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CAUTION – Read Before You Sign





 

     We have noticed recently that some insurance company adjusters are attempting to settle personal injury claims within days of an accident.  This might make sense in a minor accident with no apparent injuries.  However, where a significant injury or hospitalization is involved, such a settlement may be premature.

     In this world of downloadable apps, e-signatures and digital communication, it is possible that a person may unwittingly agree to a settlement before becoming aware of the seriousness of his or her medical condition or the rights being given up.  It seems we are conditioned to agree to long document forms without ever reading the words contained in them

     In this environment, it is the liability insurance adjuster’s goal to obtain a signed release of the company’s insured party in exchange for a payment to the injured party as quickly as possible.  For the sake of “convenience,” such releases are often presented digitally whereby a simple “click” can extinguish an injured party’s claim.         

     One should be very careful before ever agreeing to accept payment from an insurance company that promises to pay for an injury shortly after an accident.  By accepting such payment, the injured party will have essentially settled the case and closed off any opportunity for full compensation.  Unfortunately, it may be difficult to “undo” a misinformed acceptance of an early settlement proposal.

     Iowa Code Chapter 507B contains specific rules concerning how insurance companies are to fairly settle claims.  For example, an unfair claim settlement practice may include “not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear.”  The focus of the statute is on whether the company is in violation with such frequency as to indicate a general business practice.  Enforcement is handled by the Insurance Commissioner.

     In Bates v. Allied, 467 N.W.2d 255 (Iowa 1991), the Supreme Court of Iowa held that 507B does not create a private cause of action against an insurance company that commits an unfair claim settlement practice.  The Court explained that while an insurer has a fiduciary relationship with its insured, it has an adversarial relationship with a third-party claimant.  Therefore, a tort victim, as a third-party claimant, cannot compel a tortfeasor’s insurer to negotiate and settle a claim in good faith anymore than he could compel the tortfeasor to do so himself. 

CONCLUSION:  It should be understood that the insurance company for the at fault party has an adversarial relationship with the injured person.  It is crucial for an injured person to read and understand all documents sent by an insurance company before signing or “clicking” agreement to the terms.

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