Responding to an Unfair Car Insurance Settlement Offer

Getting a good settlement offer from an insurance company after a car accident is not usually a one-step process.

Getting a good settlement offer from an insurance company after a car accident is not usually a one-step process. This article discusses what you can do if the initial settlement is too low, or if your claim is rejected outright.

Car Insurance Settlements in General

If you’ve been in an accident and have filed a car insurance claim with the insurance company -- yours or the other driver's -- your claim will be handled by a claims adjuster. After you have provided the adjuster with all of the information he or she requests, the adjuster will review all facets of the accident and your claim, and make you a settlement offer. This first offer is sometimes based on a variety of car accident settlement formulas that some insurers use, and the first offer will, in all likelihood, be at the lower end of the range, although not necessarily so low as to be unreasonable or unfair.

Was the First Offer Too Low? Was Your Claim Rejected Outright?

To know whether the settlement offer was fair, you need to have a good idea of the dollar value of your claim, the coverage limits of the insurance policy (whether it's your own or the other driver's) and the insurance rules in your state.

If you're making a third party liability claim against the other driver's insurance policy, generally, damages like medical bills, property damage and lost wages are recoverable, and you can expect a "pain and suffering" or "inconvenience" component as well. But if your injuries were minor and you live in a no-fault car insurance state, you'll likely only be able to recover under your own car insurance policy, and you can't get compensation for things like pain and suffering, just out-of-pocket losses.

If your claim was rejected outright, the insurance company is required to tell you the specific reasons for the rejection. The reason can be based on a lack of coverage, but it can also be for fairly technical legal reasons, for example your state’s comparative fault rules.

Rejecting the First Offer and Negotiating a New One

If you decide the first settlement offer is too low, and you reject it, you will begin negotiating your claim with the adjuster. You will need to use the facts you have provided (i.e. medical bills, etc.) to argue why you should receive a higher settlement. It is best to document everything in writing. Continue to request the high end of what you believe you are due.

Once the adjuster is on notice that you are not simply going to take the first low offer, he or she will likely make a somewhat higher settlement offer if your claims and demands aren’t completely unreasonable. As with any negotiation, you should be able to arrive at an acceptable middle ground after some back and forth.

Filing a Complaint with Your State’s Insurance Commissioner

If you feel that your insurance company is refusing to make you a reasonable claim settlement offer or is denying your claim unfairly, it may be time to file a complaint with your state’s insurance commissioner. Every state has a state regulator in charge of the insurance industry, and a large part of what that regulator does is field complaints from consumers.

The insurance commissioner (the name may be different in your state) does have teeth, so alerting your claim adjuster (or a claims supervisor) that you intend to file a complaint should get their attention. Keep in mind, however, that if you are being completely unreasonable and unrealistic about what the insurance company owes you and why, the insurance commissioner is not going to spend much time rejecting your complaint -- and your insurance company is not going to feel very threatened in the first place.

If the Claim is Complicated, Get a Lawyer

If the accident was serious and it resulted in significant damages, you don't want to be going up against the insurance company by yourself. An experienced auto accident attorney is seasoned at negotiating with insurance companies, and almost all cases are handled on a contingency fee basis, meaning the attorney is only paid if you receive a settlement or court award.

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