After a car accident, an insurance claims adjuster will investigate your auto insurance claim and send you a settlement offer. This offer is typically presented in writing, and it explains how much the insurance company is willing to pay on your claim. The offer may be to pay the total cost of your claim, only part of it, or nothing at all. A claim for vehicle damage is usually separated from a claim for any injuries stemming from the accident, so you’ll usually receive separate settlement offers for each of these claims. This article looks at initial settlement offers, and what to do if the offer is too low. (Get more Settlement Negotiation Tips After a Car Accident.)
An insurance adjuster's first offer is typically on the low side. Initial offers are low for two reasons. First, part of an adjuster's job is to save money for her employer, the insurance company. Second, adjusters often have the authority to negotiate a final settlement amount. The initial offer is the first step in this negotiating process, and so the first offer amount will be on the low end of the negotiating range. Once you see the initial offer, you may choose whether to accept it, reject it, or try to negotiate a higher settlement amount.
Is It a Reasonable Offer? In order to know whether the offer is reasonable, it's important to know something about your claim. A fair settlement offer will cover the costs of your medical bills, the damage to your vehicle, and other losses related to the accident, like rental fees or towing. Also, consider future costs: if you have been permanently injured or will need long-term care, the costs of your injury will be higher than if you are expected to make a full recovery in the short-term. Keeping a running total of the money you have had to spend as a result of the accident will help you determine whether the offer you have received is too low.
Know Your Policy. In addition to having a ballpark idea of your costs, you should also be familiar with the insurance rules in your state and your specific car insurance policy. For instance, if the limits of your coverage are lower than the amount of your bills, your offer will not be higher than the coverage limits. And if you live in a no-fault car insurance state, and your injuries aren't that serious, you'll probably be limited to recovering out-of-pocket losses like medical bills and lost wages (up to a certain limit). Finally, pay attention to who the insurance company says was at fault in the accident; many insurance adjusters will overstate the amount of fault in order to justify a deliberately low offer.
If your offer seems too low, you have several options.
You can negotiate with your adjuster. The first step in negotiating is to reject the initial offer, which you should do in writing. Then, decide upon a range that you feel would fairly compensate you for your losses in the accident. Let the adjuster make the first offer during negotiations, which, along with the original offer, will give you a clearer idea of the low end of the insurance company's range. Then, counter with an amount that is near the high end of your range. Explain what prompted you to come up with this higher number. While your range may be higher than any of the adjuster's offers, it should still be reasonable. Asking for an astronomical amount simply because the insurer is a big company with deep pockets will only stall negotiations, and you may find yourself with a much smaller amount – or nothing at all. (Learn more about alternate dispute resolutions if you wish to avoid court).
If you do not wish to handle the negotiations yourself, you can contact an experienced insurance attorney who can help you deal with the insurance company. It is also wise to seek legal advice before firmly rejecting a settlement offer. If you need time to think or to speak with an attorney, inform the insurance company that you need a day or two to think about the offer. Then, contact an attorney as soon as possible.