It’s Almost Always in the Best Interest of the Insurance Company to Settle Out of Court.
Were you injured due to someone else’s negligence? You’re probably wondering whether their insurance company will offer you a monetary settlement to compensate you for your injuries and damages.
We have good news for you: Insurance companies almost always opt to cut settlement checks rather than going to court. Within a matter of weeks or months, you could have the compensation you need to heal and move forward with your life.
Let’s take a closer look at why insurance companies tend to offer settlements. We’d also like to show you why you’re likely to get a much higher payment if you work with a personal injury lawyer.
Here’s Why Settlements Are So Common
Insurance companies exist to protect their policyholders by paying claims against them. Unless the insurance representative has a solid reason not to pay the claim, you can almost always expect a settlement offer after filing a claim with an insurance company.
Of course, the insurance adjuster will start by looking for reasons not to pay. They might feel that their policyholder doesn’t bear sufficient responsibility, for example, which could mean they offer you zero compensation.
But that doesn’t mean you have to give up and stop trying. If you put pressure on them, the insurance company might pay your claim to avoid the expense of going to court and the risk of having to pay you a very large award.
Hiring a Lawyer Shows You’re Serious
This is a situation where you need to speak the language of insurance companies to convince them you deserve a high-value settlement. You need to know how insurance companies work, how they value settlement offers, and what you can demand when filing a personal injury claim.
An attorney can help you do lots of things to maximize your compensation and protect your rights. They can help you gather evidence, take witness statements, locate video footage, provide legal advice and organize your information into a compelling case for compensation.
Sometimes, just by hiring an attorney, you show the insurance company you’re serious about getting the amount of money you deserve and won’t back down. This opens up insurance settlement negotiations that may work out in your favor.
How the Settlement Process Works
Although every case is unique, insurance settlements tend to follow a fairly predictable pattern. Here’s how it works.
Step 1: The Insurance Company Collects Statements
The insurance company will start to determine your expenses and damages by asking a lot of questions. They’ll talk to their policyholder and they’ll want you to go on record about the details of the accident, like the time of day, weather, what you were doing, and so forth.
Beware! The insurance representative is hoping to use your own words against you. Don’t provide a recorded statement or details until you speak to your attorney.
While the insurance company is liable to compensate victims of their policyholder’s negligence, they are a business motivated to minimize your award and maximize their profits. The premiums the policyholder pays are the company’s income stream, so any settlement or court judgment lowers the money they make.
Expect the insurance company to try to uncover evidence and statements about the accident that may jeopardize your claim. We repeat: Don’t provide statements until you speak to your attorney!
Step 2: Get Ready to Be Investigated
It might feel unfair, but as the injured victim you’re going to be investigated by the insurance company. Investigators will try to look into your personal history, find out if you’ve filed insurance claims in the past, and even sometimes direct questions to your friends, relatives, and employers.
They’ll look you up online and see if there’s anything that might relate to your case in even the smallest way. They’ll even go through your social media history and see what you’ve been doing. Maybe your vacation photos will supposedly prove you’re not even really injured, from their point of view.
That’s why personal injury attorneys often recommend that victims never deal directly with the adjusters assigned to the case beyond delivering succinct factual data about the accident. Any information you volunteer could be used against you to try to lower your final settlement amount. Direct inquiries to your lawyer.
Step 3: The Documentation Stage
Proving need is squarely on the shoulders of the victim in a personal injury case. An insurance company will require clear evidence of expenses and damages before agreeing to a settlement.
This may take the form of medical documentation, statements from employers, financial records, and so forth. Much of this information is essential to proving your claim.
There is also some information that they may request from you even though they are not legally entitled to it, like your social security number. To protect your rights, this step is best overseen by your lawyer.
Step 4: Determining the Claim’s Value and Negotiating
The insurance adjuster will enter whatever information they can gather into their actuarial claims software. The software uses formulas that include numerous factors including the type of injury, circumstances of the accident, and non-injury expenses such as property damage.
This generates a settlement offer, but you should know that the first settlement is almost always a lowball offer. It may be insultingly low, barely enough to even cover your basic medical bills. Don’t rush to settle your claim by accepting the first offer.
Insurance companies are in business to make money, so they act to protect themselves financially, which means they try to pay as little as possible. So the initial settlement offer you receive is likely to be much lower than your demanded amount and may not be close to covering all of your expenses and damages from the accident.
First offers are often much less than the predicted total value of your case. This gives insurance companies “wiggle room” in case you decide to enter into negotiations rather than accept the first settlement. During the final stage of your claim, you’ll end negotiations and agree on the final settlement.
How To Know if Your Insurance Settlement Offer is Too Low
The best way to understand the value of the insurance company’s initial offer is for you and your attorney to accurately value the claim. This can be a complex undertaking when all types of compensation are considered, including the monetary value of personal losses associated with your accident.
Accident victims can often seek much more than simple compensation for hospital bills. They are often entitled to compensation for:
- Long-term health care, in addition to medical bills and hospital fees
- Damage to or loss of personal property such as your car, truck, scooter, or motorcycle
- Mental anguish associated with an accident, also known as pain and suffering
- Lost wages due to days away from work due to the accident
- The financial impact on your family members, especially your dependents
To find out if the initial offer is too low, look at the costs above and evaluate if the offer covers them. If not, you need to work with your lawyer on a strategy to negotiate for a higher offer.
Strategies to Add Value and Negotiate for a Higher Offer
Here are some strategies you and your lawyer can use to accurately value and successfully pursue your claim.
First, add up ALL of your medical bills, not just the ambulance ride and hospital bills. Include any prescriptions, non-hospital expenses like physical therapy, required plastic surgery, doctor’s follow-ups, and long-term care.
Now add additional expenses you have incurred due to the accident. Did you have to travel to your doctors’ visits? Did you have to rent a car? Did you need crutches or devices to help with your recovery?
Remember to stop and consider the long-term effects of your injuries. Your lawyer can help you put a dollar value to abstract concepts like being less productive at work, missing out on a promotion, or losing lifetime earning power.
As part of this process, make sure you know how your state views negligence. In the state of California, we are a comparative negligence state, which means each person will be assigned a proportion of the blame. Even if you are partly to blame, you can still recover compensation.
If the at-fault party’s insurance company won’t offer you what your losses are worth, and you don’t want to pursue a lawsuit, you can also seek assistance from your own insurance company. Look into your policy limits and discuss this option with your lawyer.
Yes, You Can Reject a Settlement Offer
If the initial settlement figure the insurance company offers isn’t enough to cover your expenses and damages, you can reject the offer. It’s your right to negotiate with the insurance company for a larger settlement. Plus, you still have the option to file a lawsuit – and they know it!
Starting a negotiation is a complex process and there’s an art to it. A good personal injury attorney understands the games insurance companies play and knows how to beat them at their own game.
Here’s what happens when you reject the first offer. At this point, you’ll need to demonstrate your need through strong evidence, which can include:
- Police reports and eyewitness accounts
- Doctors’ diagnoses and prognoses
- Medical records
- Financial statements from your lawyer and other sources
- Repair estimates from an auto mechanic
- Video footage and photo evidence
During this process, it’s up to you and your personal injury attorney to demonstrate to the insurer that you have a strong claim to a larger settlement than you’ve been offered. You also want to remind them that the insurance company risks a larger loss if the case goes to trial. If you can do that, the insurer will likely make another, larger settlement offer.
The negotiation process may continue for some time with multiple offers and counteroffers. Be patient, and be aware that the insurance company will not pay more than the coverage limits of the policy.
Sometimes You Have to Go to Court to Get Compensation
Occasionally, an insurance company will dig in their heels and refuse to pay your claim. They may say they have a firm reason not to pay or they might stonewall and stall you to the point where there’s no option but to head to court.
If the negotiation ends without a successful resolution, or if the insurance company fails to offer an adjusted settlement at all, you and your lawyer may decide court is the best option. Take heart, because the court might look favorably upon you as the injured victim.
Keep in mind that if your case does go to court, there is no guarantee that you’ll win anything. It can also take months or longer for your case to proceed through the legal system, during which you will still have to survive on the funds available to you.
An experienced injury attorney may be able to help you delay or finance your medical expenses during a trial. Having qualified legal representation in court almost always results in a better experience and a more valuable award.
5 Strategies for Winning Your Claim
Negotiating with an insurance company can be stressful and challenging. Here are some strategies that will help you stay on the path to successfully securing the settlement you deserve.
#1: Understand the Insurance Company’s Role
Insurance companies exist to pay claims on behalf of policyholders, but in settlement negotiations, they do not work for the interests of claimants or the policyholder. Remember, their #1 goal is to minimize settlement amounts.
It’s the adjuster’s job to investigate the accident, investigate your claim, and calculate the smallest possible settlement offer that they think they can get away with paying you. Provide a compelling case for your damages and losses that they can’t ignore or minimize.
#2: Collect Your Own Evidence
You’ll need a lot of hard evidence to prove that your claim is worth what you think it should be. Don’t rely on the police to gather all of the evidence you’ll need because that’s not their job.
Preserve and collect your own evidence, including:
- Police reports
- Eyewitness statements
- Photographic evidence from the accident scene
- Documented accident-related expenses
- Documented medical treatment and evaluations
- Documentation of the financial impact of the accident on your life including repair costs, lost wages, and evidence of the future impact on your earnings
#3: Ensure You’re Calculating All Your Expenses
The financial losses associated with your accident are challenging to calculate in full, but doing this calculation is essential. Take into account all of the tangible and intangible expenses associated with your accident, including hospital bills, travel expenses associated with medical treatment, time off from work, and long-term loss of earnings and earning potential.
#4: Craft a Compelling Demand Letter
You’re about to write perhaps the most important letter of your life. The demand letter is the most important document in your claims process.
This letter will contain a summary of the accident as well as detailed descriptions of all the evidence, documentation, and records to prove your case. Crafting a compelling demand letter is the quickest way to bypass a lowball settlement offer and get something closer to the compensation you need.
#5: Get Excellent Legal Representation
Although it is possible to secure an insurance settlement by yourself, it’s important to understand that if you’re seriously injured, hiring an experienced personal injury lawyer is in your best interest.
Your case may be more complicated than it looks or you may be entitled to substantially higher compensation than the insurer wants to provide. Even if you’re unsure, it’s worth your time to have a free consultation with a caring and qualified attorney.
We Handle Your Pedestrian Accident Claim So You Can Focus on Your Life
After a personal injury, contact the attorneys at Sally Morin Personal Injury Lawyers. We handle many areas of the law, including many kinds of personal injuries. We believe you should be able to focus on recovering while we handle the legal details.
We truly care about the people of California. Contact us today for a free online case evaluation.