People injured in auto accidents who hire attorneys are less likely to be satisfied with their total payments than injured people who do not hire attorneys, suggests a recent study by the Insurance Research Council.
Almost three-quarters of those without attorneys were satisfied with their total payments, compared to less than half of those who hired attorneys, IRC found. Among people with the highest accident expenses, who usually incurred the most serious injuries, two-thirds of those who did not hire attorneys were satisfied with their total payments. In contrast, among people with the highest losses who retained attorneys, fewer than 40 percent were satisfied. These findings are unchanged from a similar IRC study conducted in 1998.
Two factors may contribute to lower satisfaction among accident victims who hire attorneys, the IRC hypothesized: higher costs — specifically, attorneys' fees and medical expenses — and longer settlement times. Auto accident victims who hired attorneys paid them, on average, contingency fees of 32 percent of their total payments. They also incurred far higher medical expenses. In 2002, people with attorneys reported medical expenses that were almost four times higher than the expenses incurred by those without attorneys. Between 1998 and 2002, average medical expenses doubled for those with attorneys, compared to a 22 percent increase for people without.
Among accident victims without attorneys, 62 percent of those who filed with their own auto insurer and 40 percent of those who filed with other auto insurers settled their claims within three months. However, among those who hired attorneys, 29 percent filing with their own auto insurers and 8 percent filing with other auto insurers settled in less than three months.
"Attorney involvement clearly is driving up the cost of medical care for auto accident victims," said Elizabeth A. Sprinkel, IRC's senior vice president. "Yet, more medical care for people who hire an attorney evidently does not always produce satisfaction with the final settlement. Other factors, such as the timing of the payment, affect how accident victims feel about the settlement of their claims."
The report, Paying for Auto Injuries: A Consumer Panel Survey of Auto Accident Victims, is based on more than 3,000 responses. It was designed to complement another IRC study, Auto Injury Insurance Claims. Both studies show that, compared to previous research, medical expenses increased across all categories, even though reported injuries were not more severe. Payments also rose, with the largest increases going to those with the most severe injuries. At the same time, the average health insurance payment increased by more than 90 percent and auto insurance payments rose by almost 60 percent. Payment amounts from government insurance, at-fault drivers, and employer sources declined, however.
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