Beware Low-Ball Automated Insurance Payouts, Says Consumer Group

Vehicle stuck in flood waterThe Consumer Federation of America is warning consumers to be careful if a payout from an auto insurance company seems way too low.

Some insurers are "fine tuning" their computers so that automated claim systems result in "unfairly low" claims payouts after an accident, the consumer group says. In particular, officials are concered about a program called "Colossus" touted to insurers as a powerful cost-savings tool."The program will immediately reduce the size of bodily injury claims by up to 20 percent" the program literature says. If the program does not generate enough savings, the insurer just has to adjust the benchmark values (an accident is worth only X amount) and the computer returns the results.

The CFA offers these tips to protect yourself from accepting less than you are owed.

1. Find out if a computer was used to evaluate your claim.

2. Demand to see the range of results the computer generated.

3. Do not accept any offer less than the "high" range. Consider making a counter offer above the high range.

4. If the insurer does not agree to settle at the high end, consider filing a complaint with the state insurance commissioner.

For more information: Go to the CFA's consumer alert at
www.consumerfed.org/pdfs/Claims_Consumer_Alert_12-8.pdf.

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