Even if your injuries are obvious, and liability is clear, you should be prepared to bargain with insurers during settlement negotiations after an accident. As a first step, an injured victim should make sure to collect all of the relevant documents and other evidence to support their claim and send them to the insurer with a written demand letter. The letter should describe your injuries, discuss the medical treatment that you received, state your lost income and any other damages, and explain why the insured party was at fault for the accident. (If this is a no-fault auto insurance claim, you should explain why you qualify to make this claim.) If you believe that you may have been partly at fault, you should not admit fault.
This initial demand letter should ask for a relatively high amount, since you can expect the insurance adjuster to respond with a low counteroffer, usually accompanied by a statement that your claim is lacking in some way. Then, an accident victim usually will step down slightly to a lower offer, the insurance adjuster will increase the counteroffer somewhat, and the negotiations will continue until the two sides reach an agreement on an amount or decide to proceed to trial.
Disputes that arise during settlement negotiations often relate to the scope of the coverage provided by the policy. The insurance company may try to read its terms more narrowly than you read them. You should be aware that ambiguities in the policy likely will be interpreted in your favor because the insurer was responsible for drafting the policy.
An insurer also may be skeptical about the injuries that you are claiming and the treatment that you need for them. This is why you should carefully document what happened in the aftermath of the accident and provide the insurer with this information early in the process. A dispute over injuries or treatment may be especially likely when a victim has pre-existing conditions that were exacerbated by the accident.
In some situations, an insurer may question your theory of who caused the accident and may suggest that you contributed to it. This can have a significant impact on the damages that you are awarded. In a few states, any fault by a victim can prevent them from recovering any damages. You should not admit fault to an insurance adjuster without first consulting an attorney.
There are some basic points to bear in mind during negotiations. You should make sure to investigate the value of your claim before sending your initial demand letter. This involves putting a figure on medical bills, lost income, costs of future treatment, and more subjective damages like your pain and suffering. Also, you should decide on the minimum amount that you will accept to settle your claim, although you should not share this information with the insurer. (You can feel free to adjust this amount downward if the insurer points out information that weakens your claim of which you were unaware.) You should be polite, patient, and organized throughout the process, keeping track of what the insurer has said and holding it to any promises but not letting your emotions disrupt the negotiations.
In general, the first offer from the insurer will not be sufficient and is intended to simply be a maneuver in the bargaining process. If the offer is higher than you anticipated or close to the minimum amount that you would accept, this may be a sign that you are undervaluing your claim. If you feel that the offer is much too low, which is likely, you should find out why the insurer believes that your case is worth so much less and respond to the factors that it cites in support of its offer. You may not want to lower the amount in your next demand letter significantly unless you feel that the insurer’s reasons are justified.
When the negotiations have concluded in an acceptable settlement, you should make sure to put the agreement in writing. This document should include not only the amount but also the damages that the amount is meant to cover and the date when you should receive the settlement documents from the insurance company.
Some accident victims are alarmed or confused when they receive this type of letter from the insurance company. However, a reservation of rights letter is fairly standard. It simply states that the insurer is investigating the claim but is not making a commitment to pay you anything if it finds that the accident is not covered under the policy. This is a way to keep an insurance company from being on the hook based on starting to discuss a settlement with the victim.
After certain types of accidents, such as crashes caused by uninsured or underinsured motorists, victims may need to bring claims against their own insurers. This is known as a first-party claim. You should investigate the specific terms of your policy and make sure that you follow any rules that it provides. For example, you may have a certain time window within which you need to notify the insurer of the claim, and you may need to provide releases for medical records and income records. You should make sure not to authorize releases for anything that is unrelated to the claim, and you can qualify your authorization for this purpose.
Disputes may arise over the independent medical examination (IME) that an insurer may request of an insured. An insurer’s right to an IME is limited to one examination, for which the insurer must pay, and it should be confined to examining the injuries that you are claiming.
Insurers are profit-driven corporations, which means that it is in an insurer’s best interests to limit the value of a claim. Sometimes an adjuster will go too far and break the law or violate the terms of the policy. They may tell you that you waited too long to file a claim when you are still within the statute of limitations or the notice period of your policy. Even if you waited until after the notice period expired, the insurer still must honor a valid claim unless the delay prevented it from investigating the claim. These situations are rare, and you should not concede that a delay was unreasonable or accept a lower amount of compensation to make up for the delay.
When multiple parties and insurers are involved, one insurer’s adjuster may tell you that a different party or insurer is responsible for handling the claim. Unless one company makes a written commitment to be the primary insurance carrier for the claim, you have the right to proceed against any insurer involved.
An insurer does not have the right to reduce your compensation if your losses were not out of pocket, except in some situations in California. The collateral source rule prevents an insurer from basing a settlement amount on information about payments from other sources. This is meant to prevent someone who caused an accident from dodging liability because the victim acted responsibly in getting health insurance or accumulating vacation time at work.
If you believe that an insurer is acting in bad faith, you may have a separate claim against that insurer. This can result in damages beyond the compensation that you receive for the accident. You should explore the discussion of insurance bad faith on this website to learn more about the details.
