Phillip L. Carey, Attorney at Law:  Hawaii Insurance law; Bad Faith Litigation

 insurance by law,   

      When should you buy life insurance?  If you are young with children you can replace/insure your income with life insurance, but when the children are grown you may not need that life insurance.   When should you not buy life insurance?   Have you heard of "TV" life insurance companies selling life insurance policies and claiming that you don't have to take a physical or you don't have to answer medical questions?    Do you really want to be put in the same pool/barrel as people who are almost dead or have terminal illness?    If you are even remotely healthy, go buy life insurance from a respected company like Northwestern, which will require medical questions, a physical and/or testing.

     What about insuring the mechanics of your car with "Car Shield"?  Do you really need to?  You see TV hucksters like Ice T and Chris Berman say they purchased Car Shield.   Really?  Why would a millionaire need to pay for insurance to cover car repairs?  If you are a millionaire being paid to sell it on TV,  Car Shield may be a deal.   But for ordinary consumers,  Insurance can create an unnecessary layer of headaches.  Car Shield is notorious for denying claims based on "pre-existing" conditions.   In other words, if the part that breaks is worn out they might just deny the claim.   What older car is not full of almost-worn-out parts?  Car Shield is not accredited by the Better Business Bureau.  Save your money for repairs or get a vehicle with a factory warranty.  

​

           What is "bad faith"?   Insurance companies have the power to deny claims.  They are both judge and jury of any claim submitted to them.  This power comes with a legal duty.  Every Insurance company has a legal duty to treat policyholders with  "good faith".   What is the duty of good faith?   To start with, an insurance company has a duty to reasonably investigate your claim.   This investigation must be timely, thorough, and objective.  Objective means that the adjuster does not act in the interest of the company or the consumer.  There are not good facts -- just the facts -- when properly adjusting a claim. 

     How do Insurance companies work? Under normal circumstances, an insurance company has two sides.  One side involves pricing, selling policies and profit.    The other side is adjusting claims -- which should have nothing to do with profit.  Once a loss occurs, the insurance adjuster is required to fairly evaluate the claim, not try to create profit for the company. 

​

      Have insurance companies always engaged in bad faith insurance practices?  To some degree yes, but   unfortunately, beginning in about 1987, most large insurance companies were "redesigned" by a consulting company called McKinsey & Company.   This was the same consulting company that  consulted with "Enron"--a company that bilked its shareholder's and got caught.   When they redesigned insurance companies,  McKinsey & Company espoused a "Zero Sum Game" (win at all costs) mentality -- and the policyholders are on the zero end of that game.   McKinsey & Company saw great potential in limiting claim payouts at policyholder expense.   A "zero sum game" or "greed is good" corporate mentality is not conducive to honest insurance claims adjusting.  A good example of this was the redesign of Allstate.   Documents that came to light showed that Allstate changed its policy of "good hands" toward policyholders to a policy of using  "boxing gloves" when adjusting claims.   In my opinion, most major car insurance companies now engage in bad claims practices.  As an example, if you are in an accident and are entitled to underinsured coverage of $20,000, will the company pay?   Do they provide an objective "fair" adjuster?  Very rarely.  What they usually do is make the policyholder hire an attorney to collect the benefits.   So your $20,000 of promised benefits are automatically reduced by your own attorney's one-third fee, then reduced even further by litigation costs. *  What should have happened?  Your own insurance company should have immediately conducted a reasonable investigation, then told you that you don't need an attorney and that they would pay the entire benefit owed. **   

​

*   There is a law that requires insurance companies to pay the attorney's fees and costs required to enforce payment of benefits.  It is being enforced more and more by arbitrators and Courts.  In a recent Hawaii Supreme Court case I was able to force an insurance company to pay costs and pre-judgment interest for contesting a claim.   This was in addition to the $20,000 policy limit.

​

**  Although it is fine for your own insurance company to tell you not to hire an attorney -- because they are willing to pay or negotiate in good faith -- the insurance company for someone who causes an accident/injury (adverse insurance company) should not be giving you advice about hiring an attorney,   You are statistically (three-times) better off negotiating with an attorney when it comes to negotiating with adverse insurance companies.

​