CONSUMER ALERT: ADJUSTER FAILS TO DISCLOSE ALL COVERAGE

After he was slammed by an uninsured drunk driver who fled the accident scene, a new client of M&W consulted with his own insurance company to see what coverage he had available for his injuries and missed time from work. The adjuster informed him that all he had available was $1000.00 in medical payment coverage. Uncertain about how he was going to recover his lost wages and additional medical expenses, he consulted with Steve Moore. Steve reviewed his policy information and explained to him that he also had Uninsured Motorist coverage available. “Uninsured motorist coverage is mandatory in Alabama unless specifically rejected in writing,” said Steve. He also said, “it [uninsured motorist coverage] covers injury claims for medical bills and lost wages, as well as general damages, yet most people do not even realize they have it.” In Alabama, insurance adjusters are under no obligation to tell claimants, even their own insureds, what coverage may be available for a certain situation. “When you’re dealing with some one else’s insurance, you kind of expect that the adjuster may not be forthcoming, but when you’re dealing with your own insurance, most people assume their insurance company will try to help them. But that’s just not the case,” said Steve.

In a similar incident, Mark Wolfe encountered a situation where an adjuster tried to deny the full value of a property damage claim sighting an incorrect legal conclusion as grounds for the diminished offer. The adjuster, who was not an attorney or a law school graduate, had incorrectly interpreted a rather complex indemnity clause in a contract. He tried to use his incorrect legal conclusion as justification for offering fifty cents on the dollar of the property damage claim. The claimant consulted with Mark and the adjuster soon doubled his offer. This incident highlights a growing trend seen by the attorneys at M&W of incorrect legal information or conclusions reached by adjusters. In general, there is no direct restriction or prohibition regarding adjusters providing legal advice to claimants or reaching legal conclusions. Since the claimant is not paying for the advice or legal conclusion, the adjusters are not “practicing law.”  In Alabama, claimants and adjusters are considered adversaries and therefore no duty exists for the adjuster to be candid with the claimant. Yet many claimants do not understand this and often rely on the adjuster’s legal opinions and/or conclusions when settling a claim.

“It’s not really a situation of adjusters intentionally misleading claimants, although we have seen a few instances of that, but rather the problem is really that the adjuster doesn’t know the law,” said Mark. He said, “We’ve seen situations were adjusters have given claimants bad legal advice in a range of areas including statute of limitations, subrogation and coverage applications.” Based upon the volume of mistakes we have seen, and given that many people resolve their injury claims without consulting an attorney, there are probably hundreds of people in our area who have settled a claim based upon incorrect or inaccurate legal work by the adjuster,” said Mark. Consumers should realize that when there claim is being handled by an adjuster in another state, the adjuster is probably a regional adjuster responsible for handling claims in more than one state. Laws vary from state to state and it is very difficult for an adjuster to keep up with all the important legal issues in each state. “I think the increased use of regional adjusters has definitely contributed to this problem,” Mark said.