Dear ABC News Fixer: Battling 'Non-Standard Insurance'

June 4, 2013 — -- Dear ABC News Fixer: Last August, my son, Chad, was in a car accident with a driver who was insured with American Freedom Insurance. The police were called and the other driver received two tickets – for no valid driver's license and failure to stop or yield to the right of way.

My son did not receive any tickets. We followed all of American Freedom Insurance's instructions in filing our claim, including using the insurer's preferred auto body shop.

However, when it came time to pay, American Freedom said they would only pay 60 percent of the claim ($587.60 instead of the full amount of the damages, $979.34).

The insurer states that their client claimed my son was speeding and failed to maintain proper lookout. I thought the police are supposed to determine who is at fault.

I spoke to our insurance company, but they were unable to make any progress with American Freedom.

- Sue Karecki, Kildeer, Ill.

Dear Sue: This crash happened last summer as your son was exiting a parking lot via an alley and this other driver zoomed out of the same lot farther down and hit him, according to the police report. You said your son never saw it coming – and he never saw the battle ahead with the other driver's insurance company.

As it turned out, the other driver was one of many motorists who have so-called "non-standard" insurance policies for hard-to-insure drivers. Some non-standards are fine, but others have become notorious complaint-getters for delaying or underpaying claims.

American Freedom had the sixth-worst complaint ratio in your home state of Illinois in 2011, the most recent year available, with 58 complaints on $12.9 million in direct premiums written. That same year in Indiana, it had the second-worst ratio with 11 complaints on $3 million in premiums. (That has since improved in Indiana to three complaints on $3.5 million in premiums in 2012.) Also in 2012, Indiana's insurance department fined the company $5,000 and ordered it to pay restitution for improper settlement of a claim.

American Freedom's initial response to you was that their driver claimed your son hit him. Well, of course he did. But you had more details: that the other guy was ticketed, had no license and was hauled away in a police car after the accident.

After the ABC News Fixer brought all this to the attention of Western National Mutual Insurance Co., which purchased American Freedom in 2012, the insurer looked into it again and decided to pay you the full $979.34.

Spokesman Steve Norman said he couldn't speak to the specifics of this case, but he said that in general, the insurer can't rely solely on police reports that are produced after the fact. "Often our insured tells us a version that indicates their innocence, and we feel that we owe it to them to honor their word," Norman said. He added that a settlement is a negotiation, and not everyone ends up happy.

Pressed on the company's complaint ratios, Norman said: "It is on the company's radar, something they are working to evaluate."

- The ABC News Fixer

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