Negotiating a personal injury settlement with an insurance company can be tricky. Learn professional strategies for effective negotiations.
Accidents happen every day. When another person’s negligence causes you harm, you have a right to expect compensation for the cost of your medical care and related losses.
In most cases, that means filing a claim with the at-fault party’s insurance company and negotiating a settlement. The basic settlement process is the same whether you were injured in a car accident, slip and fall, or another incident.
If you only suffered minor injuries, you may decide to negotiate a personal injury settlement without hiring an attorney. Here we walk you through the settlement process, from filing your claim, to agreeing on a settlement and signing the release.
Here’s a printable Worksheet for Negotiating an Injury Settlement
First Contact With the Insurance Company
A week or two after you’ve filed your injury claim, you’ll receive a Reservation of Rights letter from the insurance company. The letter is a standard legal tool insurance companies use to protect themselves.
The letter says the company has agreed to evaluate your claim, but they haven’t accepted liability on behalf of their insured. In other words, if they decide their insured is not to blame for your injuries, they reserve the right to deny your claim.
You will also be given a claim number and contact information for the adjuster assigned to your claim.
Working With Insurance Adjusters
The claims adjuster’s job is to settle your claim for as little as possible. They are trained to look for reasons to deny your claim or reduce your compensation.
Adjusters are just people doing their jobs, and each one has a different style. Some adjusters are intimidating or confrontational. Others may not be very enthusiastic. With luck, your adjuster will be friendly and easy to work with.
Be especially careful with a kind and sympathetic adjuster. They are not your friend. They know how to get you to admit something against your interest that will lower your payout.
The adjuster will likely ask you to provide a recorded statement. Most personal injury lawyers warn against giving a recorded statement without legal representation. Consider offering to provide a written statement instead. Never give a recorded statement when you’re tired, upset, in pain, or taking pain medication.
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. Remaining professional at all times makes you more credible as an injury victim and negotiator.
Protecting Your Medical Privacy
One of the first things you’ll receive from the adjuster is a medical release form. Read the form very carefully. Many standard release forms give the insurance company the right to see all your medical records, sometimes going back ten years or more.
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 company to medical records after the accident date, and only from specific medical providers.
The claims adjuster will need proof of your injuries and medical expenses, but they’re not entitled to see your private medical history that has nothing to do with your injury claim.
Preparing a Settlement Demand Packet
Once you’ve fully recovered from your injuries and are certain of future medical costs, you’re ready to think about settling your injury claim.
At this point, you’ll gather all your documentation and prepare a settlement demand packet. Sending your packet to the claims adjuster officially begins the negotiation process.
Gathering Your Documentation
Putting together an organized claim file helps you build a strong claim and makes it easier to reference information. Your file should include correspondence from the insurance company, copies of medical bills and receipts, evidence such as photos and witness statements, and any other evidence to support your claim.
Never give original documents to the insurance adjuster. Originals belong in your file. Always make copies of specific documents when assembling 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 adjusters typically add up “special damages” and “general damages” to come up with a settlement value.
- Special damages are hard economic costs, such as medical bills, out-of-pocket expenses, and lost wages. Adding up your special damages is easy because you’ll have bills and receipts, and a copy of your wage loss statement.
- General damages are non-economic losses, like pain, suffering, and loss of consortium. Calculating general damages is trickier than special damages. There is no objective measurement for the injury’s impact on your life.
For most minor 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.
If you know you have a weak claim, it’s still possible you can get a small payout to cover your losses. This is known as a nuisance value payout.
Sending Your Demand Packet
Write a demand letter summarizing the facts of the case and itemizing your damages. Then assemble a neat and organized settlement demand packet. Your packet should include copies of all your supporting documentation, such as medical records and bills, police reports, wage statements, and other evidence.
Make two identical copies of the packets, one for you and one for the insurance adjuster. As negotiations move forward, it will help you and the adjuster stay “on the same page.”
Put the packet together in a binder or folder, and use clips to separate the sections. An organized presentation and demand for payment shows the adjuster you’re a competent person.
Send the packet by US Postal Service certified mail, return receipt requested. When the green card comes back confirming receipt, attach it to your copy of the packet.
Negotiating the Settlement Amount
Ideally, you’d like to get the full amount demanded in your letter. In reality, you’ll get less. How much less depends on your negotiating skill and the strength of your evidence. All negotiations involve compromise, but there are ways to come out on top.
Before beginning, 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 settlement proposal never gets above your bottom line, you have several options, including filing a lawsuit.
The Adjuster’s Response to Your Demand
Within a week or two after the adjuster receives your settlement demand packet, you’ll get their opening offer to settle. You may get a letter, email, or phone call. Their initial offer will likely be very low.
The adjuster’s response typically says that, after reviewing the claim, they believe the amount you’re asking for is too much. They will list the reasons for the low offer.
Common excuses for making a low settlement offer:
- 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 demanding is beyond their “authority” or even that they’ve already gone to a supervisor for permission to offer you a higher amount.
The adjuster’s counteroffer is not the end of negotiations. Settlement talks take time. Don’t give up or feel insulted. It’s just part of the process. Thank the adjuster and say you don’t think it’s enough to cover your losses. Tell them 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. They try 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, using bad faith tactics, or refuses to accept the insured’s liability for causing your injuries, seek legal advice. Contact a personal injury attorney to discuss your options. Most offer a free case evaluation.
Responding to Unacceptable Counteroffers
When you call the adjuster back, stay calm and focused. Get them to justify their counteroffer.
The adjuster will want to continue negotiating from the low amount they 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 break down each reason they used to justify the amount of their counteroffer. Take notes. 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.
How to Prepare a Rebuttal
In all your rebuttals, stress the fact that you never asked for this. You didn’t ask to be hurt, need medical treatment, or miss time from work. This is a major impact on your life, and all of it was caused by their insured’s negligence.
Use the correct medical terms for your injuries and explain clearly how your life was affected. Tell the adjuster your pain and suffering are real, and your treatment records back it up.
As part of your response, lower your demand slightly. Remember, you are negotiating down from your demand and not up from the adjuster’s counteroffer. Lowering your demand by small increments is the proper way to negotiate. So long as you’re willing to compromise, the adjuster should 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’ll be negotiating against yourself.
A good negotiation strategy is to wait a bit after you get an offer. Allow a reasonable amount of time to consider the offer before responding with your counteroffer. You don’t want the adjuster to think you’re in a hurry.
Take detailed notes during every round of settlement negotiations, including the date of each discussion, the amounts offered, and the adjuster’s arguments and reasons for their counteroffers.
When Negotiations Break Down
Most insurance claims can be resolved when both sides are willing to compromise in good faith. Unfortunately, sometimes negotiations fail despite your best efforts.
Don’t give up on your goal of getting fair injury compensation from the insurance company. You have other options when settlement negotiations fail. These include alternative dispute resolution methods like mediation and arbitration.
You also have the option to file a lawsuit. Personal injury lawsuits are always filed against the at-fault party, not their insurance company.
If the amount of compensation you’re seeking is a few thousand dollars, you might consider filing a small claims court action. Each state sets a limit on the amount you can sue for in small claims court, usually between $5,000 and $10,000.
For personal injury cases over the small claims threshold, you’re best off hiring an attorney to file a lawsuit in a higher court.
Finalizing the Insurance Settlement and Release
After a few rounds of settlement discussions with the adjuster, you should reach a compromise on the amount the insurance company will pay to settle your personal injury claim.
Write down everything you agreed on, and the date you negotiated the final settlement. Follow up by letter or email to confirm the amount and terms of the agreement.
- Confirming Your Settlement Agreement and Release
- How to Handle Delays Waiting for Your Settlement Check
Don’t settle unless you’re fully recovered, or the negotiated settlement amount is enough to cover all your future treatment. If you settle and later need additional treatment, you can’t reopen the claim or ask for more money.
Read the official settlement and release very carefully. Make sure it matches up with the agreement you made with the claims adjuster. The release is a legally binding document, and it’s up to you to know what you’re signing. Keep in mind, there’s almost always a confidentiality clause included.
Once you sign the settlement agreement and endorse the check, your case outcome is final.
Anytime before signing the final settlement, you have the right to consult an experienced personal injury attorney. Most law firms don’t charge injury victims for their initial consultation.
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