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Insurance settlements for the rich and famous

Insurance Settlements for the Rich and Famous vs. You and I

My anniversary of being hit by a car was last Saturday. Not surprisingly, lying in the intensive care unit of Stanford Hospital for Fathers’ Day put a damper on the celebration that year. Just last week a friend of mine asked why I didn’t get $90 million like Tracy Morgan and Ardley Fuqua reportedly received.

That’s a good question. My somewhat cynical, but honest, response was that I’m neither rich nor famous. Therefore, the potential embarrassment I could bring to bear on the companies holding the liability for my injuries was minimal. My friend agreed that was probably the right reason.

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Note: payments and terms for insurance settlements are typically kept confidential. Therefore, the settlement received by Tracy Morgan and Ardley Fuqua was calculated from court documents and reported by  The Hollywood Reporter. 

Tracy Morgan as an Example of an Insurance Settlement for the Rich and Famous

Without doubt, Tracy Morgan’s accident was a tragedy. Mr. Morgan wasn’t just seriously injured in the accident. Even worse, a friend of his passed away in the accident. We in no way wish to minimize the impact of the accident on Tracy or his loved one’s. With that as background, my friend commented that he would happily take somewhere in the range of 12 to 18 months of rehabilitation for a payout of tens of millions of dollars.

Myself as an Example of an Insurance Settlement for the Not Rich and Not Famous

My friend has a good point. Life would certainly be much easier after a settlement like that. Most of the not rich and not famous look at a settlement like the one and think to themselves “drop a zero, or two, I’ll still take it.” But that’s not how it works.

Why are Insurance Settlements Smaller for You and I?

There are several reasons:

  • First, it’s important to understand that most insurance companies don’t want to pay large claims. Therefore, large settlements are an uphill battle from the very beginning.
  • Second, the story about an insurance company taking advantage of a claimant doesn’t generate much interest by the media. Therefore, if you’re not rich or famous, the chance you can generate embarrassing press coverage for the insurance company involved is very low. This means the risk of bad publicity over the settlement is virtually non-existent.
  • Third, big insurance companies with big advertising budgets are confident they can weather the storm of bad publicity with their billion dollar advertising budgets. In an industry where there’s little customer interaction, advertising works.
  • Fourth, insurance companies know that most people need the money, not the headache of a lawsuit. This enables small settlements.
  • Fifth, nearly all settlements are behind closed doors with confidentiality agreements in place. This means a poor or unfair settlement will not be exposed.

Mr. Morgan got Lucky

Most of us aren’t lucky enough to get hit by a WalMart truck. WalMart is a business that has a high touch with their customers. Being dependent on customers regularly returning to their stores, businesses like WalMart don’t want bad press. Importantly, a famous person like Tracy Morgan could deliver the bad press they fear. That’s why WalMart settled the lawsuit with Mr. Morgan and Mr. Fuqua.

Not surprisingly, the insurance company didn’t like the settlement. Therefore, the insurance company filed a lawsuit against WalMart. The lawsuit between WalMart and Liberty Mutual dragged on for another couple years. This secondary lawsuit was finally settled with no record of the final settlement.

What Can Consumers do to Protect Themselves?

Here’s what you can do. Demand transparency and only work with insurance companies that honor their promise to protect. I founded Valchoice so consumers would know which companies honor their promise to protect.

We do a thorough analysis of companies so we can provide reliable information. Honestly, we don’t know of any other companies that try really do the analysis to figure this out.

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If the company gets a good rating from ValChoice, tell a friend. If they don’t get a good rating, change to a better company.

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