Low Speed Impacts, Chapter
5, 12/28/99
Recent postings on the issue of low speed impacts have raised the issue, at least
for me regarding how a low speed/low velocity impact is viewed and handled inside the
claims department.
The first issue that you must keep clearly in mind is that the majority of all adjusters
simply will not accept the fact that you or your client can be hurt in what we have now
classified as a low speed/low velocity impact. So when they are faced with such a loss the
following process begins.
1. Photos of the car all four sides and at least three of point of impact
2. Photos showing height of point of impact from ground, you will see a bright yellow
measuring stick in the photos
3. Photos under the rear portion of the point of impact, assuming a rear end impact to see
what collapse there is
4. If the damage is under $1,000 and there are claims of injury, you have a SIU (Special
Investigation Unit) flag, further flags would be two people in the same car treating with
same doctor or represented by same attorney.
5. If SIU flags NICB ( National Insurance Crimes Bureau) is run on all people making
claims as well as index bureau and several other data bases, all medical providers are run
as well as attorney.
6. Experts are hired who can work up the bio-mechanical part of the case. Reports in most
cases ran through defense counsel for work product
This is at the start of the case in most operations first 10 days, motto, I got mine and
you do not.
Keep in mind the goal of the claims department is to control loss and expense dollars. Low
Speed/Low Velocity impacts are suspect and until they get hit on a lot of these cases,
they will not pay. It is simply engrained in the mental makeup of the department that you
do not get hurt in this type of accident.
The second issue that I have commented on in the past is that on a large book of business,
say in 10 states, Personal Lines Auto, open PIP, BI and UM/UIM reserves for accident year
1998, could be in the area of $50,000,000 for a large Personal Lines Carrier.
If 5% of your cases are low speed/low velocity impacts, and then lets project that you
have total open files, not sub lines ( that being the number of people on a given claim)
of 30,000, you then have 1,500 files that are in the low speed/low velocity type. Do not
kid yourselves the carriers will code these cases in someway and can ID them.
Now if on average each of these 1,500 cases is worth on a historical basis, $5,000, that
is the average paid loss you can project, your exposure is $750,000. Then if you spend on
average $2,000 a case to work it up, and offer only $1,000 to settle, you have a $2,000 on
average case savings or $300,000. Even if you loose a few and you spread these
numbers out nationwide, the savings are great for the carrier just on the raw numbers of
the book, not even taking into account allowable investment income on reserves and tax
savings on reserves.
Also the carrier can better afford to spend the $2,000 to work up the expert side of the
case, on a $5,000 case. The plaintiff firm investment, assuming the case is worth only
$5,000 then is a poor one, it provides a very low net to the client and the firm, so most
are just not taken or dropped. Also the numbers can be much larger for the carrier than my
simple projections
You must also keep in mind the goal of hiring an expert in these types of cases is to
defeat claims not to provide information to the carriers that you or your client was in
fact hurt in the accident
A quote from long ago, possibly still true, but not always; Defense counsel to young
adjuster, "I hire an expert to say what I tell him to say"
BACK TO MENU
CHAPTER 6
Mike Cerf
Expert Witness Insurance Claims
Sherwood, Oregon
503-925-1937
mcerf@teleport.com
