You can succeed in settlement negotiations in your car accident case, even if you don't have any experience.
Of course, you don't want to end up like the fellow on the left in this cartoon. Here are some questions to consider in order to get the best result in your settlement negotiations.
When should you begin negotiations on your injury claim?
After you have recovered from your injuries and obtained all the documentation you need, there is no reason to delay. Send a demand letter to the insurance company and begin settlement negotiations. But remember, it is important to have all necessary evidence to back up your claim -- police reports, witness statements, photographs, and medical treatment records and bills. A lack of evidence can doom your case, or at least leave you with a settlement that doesn't cover your losses. (Use this Checklist of Records to Gather After a Car Accident.)
Do you simply ask the insurance company to pay the amount you have decided is reasonable?
No. Settlement negotiations in a car accident claim are much like the back-and-forth negotiation system that most car dealerships still use. (In fact, don't be surprised if, during the negotiations, the adjuster tells you she has to speak to her manager, just like a car salesman might.) And it has been this way as long as car accident claims have been negotiated.
You have to recognize the nature of the settlement negotiations system and "demand" more than you actually hope to recover. The normal response from the insurance adjuster is an offer that is less than they are really willing to pay. The back-and-forth process continues until the claim is resolved or until it is decided that it can't be settled, that your views of the value of the claim are simply too different.
A good rule of thumb: Ask for anywhere from 25% to 100% more than you hope to recover. If you think $10,000 is fair, "demand" $12,500 to $20,000 and negotiate from there.
How long should you continue settlement negotiations?
Ideally, negotiations will go on as long as necessary, until a fair agreement is reached. The settlement negotiations could be completed in one discussion (or one exchange of letters), but, more likely, you will have to go back-and-forth with the adjuster several times before you get the adjuster's very best settlement offer. Some lawyers have a hard and fast rule: they won't settle an injury case without discussing the claim and exchanging figures with the adjuster at least three times.
Should you accept the insurance company's final offer?
First, you have to know whether the offer is really the best offer that will be made. How do you do that? Ask the adjuster something like this: "Are you telling me that this is the highest offer you are authorized to make, and that the offer will never be increased?" Or, ask: "Is this a take-it-or-leave-it offer?" Listen carefully to the answer because most adjusters won't flat out lie to you. If the response is equivocal -- such as, "This is all the authority I have at this time" -- that probably means you can get a higher offer at another time. (More: What to Do If the Adjuster's Offer is Too Low.)
Once you get to the point that you think you have the insurance company's best offer, whether you decide to accept it is up to you.
If the offer is within the range you think is fair, and the adjuster convinces you that he or she is being honest in telling you that it is, indeed, the best offer that will be made, accept it.
If the offer is less than your goal amount, you have to decide whether to invest the time and expense of going to court to try to get more. If the offer is far less than you think is reasonable, you should probably reject it and go to court. But if the offer is less than you think is fair but is close to your goal figure, you should think carefully about it.
Ultimately, your decision on whether to accept or reject a settlement offer will probably depend on:
- how much more you think you can recover in court -- recognizing that you really don't know what will happen in court (no one does)
- how long it will take
- how much it will cost, and
- how comfortable you are with the uncertainty of going to court.
In case you are wondering, if you decide to go to court, the judge or jury deciding the case is not told the settlement offer you rejected. You can't, for example, say that you were offered $6,000 but think your case is worth $12,000. You can't mention settlement negotiations at all.
Keep in mind that the adjuster doesn't know for sure what will happen if you take your case to court, any more than you do. However, you should give some consideration to the arguments and to the evaluation of the insurance company in deciding whether to settle. While they don't know for sure what will happen in court, the insurance company handles thousands of claims each month and therefore has far more insight into the process than you do. Their evaluation of your claim may be wrong. It undoubtedly will be on the low side. But at least listen -- carefully -- to the arguments they make to you as to why your claim is worth less than you think. It will help you to better evaluate your claim, and it can even help you prepare for court if you decide to go there. You will hear the same arguments in court that you heard when you negotiated the claim with the adjuster.
To learn more about what to expect in a settlement in your state, see our Car Accident Settlement Laws state collection. If your case is going to court, learn about Car Accidents and the Lawsuit Process.