If you’re not willing to put in the time to prepare for settlement negotiations, you might as well give up now. You’ll be up against an experienced claims adjuster who will take advantage of any weakness in your claim. Without some negotiation basics, you probably won’t get a fair settlement offer.
Begin at the Accident Scene
As soon as possible after an accident, do the following:
- Check if you, your passengers, the other driver, or anyone else is injured.
- Call 911 to report the accident.
- While waiting for the police, write down the the other driver’s contact information, insurance policy number, and the insurance company’s phone number.
- Look for any witnesses. Try to convince them to write down what they saw, and sign and date their statements. Be sure to get their contact information.
- Write down the police officers’ names and badge numbers.
- Write down the service number or police report reference number.
- Grab your camera or cell phone, and take photos of:
- Skid marks and gouges in the roadway
- Damage to guardrails, curbs, buildings, signs, etc.
- Leaking fluids from the transmission, engine, brakes, or radiator
- Car parts that fell off at impact, and glass from broken windows
- The point of impact, and final resting place of the vehicles
- Police officers marking the accident scene, which can include:
• Spray painting the roadway at critical points of impact
• Setting small flags next to skid marks, wreckage, or other evidence
Report the Accident
Call the other driver’s insurance company to report the claim. Also call your own insurance company. Regardless of fault, most insurance policies require the policy holder to notify the company when an accident occurs.
First Contact with the Claims Adjuster
Claims adjusters are specially trained to investigate accidents and negotiate settlements to resolve legitimate claims. They’re also required to deny claims when their investigation concludes their insured wasn’t negligent.
Within a few days after you report the accident, you’ll get a phone call from the other driver’s claims adjuster. She’ll want to take your recorded statement and ask you to sign a medical release. Both are standard procedure.
If your claim is serious enough to need an attorney, don’t give a statement or sign a release until you’ve spoken with one. If you’re handling the claim yourself, don’t make any statements implying your own negligence, and don’t give access to any medical records unrelated to your current injuries.
Several days after your first contact with the adjuster, you’ll receive a Reservation of Rights letter. This is standard practice and nothing to be alarmed about. The letter states that, although the insurance company has agreed to discuss the claim with you, it doesn’t mean they accept liability for their insured’s actions.
Demand a Rental
If your car will be in the repair shop for more than a day, you have a right to a rental car similar to the one damaged in the accident. For example, if you’re a soccer mom who uses her minivan to pick up youngsters and take them back and forth to soccer practice, tell the adjuster you need a minivan.
If the other driver was totally at-fault for damaging your car, you have the right to a rental until the day your car is fully repaired.
Build Your Claim
After your initial statement and signing the releases, there will be a lull while you’re recovering from your injuries. You can’t negotiate a settlement until you have fully recovered, or no further treatment will change your medical status. During your recovery and treatment, begin gathering the following documents to build your claim:
- A written medical diagnosis describing the type and extent of your injuries
- A written medical prognosis describing how the injuries will affect you in the future, and if applicable, the doctor’s orders limiting or prohibiting you from engaging in certain types of employment
- If you will require future treatment, a medical statement indicating the estimated cost of that treatment
- Copies of medical bills and out-of-pocket expenses
- Written proof from your employer confirming the wages you lost while you were unable to work (if self-employed, gather copies of tax returns, bank statements, etc.)
Negotiate Your Settlement
Getting to the final stages of negotiations requires you to effectively communicate your demand amount to the adjuster, and support that demand with credible proof. You must determine your ideal compensation, and put it in writing in the form of a demand letter.
Starting with an absurdly high demand is not a good idea. The adjuster may disregard all further negotiations and just give you her final offer. She’s not going to waste her time negotiating down from a ridiculous amount. (Read some other articles on this website to find out how to calculate a demand for settlement.)
After the adjuster receives your (realistic) initial demand, she’ll call you to begin negotiations. She may start by saying, “Your demand is way too high,” or “I don’t have authority for that amount.”
What’s the adjuster’s authority?
An adjuster’s authority is the maximum dollar amount she has permission to settle the claim for. Any greater amount has to be approved by a supervisor. Claims adjusters are notorious for telling claimants their demand exceeds the authority given to them, when in reality it’s not even close.
Don’t use her authority amount as the starting point for negotiations. Start with your demand and go down from there. Remember, claims adjusters’ first duty is to protect their employer from financial loss. The primary way they save money is by paying injured claimants as little as possible.
Dealing with objections
Calmly explain the reasons for your demand. You do that by first setting out the evidence of the insured’s negligence, then going over the prescribed medical or chiropractic treatment you received. Remind the adjuster the treatment was not your idea, but was ordered by your doctor.
Make clear to the adjuster that your injuries and medical bills were totally her insured’s fault. Tell her that having to endure pain and undergo medical treatment was not something you asked for, nor wanted.
It’s very difficult for an adjuster to contest a physician’s diagnosis and prognosis. Doctors rely on tangible evidence of injuries and are trained to recommend appropriate treatment.
Even so, the adjuster may suggest your treatment was excessive, or that the tests performed were unnecessary. She may also say you took too much time off from work. Then she’ll state how much she is prepared to offer.
The offer won’t be close to your demand, but don’t overreact. Remain calm and professional at all times. Tell her the amount is not appropriate compensation for your damages, but you will review it and get back to her.
Final steps to settlement
There may be several back-and-forth exchanges between the two of you. As long as the adjuster is still talking, she’s still negotiating. Remember to negotiate down from your original demand, not up from the adjuster’s counteroffer.
At all times have a figure in mind which represents the lowest amount you will accept, your drop dead amount. You should be prepared to walk away from negotiations and seek legal representation if the adjuster won’t pay at least that amount.
There may come a time when she says the words “final offer.” Adjusters normally don’t say that unless it actually is their final offer. At that point you will have to either accept that amount, or consider filing a lawsuit.