After an accident, you have more important things to worry about than what the insurance company is thinking. You want to get your car repaired and your medical needs taken care of. If another party was involved, you might have exchanged information with them at the time of the accident, but you likely didn’t think much more about it.
Then you get the phone call. “Hi! This is Insurance Adjuster from XYZ Insurance! I need to talk to you about the accident you had on the 23rd with our insured? This will only take a few minutes.” The adjuster asks a few questions and offers you a nice sum of money. Now what? Should you take it?
Insurance Companies 101
Whether the adjuster works for your insurance company or the other driver, there are a few things to keep in mind. They do not work for you. The adjuster works for the insurance company, and they have a job to do. That job is keeping the insurance company’s costs as low as possible. Ideally, an insurance company wants to pay nothing at all, but if they must pay, they want to pay as little as they legally can.
Your Insurance Company
Your insurance company may be obligated to pay certain amounts based on your policy. For instance, some states require “no-fault” insurance that pays a set amount for medical expenses and lost wages, no matter who is at fault. No-fault, sometimes called “personal injury protection” or PIP, may have a cap or fixed amount and may limit the policyholder’s ability to sue for additional coverage.
Agents will try to persuade you to settle for your limited PIP coverage, although it may not cover your medical expenses. They may assure you that you will be able to sue the other driver for costs or that they’ve reviewed your case and your costs should not be that high. Their goal is to keep the insurance company from paying more than necessary.
The Other Insurance Company
The other driver’s insurance company does not want to pay you. Their agent’s goal is to get you to admit either fault, thereby relieving them of having to pay you anything, or that you’re unhurt, thereby minimizing any duty to pay you.
If the other driver was clearly at fault, the other company’s goal is to pay you a single sum and be done with it. If they can encourage you to accept a single lump-sum payment and agree not to sue them for more, they will do so. The other company does not want to go to court, and they do not want to deal with you more than necessary.
The First Settlement Offer – What’s the Rush?
The first offer from either insurer is likely to be both low and a one-time offer unless your injuries are so severe it’s clear you’ll need extensive medical treatment. You may receive the first offer sooner than you expected, which is good, and it may be for a single lump sum, which is strange. The agent may tell you that you need to inform them soon, within a few days.
What’s that all about?
The Lowball Offer
When an insurance agent makes the first offer, they review the same information your attorney will look at later. They are considering the costs of your medical treatment, lost wages and income, potential long-term costs of care, property damage, and pain and suffering.
Some things, like the cost of medical treatment already given and lost wages, are easy to calculate. Others, like possible long-term costs and pain and suffering, are more subjective. When making an offer, the adjuster can lowball or discount these potential costs and focus on the known costs.
Hitting You When You’re Down
Insurance agents like to make these early lowball offers before you’ve had a chance to consult legal counsel. Suppose you’re still suffering from the accident’s physical and emotional effects. In that case, you may be thinking about the immediate impact of your injuries and not about the long-term consequences. An offer of a quick paycheck may sound appealing, especially if you’re not working and looking at many medical bills.
Insurers know you’re most vulnerable when you’re in pain, out of work, and struggling to make ends meet. This is when you’ll be most susceptible to pressure from a sympathetic agent.
How to Make Them Back Off
The one thing an insurance company fears the most at this point is learning that you already have an attorney. Once you have a lawyer, any communication with the insurance company must be done through your attorney.
More importantly, anything they send to you, whether it’s a settlement offer, a request for documents, or a questionnaire about the accident, must be reviewed by your attorney. This prevents the insurance company from getting you to sign a settlement offer or check and send it back before you realize what you’ve done.
Negotiating in Good and Bad Faith
Laypeople like yourself may not realize that a “settlement offer” isn’t a final figure — it’s just the beginning of a long process that may or may not end in a trial. You have the right to reject a settlement offer or to make a counteroffer to the insurance company. Sometimes an insurance agent will suggest — or even state outright — that you must “take it or leave it” and that you have only one chance to accept. This is not the case.
They Won’t Lie, but They Won’t Be Honest
The insurance companies have entire legal departments telling them what they can and cannot do and still stay on the right side of the law. The agent probably won’t tell you any lies, but if they can get away with some half-truths or omit a few things, they will. Some things you should watch for if you haven’t yet contacted your own attorney include:
- “Is it OK if I record our conversation?” The agent may ask to record your conversations or say that it’s their policy to record all phone calls for legal purposes. The real reason is to allow them to review your discussion and see if you gave them anything they can use to deny your claim. You do not have to give permission to record your phone calls.
- “We’ve reviewed your case, and your injuries are not serious.” Things are changing, but concussions, whiplash, sprains, contusions, and emotional trauma are still not considered “serious” by insurance companies. However, that is not their decision to make. Only a doctor can decide if you need treatment for your injuries.
- “Our investigator has determined you are partially at fault, so we won’t be offering a settlement.” This may or may not be true according to the laws of your state, but again, it isn’t a determination the agent can make over the phone. You have the right to have your attorney review the decision, an appeal, and a trial.
- “That’s the best we can do.” When they’re attempting to pressure you into accepting their lowball offer, they may say they’ve reached their limit and won’t go any higher. This is a pressure tactic, like a used-car salesman saying his manager won’t let him drop the price any lower. Unless you have been negotiating for weeks or months, that is not the best they can do.
Keeping Them on the Straight and Narrow
Having your own attorney levels the playing field during the negotiation phase of this process. The insurance company won’t be able to use their agent to talk with you — they’ll have to have their lawyers talk to your lawyer. Once the two attorneys talk to each other in legal language, it makes things fairer for you.
Your attorney has some advantages in the negotiation field that you do not have. Not only does your attorney understand the legal jargon without needing a translator, but they also:
- Understand the negotiation process because they’ve been through it before. They know what the insurance company is doing and what they are trying to accomplish.
- They understand the comparative negligence rules in your state and can clarify the liability questions that could affect the settlement.
- They can explain the various settlement offers and options to you in plain language and what they will mean to you in the long term.
- They will keep track of the statutes of limitation and court deadlines and file accordingly.
- They will review alternatives such as mediation and Alternative Dispute Resolution with you and discuss the benefits of each.
- If necessary, they will prepare to go to trial if that is what you want.
Litigation is never the first option for an insurance case, but surprisingly, insurance companies are even more reluctant than you are.
Insurance Companies in the Courtroom
One of the threats insurance agents like to use if you’re reluctant to settle is, “We’re not afraid to go to court!” They know that you don’t want to go to court. It’s expensive and time-consuming and, frankly, a little intimidating. It would be better just to take their offer and not worry about the whole trial thing, right?
Actually, no. The insurance company is more worried about court than you are. Insurance companies do not like to litigate. Some of the reasons may surprise you.
It is expensive. You may have thought insurance companies had money to burn, and it is true that they will spend as much money as they need to if they believe they won’t lose — but if it appears they will lose or will end up paying out more than they would have paid in a settlement, they will cut their losses and negotiate.
It is risky. Juries are unpredictable. A sympathetic plaintiff (you) or an unsympathetic defendant, which insurance companies often are, can sway a jury into giving a much larger award than the insurance company wanted to pay.
It is bad for their reputation. In this era of social media and instant news, a trial can quickly make an insurance company look bad. Even big companies can become victims of public shaming, and insurance companies are no exception. They would rather stay out of the public eye than have their policies scrutinized.
It is time-consuming. Insurance companies have more time than you do, but their time isn’t unlimited. Trials take up time and effort that their legal team needs for other, more important matters. Unless your case is a multimillion-dollar matter, negotiating a settlement is still better than litigating.
What You Need From a Personal Injury Attorney
A skillful trial attorney can put real fear into an insurance company. When it’s time to look for your attorney, you need one who has a good record in the courtroom. If their testimonial page mentions settlements and trials, you’ve found the right one.
A good trial attorney knows how to present your case to the jury in a way that will get the jury on your side immediately. When you sit down to discuss your case with the attorney, they’ll want to know a few extra details, including:
- How your injuries have affected your daily life. Are there things you can’t do anymore and things you must do differently?
- Did it take longer to heal than you expected? Are you still in physical therapy or seeing a psychiatrist or mental health specialist?
- Did your injury affect your relationship with your spouse or children?
- Are you likely to develop other health complications directly related to your injuries later in life?
If it comes to a trial, your attorney can take this information and use it to show a jury why you need more than just compensation for your bills and lost wages. You need compensation for the emotional pain and suffering and for the medical bills you may incur in the future.
Good trial attorneys rarely go to court. Morris & Dewett Injury Lawyers estimate that they only take 5% of their cases to trial, because they prepare 100% of their cases as if they were heading for court. When they sit down with the insurance company’s attorneys, opposing counsel knows that they are ready for litigation, and that leads to a quick and fair settlement.