It is common knowledge that most personal injury cases end up in settlements, and they don’t quite end up in court. However, you should also know that insurance companies routinely make lowball offers at the start, ones that don’t match up to claimants’ damages. Unfortunately, several victims end up accepting these offers, not knowing that they can ask for more. So, why do insurance companies offer lowball settlement offers, and what should you do in any such scenario?
Why Insurance Companies Offer Low Settlements
Insurance companies, like other businesses, aim to maximize profits, and an easy way to do this is by minimizing payouts. Understanding why they offer low settlements can help you navigate the claims process and fight for the compensation you deserve.
The Bottom Line
All the money an insurance company pays out as part of a claim has a direct impact on its profit. By offering low personal injury settlement offers, these companies attempt to resolve claims for the least amount possible. This has a positive effect on their financial health and bottom lines. Keep in mind that this is a calculated business decision, and not a reflection of the severity of your injuries or damages.
In addition, given that most insurance providers handle a significant number of claims regularly, it’s common for them to rely on cost control measures. If they can manage to keep payouts on the lower end of the spectrum, they can handle way more claims without worrying about their bottom lines.
Assuming Lack of Knowledge
It is common for insurance adjusters to assume that claimants lack a full understanding of their rights, the true value of their claims, and the intricacies of personal injury law. In this scenario, an insurance company might have you believe that its offer is more than reasonable, with the hope that you will accept it easily.
Exploiting Vulnerability
Another common reason why insurance companies offer low settlements is to check how determined you are to see the process through. For example, if it feels you are in a desperate need of money, it might make a low offer, hoping that you will accept it quickly. This tactic often comes into play when claimants are struggling to keep up with medical bills and/or day-to-day expenses.
Identifying Lowball Settlement Offers
Understanding your personal injury claim value is the first step in identifying a lowball offer. After all, you will know how much to seek as damages only after you evaluate your damages and assign them a dollar value. Once you do, identifying a lowball settlement offer is fairly simple.
- Comes very quickly. Know that insurance companies typically take a few weeks to even months to arrive at personal injury settlements. As a result, if you receive a settlement offer from an insurance company days after filing your claim, you can be certain that it does not cover your damages. Instead, what the company is trying to do is resolve the matter before you get a complete understanding of your damages.
- Making the process seem very complicated. Insurance adjusters try to take advantage of the fact that many claimants find the claims process daunting. In this case, they might try to make the process seem more complicated than it is, hoping that you settle for a low offer quickly instead of going through a supposedly complex process.
- No clear breakdown. Ideally, your personal injury settlement offer should provide a clear breakdown of your damages and the corresponding compensation. If it does not tell you how a company arrived at any given number or is vague in any other way, it’s a sign of a lowball offer.
- Downplaying your damages. An insurance company might argue that your injuries are pre-existing, not as severe as you claim, or unrelated to the accident. It may also try to disregard non-economic damages like emotional distress, pain and suffering, and loss of enjoyment of life. By doing this, it can end up making a lowball offer.
- Disputing or minimizing liability. If there’s ambiguity about who was at fault for an accident, insurance companies can try to leverage it to their advantage. They may argue that you were partially responsible, which, in states with comparative negligence laws, could reduce the amount of compensation you’re entitled to receive. What you get then is a lowball offer, which the opposing party’s insurance company tries to justify.
- Prolonging the process. Insurance companies can transfer your case to different adjusters, misplace your paperwork, or take an unusually long time to respond to your inquiries. Their aim is to frustrate you, wear you down, and make you more likely to accept a lower offer so you may get on with your life.
- Ignoring you. There is a possibility that you might be up against an insurance company that may try to ignore your attempts to contact its representatives. This delay tactic can come into play if you are nearing the statute of limitations, which, in New York, is two years for most personal injury cases. Then, when it makes an offer, you may expect it to be low.
- Putting pressure on you. Insurance adjusters can put pressure on you to accept a lowball personal injury settlement offer by suggesting that it’s the best you can get or that the offer in question might lapse if you take time to decide.
What to Do When Insurance Offers a Low Settlement Offer
You are under no legal obligation to accept an insurance company’s settlement offer, and you have the right to dispute it if you feel the assessment is incorrect. You can ask the insurance company the reason why its offer does not match the extent of your damages, following which you can collect all the evidence you need to continue negotiations by asking the insurance company to reconsider its claim or taking your case to court.
What Happens If You Reject a Lowball Offer?
If you reject a settlement offer that you find to be low, the insurance company might offer a higher amount, but it might still not cover your damages. It can also ask you to substantiate your claim by providing further evidence. In some instances, insurance companies might stop responding to claimants with the hope that they lose patience and accept the initial offer. An insurance company can also tell you that it can do no better than the initial offer and give you the option of taking it or letting it go. In any such scenario, it’s best to seek advice from a personal injury attorney.
Steps to Take After a Low Settlement Offer
Rejecting settlement offers is one thing, but knowing what the process entails and what to do after is crucial. Remember that experienced personal injury attorneys handle settlements regularly, and this is how they deal with the process.
Analyze the Initial Offer
It’s important not to accept the first offer that comes your way, even if you think you can do with the money. This is because you need to determine if the amount in question covers all your economic and non-economic damages. In addition, you must go through the fine print in detail to look for clauses that might prohibit you from seeking additional compensation in the future or do away with the insurer’s liability.
Collect Evidence
If you receive a lowball settlement offer, you need to present compelling evidence to support your case. This can come in the form of medical records, accident reports, police reports, property damage estimates, witness testimonies, expert witness testimonies, and visual evidence (photographs and videos). Make sure you don’t miss any detail because comprehensive evidence helps bolster your claim.
Communicate Effectively
One of the top tips for dealing with insurance adjusters is to communicate with purpose. For example, no matter how frustrated you might be, you need to keep your emotions at bay and remain calm and composed, as this shows you are in control. In addition:
- Demonstrate why the offer is low by highlighting specific expenses.
- Ask for a detailed breakdown so you can see which portions to challenge.
- Don’t speculate.
- Refrain from providing unnecessary information.
- Maintain records of all correspondence.
Prepare for Negotiations
If you’re wondering when to accept a personal injury settlement offer, know that the time might come only after a few rounds of negotiations. This is because insurance companies are not really waiting to accept the counteroffer that claimants make. As a result, you need to prepare for what can be a time-consuming negotiation process that calls for patience and perseverance.
Before you begin negotiating, it’s best to determine the minimum compensation amount that will work for you. Then, you submit a counteroffer with the amount you wish to seek along with evidence to support your claim.
If you find any incorrect information or inconsistencies in the initial offer, shed light on the same. You may also emphasize the insurance company’s obligation to offer a fair settlement according to its policy’s terms and conditions.
Conclusion
While you have looked at the steps to take after a low settlement offer, remember that dealing with insurance companies on your own can be an uphill task, which is why you should consider using the services of an experienced personal injury attorney. Then, while you can focus on your path to recovery, your attorney can determine how best to proceed with the lowball settlement offer you have.