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Allstate Can Discourage Hiring Lawyers

Are you in good hands with Allstate? The insurer recently won a case where a federal judge thought so. Some plaintiffs and lawyers think not.

In June 1998, Allstate sent Connecticut Plaintiff Donald J. Hipsky a copy of its "Quality Service Pledge" (QSP) after Hipsky had an accident with an Allstate insured. Hipsky was not insured with Allstate.

The pledge stated that "[b]ecause you have been in an accident with an Allstate policyholder, we will provide you with quality service." It also said Allstate would investigate the accident fairly and quickly, and make "an appropriate offer of compensation" for Hipsky's injuries if he "qualified."

Hipsky also alleged that an Allstate claims rep discouraged him from seeking legal counsel, telling him an attorney would merely reduce the net amount of his settlement. Not surprisingly, Allstate offered $3,500 and a "final" offer of $4,000 in June 1999. Hipsky then hired a lawyer, and settled for $25,000 two years later.

Hipsky then sued Allstate, but the federal judge ruled for Allstate on claims it breached an implied contract of good faith and fair dealing, and was engaging in unfair trade practice, unfair insurance practice, recklessness and fraud.

The federal judge also decided that Connecticut does not recognize a duty of good faith by an insurer to anyone who is not a policyholder, and that doing so would detract from the insurer's key obligation.

Just to add fuel to the fire, the American Trial Lawyers Association obtained an Allstate training manual containing scripted pitches and in-house averages reflecting that unrepresented claimants in matters under $15,000 averaged settlements of $3,464, while those with lawyers averaged $7,450. The ALTA has dealt with similar Allstate issues in Connecticut in the past.

Now you get to decide.

Printer friendly page Permalink Email to a friend Posted by J. Craig Williams on Saturday, January 31, 2004 at 10:57 Comments Closed (0) |
 
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