies operating in Texas. At about the same time, Texas made the shift from being a Democratic state to a Republican one. Besides changing laws, “tort reform” had the added benefit of influencing public opinion which, over time, caused a complete reversal in the way jurors viewed personal injury cases. The result was that jurors began deciding cases not based upon what was fair to the victim, but rather what was best for business. Jurors began reasoning that every dollar given to an injury victim would, in effect, eventually come out of that juror’s own pocket in the form of higher insurance rates or higher prices of the goods and services purchased by them.

When it came to matters of “tort reform,” the insurance industry found a great ally in the Republican party (both on the state and national levels). The mantra of the GOP with regard to insurance claims settlement practices seemed to always fall on the side of “more for the insurance company” and “less for the victim.” The basic premise has been that there were too many frivolous lawsuits and too many fraudulent claims, so vast reforms were necessary in order to ferret out these crooks who were taking advantage of the system and driving everybody’s insurance rates through the roof. Cases like the McDonald’s “hot coffee” case and a deluge of sleazy lawyer television advertisements added to the feeding frenzy. (However, read our separate article on the McDonald’s hot coffee case to see how it has been completely misreported by the insurance industry in order to further reduce jury awards.)

There has been no greater standard-bearer for the insurance industry than George W. Bush, first as governor of Texas and later as President of the United States. During President Bush’s first term, “lawsuit reform” was one of the major planks of his platform. Later, after he was elected, it seemed that even while speaking to the United Nations about nuclear proliferation he nevertheless always seemed to find some way to weave into his speech how we had “too many frivolous lawsuits” and must do something now about “all these fraudulent claims.” (In fact, one of his campaign promises was that he would push federal legislation to curtail “frivolous lawsuits.”) While no rational person could dispute that frivolous lawsuits and fraudulent claims should be stopped, what the President didn’t bother to mention is that, according to every credible study that has ever been conducted, less than 2% of all claims are fraudulent. Regarding “frivolous” lawsuits, the definition of “frivolous” greatly depends upon your point-of-view. (Automobile manufacturer Ford Motor Company called the Pinto litigation “frivolous;” the families of the several hundred people incinerated in Pintos after they exploded upon impact did not quite see it that way.) In an earnest effort to avoid awarding damages on any “fraudulent” or “frivolous” claim, Texas juries have thrown the baby out with the bathwater and seem to have decided that it is safest to just not award any money on any claim! As a consequence, any person who still has both arms and legs (but is nevertheless claiming injuries) is automatically presumed to be a fraud. On any case involving injuries less than quadriplegia, jurors are convinced before they are even seated that “this must be one of those frivolous lawsuits our President has been warning us about!” When an accident victim has a neck or back injury (a so-called “soft-tissue injury”), insurance companies are repeatedly refusing to pay adequate compensation and Texas juries are letting them get away with it.

The result of all this tort reform hysteria is that few injured victims, at least in Texas, are getting fair awards out of our juries. The insurance companies are loving this and are soaking this trend for all it’s worth. As a consequence of what juries are doing (or, more correctly, what juries are not doing) in their awards, insurance companies are likewise not offering very much money to settle claims. After all, if a jury is unlikely to award much in damages, why should an insurance company voluntarily pay much?

How the individual insurance companies have parleyed “tort reform” to cheat the consumer—and to what extent—goes into determining our list of the “Worst Insurance Companies—2009.” When deciding which insurance company to choose, most people will look only at price and will quite simply choose the one with the lowest premiums. (If you own a television, you can’t have missed the fact that, on every channel at every hour of the day, insurance companies are touting what wonderful friends of yours they are. The one thing they have in common is that they all are claiming to have the lowest price.) In truth, the best measure of how “good” (or “bad”) an insurance company is has very little to do with how low its premiums are but, instead, by how likely it is to pay off in order to protect its insured from a lawsuit. After all, the reason you purchase liability insurance is to protect you in the event you are in an accident (and because it is required by law). If you purchase the cheapest insurance you can find, that insurance company is usually the least likely to pay off when you need it to. (How can an insurance company afford to be the cheapest? How about by not paying claims? The less claims it pays, the more money it keeps, the lower it can make its premiums. And, logically, the more of those slick ads it can run.) There are exceptions (some of the more-reasonably-priced insurance companies are better at paying claims than some of the more expensive), but we have found that our top five “Worst Insurance Companies—2009” are also among the cheapest to purchase. Instead of considering only price, what you should look for in an insurance company is one that will pay the damages you caused to the other party—to keep you from getting sued. After all, if your insurance company refuses to pay, it is you, not they, who gets sued. (Some of you may be surprised to learn that you cannot sue the negligent driver’s insurance company in Texas; you may only sue the driver him- or herself.) Of course, there is no database anywhere that lists which insurance companies pay off when they should. That is the purpose of our “Worst Insurance Companies—2009” list. We tell you the insurance companies that, in our experience, pay off the least, so you can avoid them like the plague. It is our opinion, based upon our experience, that if you are insured by one of the insurance companies on our list, you have at least a 75% likelihood (and, in the case of our first, second and third place “winners,” an almost 100% chance) of getting sued if you are in an accident and it is your fault. These are the insurance companies that we have found do the absolute least to attempt to settle claims fairly or in a timely manner and are the most likely to leave you vulnerable to a lawsuit when you need them the most.

So, without further ado, here is our list of the

WORST INSURANCE COMPANIES—2009

  1. PROGRESSIVE INSURANCE - Vaulting up from fifth place two years ago into third place last year, our Number 1 Worst Insurance Company for 2009 is Progressive. Propelled into being one of the most profitable and recognizable insurance companies in America by its slick and incessant advertising, Progressive has gone from being a not-so-bad insurance company to, in our opinion, the very worst. Progressive employs droves of very young, very inexperienced adjusters who have no clue how to properly evaluate claims. These young adjusters attend seminars where they are taught to use certain key phrases like “soft-tissue injury” and “minimal impact case” and they apply these phrases by rote to almost every situation, using them to justify extremely low offers. Progressive (and about twenty other insurance companies we know of) uses a computer program called “Colossus” into which the adjuster inputs dozens of key words, phrases and figures and out of which spits a number—a very low number—that the adjuster is pretty much married to. The number of lawsuits we have filed against those insured by Progressive has increased dramatically and, without a doubt, will rise even higher in the future due to Progressive’s unreasonable settlement practices. We recommend that you stay as far away as humanly possible from Progressive Insurance Company.
  2. FARMERS INSURANCE - Farmers Insurance, and its subsidiary, Mid-Century, is doing its best to become the next Progressive, and because of these efforts it has moved up into second place this year. Since being purchased by a French conglomerate a few years ago, Farmers has gone from being one of the better insurance companies to one of the very worst. Farmers, like Progressive, uses “Colossus” to evaluate claims. Adjusters, even those with decades of experience, are given very little latitude in settling claims. In our experience, Farmers makes some of the lowest offers in the industry. If you carry Farmers or Mid-Century Insurance, your chances of getting sued if you cause an accident are extremely high. A typical offer by Farmers, even after a lawsuit is filed, discovery is completed, mediation is conducted, and the case is “on the courthouse steps,” is usually no more than 10-15% above the medical bills. Dumping Farmers as your insurance company now will save you much grief later should you ever have a claim.
  3. ALLSTATE INSURANCE - Dropping from first place (which it held for the last two years), Allstate gets our vote as the 3rd-worst insurance company in America. (That Allstate has slipped two notches in our “worst” ratings is not because it has become any better, but only because both Progressive and Farmers have gotten so awful.) In spite of its highly-effective media blitz (“That’s Allstate’s Stand!”), it has been our experience that Allstate is truly an awful company with which to do business. Not surprisingly, Allstate also employs a computer software case-evaluation system that assigns some of the lowest claim-settlement offers in the industry. Allstate typically offers—at best—$500.00 to $1,000.00 over the medical bills and will not budge, even after months of litigation. They have their own law firm in every major city and don’t mind working their lawyers to death. After all, they are not paying “attorney’s fees” because the lawyers are on staff. The attorneys are given almost no say as to whether a case settles or not. The only way to beat Allstate is to take your case to trial. Unfortunately, because of “tort reform” and its irrational effect of juries (discussed above), most claimants have faired only marginally better (if at all) by trusting their fate to Texas juries. Our best advice to anyone who has Allstate insurance—dump it. We don’t care which insurance company you switch to, in our opinion you couldn’t do much worse than Allstate no matter which carrier you choose.
  4. MERCURY INSURANCE - Maintaining its position in fourth place this year is Mercury. In September, 2005, Mercury Insurance Group was named “Texas Insurance Company of the Year” by Texas Insurance Professionals, the Texas affiliate of the National Association of Professional Insurance Adjusters. Need we say more? Any insurance company voted the best by insurance adjusters should be avoided at all costs. (We also advise you not to open your front door to anyone bearing a business card that says, “I was voted ‘Top Burglar of the Year’ by the Texas Home Burglar’s Association.”)
  5. INSURANCE DEPOT - In fifth place again this year is Insurance Depot, but it would no doubt score even worse if it had any appreciable market share. Thanks to you, Insurance Depot is selling less and less insurance so we are seeing them less and less, which is fine with us. Hopefully they will go out of business soon and will be unable to victimize anyone else. Insurance Depot and its subsidiary, U. S. Insurance, is a father/son operation that started up in an abandoned service station in Farmers Branch, Texas, and really has not progressed very much in dignity or class, in our opinion. It is one of the few insurance companies that sells insurance by the month. (That should tell you something right there.) For years, Insurance Depot employed only one claims adjuster. (After all, how many adjusters do you need to say “NO!” to every claim?) In our experience, Insurance Depot has either denied every claim or made extremely minimal offers on every claim and the vast majority (over 90%) of the claims we have made on behalf of our clients have resulted in litigation. We have spoken to other attorneys who have told us that this insurance company even refused to pay a Court Judgment after the jury awarded damages in a personal injury lawsuit! (In that case, even after an injury victim won his suit against the negligent driver and was awarded damages by a jury, a second lawsuit had to be filed directly against Insurance Depot to collect on the jury award!) In our opinion, having Insurance Depot as your insurance company is worse than having no insurance at all.

So there you have it: the Worst Insurance Companies—2009. Admittedly, it was difficult to narrow the list to just five. The runners-up who just missed the cut are GEICO and Nationwide. And, somewhat surprisingly, State Farm seems to be doing its best lately to make our list. From what we’ve seen lately, we’re sure each of these carriers will be vying to make the list next year. We intend to update our list every December.

We have also just released our list of the Best Insurance Companies —2009. (Yes, we actually do recommend a few insurance companies based upon our experiences with them.) Check our site to see if your insurance company is one of them.

In the meantime, if you have one of the worst insurance companies as your own, get rid of them! You’re paying good money and getting very little in return. And, if you’ve been hurt in an accident and have a claim against any of these “worst” insurance companies (or any others, for that matter), give us a call at the STREET LAW FIRM before the insurance company has an opportunity to take advantage of you. We look forward to serving you.  

You can also view last year's Best Insurance Companies and Worst Insurance Companies right here on our website. Thanks for reading!

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News & Notes

The worst insurance companies we have here do the absolute least to attempt to settle claims fairly or in a timely manner.  They are also the most likely to leave you vulnerable to a car wreck lawsuit when you need them the most.
The worst insurance companies are some of the most popular. Why? Because you get what you pay for, and sometimes that's a car wreck lawsuit .
The best insurance companies? It's a rare breed these days, but we have our opinions on where your insurance dollar is best spent.
To find an accident lawyer, it takes a little bit of legal knowledge. Just as with any other kind of professional, when seeking help, it's important to know something about the area of practice in which you need help.
What to do after an auto accident...a handy printable "fill in the blank form" to keep in your glove box in case you become involved in an auto accident.