Protecting the policy limits

By GENE A. WEISBERG

Consumers have accidents every day, and insurers are there to protect them from the unexpected perils of everyday life. Laws have been enacted to protect our identities – including everything from credit card fraud to hacking our computers. But did you ever think having an auto accident may trigger a behind-the-scenes scheme devised to determine your insurance policy’s limits in an attempt to potentially collect hundreds of thousands of dollars? In several states, disclosing your liability limits prior to litigation is prohibited for good reason: to combat such schemes to treat up to the amount of the policy limit. Consequently, a cottage industry, otherwise known as “Policy Search Companies,” arose. They work hard to obtain and sell consumers’ protected insurance limits to attorneys so they can build unwarranted injury cases and get your insurance company to pay those limits or even try to go after your personal assets.

Once a lawsuit is filed, in many states a defendant is obligated to disclose their policy limits. But timing is everything. There is no obligation to provide that information pre-litigation. As one case stated, “By controlling the timing of the release of information we protect the premature release of confidential data.” (Griffith v. State Farm Mutual, 1991) The policy search companies, and their clients, want the information early because it is profitable. Knowledge is power. Knowing a consumer’s policy limits allows plaintiffs’ attorneys, medical providers and organized medical lien companies to determine up front the extent to which the attorney can build an injury case in light of the insurance available for recovery. The attorneys can then encourage claimants to seek excessive treatment with preplanned medical facilities at highly inflated rates. This can put insurers in a position that pressures them to pay more than the actual damages owed and up to the policy limits, leading to a potential impact on rates. This also can put injured claimants in a position of being told they need medical procedures that they do not need, and in some instances should not have, to drive up the bills paid to the medical provider who has a deal with the law firm.

Interestingly, when a claimant’s representative asks the insurer for the policy limits before litigation, because that information may be confidential, rather than rejecting the request some insurers ask their policyholder for consent to disclose the limits information. This shows a lack of understanding of the potential for misuse of the information.

Policy Search Companies secure policy limits information by various means. They have been known to fictitiously pose as an insured and call the insurer to fraudulently obtain policy limit information. Call center and claims representatives are service oriented and trained to assist consumers, so it is counterintuitive to these employees to be suspicious or withhold assistance. Knowing that these companies are attempting to fraudulently obtain information, these employees are being trained to try and spot when the caller is an identity thief. With stronger barriers in place, Policy Limit Search Companies have become more creative by spoofing phone numbers or calling in to request changes to policyholder contact information; then, they later access policy information through the contact information they themselves, not the customer, set up. Some companies have gone so far as to update insureds’ email addresses to an untraceable encrypted ProtonMail address that is controlled by the Policy Limit Search Company with a database of personal information that later can be sold. In some instances, they call back a few days later, impersonating the insured again and ask for policy information to be emailed to the new encrypted email address on record. Or they simply continue to call through a spoofed phone number, impersonating the insured to secure more and more information from the insurance carrier regarding personally identifiable information and policy limit information.

These examples, unfortunately, are becoming a trend rather than an anomaly. When a Policy Search Company uses another person’s personal identifying information secured without their permission especially by fraudulent means for financial gain, it is a crime. These activities, and the selling of private information, is funded when plaintiffs’ attorneys hire these companies to gather protected policy limit information. This is fraud: deliberate identity deception with the intent to collect information to which they are not entitled, and selling such information without the policyholder’s knowledge or authorization. Policy Search Companies are acting illegally when they illicitly collect policy information that they later sell.

In states such as California, liability policy limits are personal information that can be required to be produced in only limited circumstances. The California Court of Appeals determined in Griffith v. State Farm Mutual Auto Insurance Company that “the policy limits are ‘personal’ as they are ‘gathered in connection with an insurance transaction.’… In line with the policy of protecting a citizen’s privacy rights, the Insurance Code must be interpreted to include policy limits as an item which is ‘personal.’” The court concluded that “a third party claimant does not have the right to know the policy limits of another’s insurance policy prior to the filing of a formal proceeding.”