Here are your best options for pursuing injury compensation when claim negotiations with the insurance company fail.
Most injury claims are settled out of court by negotiating directly with the insurance adjuster.
Severe or complicated injury claims are usually handled by the victim’s attorney. However, plenty of less serious injury claims are successfully negotiated without an attorney.
Let’s assume you’ve done your homework. You’ve learned about the claims negotiation process and calculated what your injury claim is worth. You have every reason to expect a fair settlement of your claim.
Even when you avoid costly negotiation mistakes, sometimes personal injury claims aren’t easy to settle. If you’re having trouble getting a decent settlement from the insurance company, you have other options for pursuing fair injury compensation.
Here’s where we unpack your options when claim negotiations fail.
Causes of Failed Claim Negotiations
Imagine you’ve submitted a settlement demand packet to the insurance adjuster, including supporting evidence of your losses, and are ready to patiently negotiate your claim. Then it all falls apart. What happened?
Some adjusters will flatly deny your insurance claim. Common excuses an adjuster might have for denying accident claims could be:
- Your claim isn’t covered by the insurance policy
- The adjuster blames you for the circumstances leading to your injuries
- The adjuster believes your injuries weren’t caused by the incident
- The adjuster thinks your injuries existed prior to the accident
If your claim wasn’t denied outright, you might still need to consider other options if you’ve gone back and forth with the adjuster without making any headway.
Indications of failing negotiations include:
- The claims adjuster ignores your letters and telephone calls
- The claims adjuster is unreasonable, condescending, or just plain mean
- The adjuster is making unreasonable demands for medical records and other documents you don’t have or already provided
- The adjuster won’t come off an unreasonable lowball offer
- The adjuster continues to delay your claim, waiting for the statute of limitations to expire
Each state has laws requiring the insurance company to act in good faith. Unreasonable delays and demands by the adjuster border on bad faith negotiating tactics.
A bad faith case is separate from the original injury claim. Consider talking to a personal injury attorney about a bad faith claim against the insurance company.
Your Options When Claim Negotiations Fail
Your available options depend upon the extent of your injuries, and whether you’ve filed the injury claim with your own insurance company, called a “first-party” claim, or against the at-fault party’s insurance, called a “third-party” claim.
First party injury claims are filed under your own auto insurance policy. Depending on the coverages you purchased, you expect your insurance company to pay your injury expenses under:
- Personal Injury Protection (PIP) coverage
- Medical Payment (Med-Pay) coverage
- Uninsured or Underinsured Motorist (UIM) coverage
A claim made to your own homeowner’s insurance policy is also a first-party claim.
It’s important to read your insurance policy carefully. Your policy is a legal contract between you and the insurance company. Many insurance policies have a clause requiring the insured to agree to arbitration rather than filing a lawsuit for unsettled claims.
Third-party injury claims are filed against someone else’s insurance policy. Third-party claims that injury victims can handle on their own include:
- Workers’ compensation claims
- Auto accident claims
- Slip and fall claims
- Other claims against a property owner’s liability insurance
Option 1: Talk to an Attorney
You always have the option of consulting an attorney at any point in the negotiations process, no matter whose insurance company you’re dealing with.
Most personal injury attorneys offer a free initial consultation. There’s no obligation, and you can talk to attorneys from more than one firm to find the one that’s a good fit for your situation.
Even if your injury claim is for a relatively small amount, like a couple of thousand dollars, you are still better off talking to an attorney about your options. It might not be worth the expense of hiring an attorney, but you’ll still get good advice during your free consultation.
If you decide to hire an attorney to help with your case, the attorney won’t get paid unless your case settles. It’s amazing how fast some adjusters will settle a claim for a fair amount of compensation once an attorney is involved.
Option 2: Mediation
“Alternative dispute resolution” is a phrase used to describe methods of resolving a conflict before litigation. The most common alternate methods are mediation and arbitration.
Mediation is a process by which you and the insurance company both agree to have a neutral party, called a “mediator,” help resolve your settlement dispute. The mediator’s fee must be shared equally by you and the insurance company, and unless you and the company agree to accept the mediator’s decision, it’s non-binding.
Many insurance companies won’t agree to mediation for minor personal injury claims. It’s simply not cost-effective for them to pay towards settling smaller claims.
If you have a no-fault insurance policy with a clause permitting you or the insurance company to request mediation, asking for it may convince the adjuster to settle your claim.
Although you can have a lawyer with you, it’s not required. You can be sure the insurance company will bring a lawyer to the mediation.
What happens in a mediation?
The mediation process begins when you and the insurance company agree on a mediator. A mediator should be a neutral, unbiased person who is not affiliated with you or the insurance company.
You can find lists of qualified mediators online, or you can check with your local court for help finding mediators.
Examples of state-run mediation resources include:
- California’s Mediation Programs
- New York’s ADR Programs
- Florida Citizens Dispute Settlement Programs
- Texas Alternate Dispute Resolution
By process of elimination, you and the insurance company will settle on one mediator to hear your dispute.
Normally, the mediator’s fees must be paid in full before the mediation takes place. Some will accept a partial amount to begin, and the balance at the conclusion.
The mediator’s job is to interpret the information from both sides and help prompt a settlement everyone can live with. The process is informal, without the rules of evidence used in court cases.
The mediator will listen to your side of the story, then present your demands to the insurance company. The mediator will go back and forth between both parties trying to reach an agreement.
A successful mediator eliminates as many roadblocks as possible and works out a mutually agreeable settlement. You and the insurance company will sign a written copy of any agreement you make.
If you don’t settle at mediation, you usually still have the right to file a lawsuit.
Option 3: Arbitration
Arbitration is similar to mediation in that a neutral party, called an “arbitrator,” is brought in to help resolve the stalemate between you and the insurance company.
The difference is, instead of helping both sides come to an agreement, the arbitrator will listen to arguments from both sides and make a decision.
Depending on the arbitration agreement between you and the insurance company, the decision can be binding or non-binding:
- Binding arbitration means both sides must live with the arbitrator’s decision. There is no appeal.
- Non-binding arbitration allows either side to take further action, like a lawsuit, if they don’t agree with the arbitrator’s decision.
Arbitration is the most demanding method of alternative dispute resolution. Certain aspects of the arbitration agreement must be negotiated before the actual process can even begin. It’s advisable to have an attorney on your side to help you with the specifics.
Contract Arbitration Clauses
If you’re in a stalemate with your own insurance company, you may have no choice but to arbitrate the dispute. The right to call for arbitration is often written into your insurance policy. The arbitration clause likely states that either party has the right to have a contested matter arbitrated.
In other words, if your injury claim negotiations have failed, you have the option of asking for arbitration.
If you want to arbitrate, tell the adjuster and follow up with a written request for arbitration.
The request alone may be enough to get the adjuster to settle. Like mediation, the costs of arbitration can be high, so settling the claim is often in everyone’s best interest.
Learn more about participating in arbitration without an attorney from The American Arbitration Association.
Option 4: Filing a Lawsuit
Filing a full-blown personal injury lawsuit can be expensive and complicated, and almost impossible to win without a skilled attorney on your side.
If you’re handling your own minor injury claim and negotiations fail, filing a lawsuit in small claims court may be the perfect solution.
Most states allow you to bring an attorney to small claims court, although you might not find an attorney willing to take a small case on a contingency fee basis.
Small claims courts are designed to settle disputes without the need for lawyers. These courts have limited jurisdiction, which means the maximum monetary awards are relatively low. Monetary limits in small claims courts usually range between $2,500 and $6,000, but can be as high as $25,000. The specific amount depends on state laws.
Small claims court procedures are easier for someone handling their own case, and the fees are more affordable than higher court costs.
Lawsuits, even in small claims court, are always filed against the at-fault party, not the insurance company.
Keep in mind that most insurance companies have a “duty to defend” their insured, so the insurance company will usually pay for an attorney to represent their insured, even in small claims court.
The insurance company might also be willing to offer a nuisance value payout to get rid of your claim. Carefully consider any settlement offers. There’s no guarantee you’ll win in court.
Small claims trials can take anywhere from a few minutes to a couple of hours. If you win, the insurance company will be ordered to send you a check. It will include the verdict amount and reimbursement for your filing fees.
The person you sued usually has the right to appeal the verdict to a higher court, but because of the additional lawyer’s fees, insurance companies often won’t appeal a minor payout. If you lose, you also have the right to appeal to a higher court. For that, you’ll need an experienced personal injury attorney to handle the case.
Video: Options for Recovering Injury Compensation
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