Great news! The insurance company has reached out to you with a settlement offer for your personal injury claim, but how do you know if it’s the right offer? If the process was too easy or the settlement was more than you expected, then it could be a red flag that the insurance company is sitting on a piece of big information you’re unaware of. This is one of the many reasons why it’s important to have a lawyer assess your case to make sure the insurance companies aren’t lowballing you––because it’s very likely they will.
What can you do next if your insurance company gives you an offer you can refuse? Firstly, please don’t go all Luca Brasi on them (…or anyone for that matter). You still have to work with the insurance adjusters, so it’s best to keep a cool head. Take a second to thoroughly read the settlement they’re offering you and then review it with a personal attorney. From there, your attorney can help you to create a counteroffer, but let’s slow things down and explain the process in a bit more depth first.
Who Makes the Initial Settlement Offer?
Assuming you’ve been in an accident, the first settlement offer generally will come from the defendant’s insurance company, so long as they have coverage. This offer will attempt to cover your losses and damages caused by the accident, including medical treatment, lost wages, property damage, and any other financial losses. When you file a legal claim, your attorney will negotiate with the responsible party’s insurance company for a settlement. However, if the other driver does not have insurance, then you will likely be dealing with your own insurance company (so long as you have coverage that protects against uninsured parties).
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Why You Shouldn’t Accept the First Settlement Offer
The settlement process is much like haggling with vendors at a flea market–– you should never accept the first offer. And like flea market vendors, insurance adjusters are looking out for their own interests before anyone else, and they will likely try every trick in the book to get you to settle for less than the amount you’re owed. When you actively reject the first offer of compensation, you’re also showing the insurance company that you’re keen to their tricks, and it’s less likely they’ll try lowballing you again.
Remember, the insurance adjuster’s main priorities are to minimize financial losses for the insurance company, and it’s never in their best interest to maximize your settlement. So always stay wary and ready to reject their initial offer, especially if it comes too soon.
Oftentimes, insurance companies will offer you a settlement offer before you’ve finished receiving medical treatment. This protects them from bills that may prove more costly than their offer accounts for, so if you haven’t finished your medical treatment, do not accept an offer.
Additionally, if you do choose to accept any insurance offer, you’ll be signing a release form which gives away your right to pursue future legal action. So should any future injuries or damages crop up, you’ll have signed away your rights to take legal action. Yet another reason to be wary of accepting the first offer of compensation.
How Much Should Your Counteroffer Be?
The best way to calculate your counteroffer amount is to collect any documentation and bills stating the precise and general damages you’ve experienced. Precise damages include medical bills, prescription costs, therapy appointments, medical tests, property damage bills, and lost wages due to the inability to work. General damages include the inability to enjoy certain activities you once loved, mental anguish, etc. General damages are harder to prove, but they can be one of the most significant parts of your settlement, giving you greater leeway to negotiate.
The insurance company will use a formula called the general damages multiplier to calculate general damages. However, this amount can vary drastically, so it’s vital to seek the aid of an attorney to help you prove the extent of your general damages.
You should compare your damages calculations to the insurance company’s initial offer. Is it a reasonable offer? Any settlement offer should sufficiently cover the cost of your damages. If it’s not, it’s time to send in a counteroffer.
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How to Make a Counteroffer
A counteroffer must be made in writing, and it must also state that you are rejecting the initial offer along with the reason why you are doing so. It is in your best interest to compose the letter with the assistance of an attorney, as the supporting arguments for a higher settlement offer must be compelling enough for the insurance company to agree to the terms. Once the insurance company receives the letter, they will likely come back with a second settlement offer. This offer may or may not be in the range you are seeking. If not, there may be additional back-and-forth negotiations until both parties are happy with the final settlement figure.
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The settlement process is similar to bartering, and it’s a delicate balance of understanding when you’re being lowballed and when insurance companies are giving you the best offer. It’s unlikely that you will want to settle for the first amount that the insurance adjuster offers, so it’s critical to be prepared to make an adequate counteroffer in writing.
Are You Ready to Maximize Your Settlement?
Having a good lawyer by your side during the settlement process is vital to ensure you receive the highest compensation from your personal injury suit.
At the Hammack Law Firm in Greenville, South Carolina, our experienced team of personal injury lawyers will do everything possible to get you the amount you rightly deserve. If you have questions about filing your counteroffer or need someone fighting for your claim, contact us today for a free consultation.
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