Case Study: Court nails Allstate Insurance Company for engaging in illegal claims practices.

In an actual court case, the Washington State Supreme Court ruled that an Allstate Insurance Company adjuster engaged in the illegal practice of law by advising an unrepresented injured accident victim to accept a settlement that only benefitted the insurer.¹ Janet Jones was severely injured when a teenager ran a stop sign, crashed into her minivan and flipped it. She was partially ejected from the van due to a defective seatbelt, sustaining severe head and facial injuries, including the loss of an eye. The medical expenses alone from her initial hospitalization were $75,000, far more than the $25,000 liability limit of the teenager's Allstate policy.

Three days after the accident, Allstate sent a form letter to Ms. Jones promising a "Quality Service Pledge," and explaining that it would "represent" Jones as her claims representative. Keep in mind, Allstate insured the at fault teen. Allstate continued to contact Ms. Jones and ask her family to trust Allstate, promising an "appropriate offer of compensation," but cautioning that Allstate would not continue "representing" them if they retained an attorney.

Ultimately, Allstate told Ms. Jones (falsely) that she needed to settle for the teenager's policy limits. By doing so, Ms. Jones would have forfeited her claim against the defective seatbelt manufacturer, potentially causing her to lose hundreds of thousands in settlement proceeds. Thus, the settlement benefitted only the insurance company and its at fault insured, not Ms. Jones.

After Ms. Jones sued Allstate, her attorney was able to get the company's training manuals, which confirmed that Allstate's adjusters were trained to contact accident victims immediately after the accident claiming to be their "representatives" for the claims process. The victim would normally be sent a letter promising the "Quality Service Pledge," along with a brochure advising the victims that they "do not need attorneys to receive fair treatment or a fair settlement." Thus, Allstate's explicit goal was to remove attorneys from the equation in order to pay less money to claimants and increase its own revenue.

Fortunately, Ms. Jones was permitted to recover damages against Allstate for its illegal claims practices.

¹See Jones v. Allstate Insurance Co., 146 Wn.2d 291 (2002).