Here’s what you need to know to negotiate a personal injury settlement with the insurance company. Find out how to settle your claim for fair compensation.
Accidents happen every day. When another person’s negligence causes you to get hurt, you have a right to expect compensation for the cost of your injuries and related losses.
For most of us, that means dealing with the at-fault person’s insurance company. The basic settlement negotiation process is the same whether you were injured in a car accident or on someone else’s property.
When you’ve recovered from relatively minor injuries, you can probably negotiate a personal injury settlement without hiring an attorney. We walk you through the process from initial demand through release and settlement.
Expect Contact from the Claims Adjuster
The claims adjuster’s job is to settle your claim for as little as possible, as quickly as possible. Insurance adjusters are trained to look for reasons to deny your claim or reduce your compensation.
Claims adjusters are just people doing their jobs, and each one has a different personality and style. Some adjusters try to be intimidating. Others are condescending. Some don’t appear very interested in doing their jobs. You may even find your adjuster is pleasant and easy to work with.
Be especially careful with the kind and sympathetic adjuster. They are not your friend. They know precisely how to get you to say something that will damage your claim, or make an admission against your interest.
Remain calm, cool, and polite, regardless of the adjuster’s attitude. Stick to the facts, don’t get emotional, and you’ll get better results.
Reservation of Rights Letter
Anywhere from a few days to a couple of weeks after you’ve filed an injury claim, you’ll receive a Reservation of Rights letter from the insurance company. The letter is a legal tool insurance companies use to protect themselves. It’s standard procedure, so don’t be alarmed.
The letter says the insurance company has agreed to evaluate your claim with the understanding that they haven’t accepted liability on the part of their insured.
In other words, if they decide their insured is not liable at any time before the case is settled, they reserve the right to deny your claim.
Protecting Your Medical Privacy
One of the first things the claims adjuster will send you is a medical release form. Read the release form very carefully. Many standard insurance company forms give the company the right to all your medical records going back five or ten years.
The adjuster will comb through your records looking for prior injuries or other information to use against you.
You don’t have to sign the medical release form from the insurance company. You can write your own release that limits the insurance company to medical records after the accident date, and from specific medical providers.
The claims adjuster will need proof of your injuries and medical expenses, but isn’t entitled to see private medical or mental health history that has nothing to do with your injury claim.
Important Points to Remember
- The claims adjuster wants to settle your claim for a little as possible, as quickly as possible. Don’t rush into negotiations if you’re still in treatment for your injuries.
- The adjuster knows what the case is worth and will take advantage if you haven’t done your homework.
- You may go through several counteroffers before you and the adjuster finally agree on a settlement amount.
- Be firm but open to compromise – that’s the key to success.
You have the right to consult a personal injury attorney at any time during settlement negotiations.
Preparing a Settlement Demand Packet
Once you’ve fully recovered from your injuries, or you are certain of future medical costs, you’re ready to think about settling your injury claim.
You’ll gather all your documentation and prepare what lawyers and insurance professionals call a Settlement Demand Packet. Sending your packet to the claims adjuster officially begins the negotiation process.
Gathering Your Documentation
Putting together an organized injury claim file will help you build a strong claim and makes it easier for you to discuss your claim with the adjuster.
Your file should include:
- Police or incident reports
- Witness statements
- Photographic evidence
- Medical records, bills, and receipts
- Lost wage statements
- Your detailed notes about the accident and aftermath
- Correspondence related to your claim
Don’t hand over your original documents to the insurance adjuster. Originals belong in your file. Make copies of specific documents from your file when you’re ready to assemble a demand packet.
You can never have too much documentation. The adjuster won’t take your word for anything. Even a statement from your neighbor who made meals while you were laid up can help support your damage claims.
Calculating Claim Value
Before you can negotiate a personal injury claim, you need to know how much your claim is worth. Attorneys and insurance adjusters typically add up “special damages” and “general damages” to come up with a claim value.
Special damages, or “specials” are hard economic costs, such as:
- Medical or chiropractic bills
- Therapy or treatment bills
- Out-of-pocket medical expenses
- Replacement service expenses, like childcare
- Lost wages
Adding up your special damages is easy because you’ll have bills and receipts, and a copy of your wage loss statement.
Be sure to include the full cost of your medical and pharmacy expenses, even when some or all of it was covered by your private health insurance.
General damages are non-economic losses, such as:
- Pain and suffering
- Mental anguish
- Emotional distress
- Loss of consortium
Calculating general damages is more difficult than special damages. There is no objective measurement for the injury’s impact on your life. You need to think like an adjuster to justify general damages.
For most injury claims, it’s reasonable to add one or two times the total of your special damages to account for your pain and suffering. The resulting total is a fair estimate of your claim’s value.
Sending Your Demand Packet
Take the time to put together a neatly assembled settlement demand packet. You can put the packet together in a ring binder or use clips to keep the pages together.
An organized presentation of your demand for payment shows you know what you’re doing.
Make two identical packets, one for you and one for the insurance company. As negotiations move forward, it will help you to see exactly what you sent and when you sent it.
Prepare a demand letter summarizing the facts of the case and itemizing your damages. Your packet should include copies of all your supporting documentation, in the order the items are mentioned in the letter, such as:
- The police report or incident report.
- Medical records and bills
- Wage statements or copies of prior pay stubs
- Photographs, witness statements, and contact information for everyone involved
- Your observations, drawings, or anything else that helps prove your case
Look like a pro with our free sample Personal Injury Demand Letter.
Use a big enough envelope to hold the packet neatly. Send the packet to the insurance adjuster by US Postal Service certified mail, return receipt requested. When the green card comes back, attach it to your copy of the packet.
Negotiating Your Personal Injury Settlement
Ideally, you’d like to get the full amount of the claim value you requested in your demand letter. In reality, you need to figure out your “drop dead amount,” meaning the minimum settlement you will accept.
Never tell the adjuster how low you’re willing to go; hopefully, you’ll never get to that point. If the adjuster’s offers never get above your drop-dead amount, your next step will be to file a lawsuit.
The Counteroffer to Your Demand
Within a week or two after the adjuster has received your settlement demand packet, you’ll get the adjuster’s counteroffer to your demand. You may get a letter, or more likely a phone call.
The counteroffer typically says that after reviewing the claim, they believe the amount you’re asking for is too much. The counteroffer should list the reasons for the lower offer.
Common reasons a claims adjuster may use to diminish your claim:
- The insured is not 100 percent liable for your injuries.
- You waited several days before seeking medical care.
- Your injuries aren’t new, they’re just an exacerbation of a previous injury.
- The length and cost of your medical or chiropractic treatment is unreasonable.
- The time you took off from work was excessive for the type of injuries you sustained.
- The amount you’re asking for pain and suffering is too high.
The adjuster may say the amount you’re asking for is beyond their “authority” or even that they’ve already gone to a supervisor and gotten permission to offer you a certain amount.
The adjuster’s counteroffer is not the end of negotiations. Don’t give up or feel insulted. It’s just part of the process. Thank the adjuster and let them know you don’t think it’s enough to cover your losses. Say you’ll weigh the offer and get back in touch in a few days.
Most adjusters know better, but occasionally an adjuster will stoop to bad faith tactics to harass the claimant into accepting a ridiculously low settlement or drag out negotiations until the statute of limitations expires.
If the adjuster is stalling or argues that you share a large part of blame for the circumstances leading to your injuries, you should speak to a personal injury attorney about your options.
Responding to Unacceptable Counteroffers
When you call the adjuster back, stay calm and focused. Get the adjuster to justify the counteroffer. The adjuster will want to continue the negotiations from the low amount just offered. It’s a common negotiation tactic, so be ready and don’t go along with it. Instead, go back to your original demand and negotiate down from there.
Ask the adjuster to give a breakdown of each reason used to determine the amount of their counteroffer. Write each reason down. If the adjuster talks faster than you write, ask them to repeat or slow down. Settlement negotiations are serious business, and everything is important. Then say you need a few days to review the reasons.
Your next step is to prepare a rebuttal to each of the reasons.
Stress the fact that you never asked for this. You didn’t ask to be hurt or be forced to miss time from work while going back and forth to medical treatment. Use the correct medical terms for your injuries and explain clearly how your life was affected. Tell the adjuster your pain and suffering is real, and you aren’t going to be taken advantage of.
As part of your response, lower your demand slightly. Remember, you are negotiating from your demand and not the adjuster’s counteroffer. Don’t lower your demand very much. Lowering it by small increments is the proper way to negotiate. So long as you’re willing to compromise, the adjuster will usually continue negotiating.
Once you’ve lowered your demand, don’t call the adjuster back right away and lower it again. Wait until you get a response. If you drop your demand before the adjuster has a chance to respond, you’re negotiating against yourself.
Take detailed notes during every round of injury settlement negotiations, including the date of each discussion, the amounts offered, and the adjuster’s arguments and reasons for their counteroffers.
The Final Settlement
Don’t settle unless you’re fully recovered, or the settlement amount is enough to cover all your future treatment. If you settle and later need additional treatment, you cannot reopen the claim or ask for more money.
After a few rounds of offers and counteroffers, you should come to a compromised agreement of the amount you will be paid to settle your personal injury claim. Write down everything you agreed on, and the date you negotiated the final settlement.
Be sure to read the settlement and release agreement very carefully to make sure it matches up with the verbal agreement you made with the claims adjuster. The release agreement is a legally binding document, and it’s up to you to know what you’re signing.
Once you sign the settlement agreement and endorse the check, your case outcome is final.
Anytime before the final settlement, you have the right to consult an experienced personal injury attorney. Most attorneys don’t charge injury victims for their initial consultation.
Don’t let the insurance company call the shots. It cost nothing to find out what a good attorney can do for you.
Video: Intro to Personal Injury Settlement Negotiations
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