Why Auto Insurance Claimants Hire Attorneys
In a recent online poll, almost half of respondents with auto injury claims hired attorneys to help settle those claims. But most who hired attorneys were not upset with how their claim was being handled, according to the insurance industry’s Insurance Research Council (IRC). Only 15 percent of auto injury claimants who talked to an attorney said that they did so because of delays in getting the claim settled, and 10 percent said it was because they were unhappy with the settlement amount offered.
In other words, the most common reasons for talking to attorney did not involve dissatisfaction with the claim process.
Then why do claimants hire attorneys?
Instead, it was more common for respondents to say that they talked with an attorney because it was suggested to them, either by someone they know (33 percent) or by their doctor (16 percent), according to IRC.
Another common reason was that they wanted to get the highest settlement possible, cited by 22 percent of respondents.
The survey conducted for IRC by an outside firm found additional evidence that claim settlement problems are not the primary motivation for attorney involvement. Nearly two-thirds of claimants who contacted an attorney in relation to an auto injury claim did so at the very beginning of the claim, within one week of the accident. In addition, even among respondents who reported satisfaction with the insurance company’s handling of the claim, one in three claimants hired attorneys.
“It is a myth that most attorney involvement in auto injury claims arises because a claimant has difficulties settling a claim. Many consumers start the process believing that they cannot navigate the claim without legal representation, a perception perpetuated by many ads for attorney services,” said Elizabeth Sprinkel, senior vice president of the IRC. “This widespread perception has important implications, given the fact that attorney involvement can add significant costs and delays both for the system and for claimants.”
IRC looked at the cost of attorney involvement in auto insurance claims in a report based on 2012 data that was released in 2014. That study found attorney involvement in auto insurance claims was on the rise.
The percentage of auto injury claimants represented by attorneys rose to 36 percent of personal injury protection (PIP) claimants in 2012, up from 31 percent in 2007 and more than double the rate found in a similar study in 1977, the 2014 IRC report found.
The rate of attorney involvement among bodily injury claimants rose slightly, to 50 percent in 2012.
The 2014 IRC study also examined the factors associated with attorney involvement and found that represented claimants:
- Were much more likely than those without representation to receive treatment in a pain clinic and to undergo magnetic resonance imaging (MRI) for similar injuries
- Were more likely to be involved in apparent claim abuse
- Received, on average, lower net payments (total payments adjusted for claimed economic expenses and applicable legal fees) than those who did not hire attorneys
- Waited longer for payment of claims
The rate of attorney involvement varied significantly by state. The highest rate among no-fault states was in Florida, where more than half of PIP claimants hired attorneys in 2012. The lowest rate was in Kansas, where just 12 percent of PIP claimants hired attorneys.
The new report on why claimants hire attorneys, Motivation for Attorney Involvement in Auto Injury Claims, is based on an online survey conducted by GfK Public Affairs & Corporate Communications on behalf of IRC. A total of 27,126 online interviews were conducted in June and July 2016, with follow-up questions asked of 505 respondents identified as auto injury claimants who hired attorneys. Survey data were weighted to the U.S. population of adults aged 18 and above.
The IRC is a division of the American Institute For Chartered Property Casualty Underwriters (The Institutes).