Tips for Negotiating a Settlement After a Car Accident

Expert tips for handling settlement negotiations in your car accident case.

Updated by Stacy Barrett, Attorney

Negotiating a car accident claim is a bit like haggling over a used car. You have to do your research first, figure out how much you're willing to accept to settle your claim, and come up with a settlement strategy.

Here are some questions to ask yourself as you prepare to negotiate a car accident settlement.

When Should I Start Negotiating My Injury Claim?

You should start gathering information to support your car accident claim right after the accident. But you shouldn't negotiate a final settlement until you've reached "maximum medical improvement" (MMI). You reach MMI when you have a clear understanding of your injuries and the future treatment you'll need.

Reaching MMI is important because when you settle your case, you're giving up your right to sue the at-fault party for the accident. If your injuries turn out to be worse than you first thought, you can't ask for more money. Your case is closed as soon as you sign a settlement agreement.

How Should I Kick Off Negotiations?

Send a demand letter to the insurance company to begin settlement negotiations. Your letter should tell your side of the story, explain how the other driver was negligent, and provide a detailed account of your injuries and losses, including supporting documents. Supporting documents might include police reports, witness statements, photographs, medical treatment records, and medical bills. A lack of supporting documents 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.

How Do I Estimate the Value of My Claim?

Adjusters often use the multiplier method to estimate the value of your claim. You can use the method too if you:

  • total up your accident-related medical bills (called medical special damages)
  • multiply your medical special damages by a number between one and five (the "multiplier") to get an estimate of harder-to-measure damages, like pain and suffering (called general damages), and
  • add up your medical special damages, estimated general damages, lost wages, and property damage to arrive at an overall estimate of your car accident claim.

Adjusters choose a multiplier based on the seriousness of the injuries, the obviousness of the other driver's fault, the length of your recovery, and other factors. Relatively minor injuries would be on the low end of the multiplier range, while serious or long-lasting injuries would likely be at the high end of the range.

Another way adjusters estimate general damages is by assigning a "per diem" (per day) value to each day you have to live with the pain caused by the accident. The problem with this method, of course, is figuring out the daily rate to use.

Adjusters often use your daily earnings. For example, let's say you were sideswiped. You suffered a moderate neck strain. You were in pain for three months (about 90 days). You earn about $180 per day. An adjuster using the per diem method would assign a value of $16,200 (90 x $180) to your estimated general damages and then add that number to your medical special damages, lost wages, and property damage.

Learn more about how to calculate pain and suffering in a car accident.

Do I Simply Ask the Insurance Company to Pay the Amount I'll Accept?

Your settlement demand figure should be considerably higher than the amount you would be satisfied accepting in the end. Your demand figure is the beginning, not the end of negotiations. Allow yourself some wiggle room.

The insurance adjuster will typically start with an offer that is much less than what the insurance company is willing to payout. You can make a counteroffer, and the back-and-forth process will go on until you reach a settlement agreement or you decide to file a civil car accident lawsuit.

But don't make your initial demand figure outrageously high. If your first demand is too high, the adjuster might dismiss you as unreasonable. Remember, negotiating a car accident claim is like negotiating for a used car. If a car is priced at $19,995 and you offer $17,000, the dealer will probably think you're serious and haggle with you. But if you offer $8,000 for a car that's priced at $19,995, the dealer probably won't waste time negotiating with you.

Your initial demand number should be higher than your claim is worth, but still believable. A good rule of thumb is to ask for 75% to 100% more than you hope to recover. For example, if you think $10,000 is fair, ask for $17,500 to $20,000 and negotiate from there.

How Long Should I Continue Settlement Negotiations?

Ideally, negotiations will go on for as long as necessary, until a fair agreement is reached. You could reach an agreement in one or two phone calls or emails, but you might have to go back and forth with the adjuster many times before you get the adjuster's very best settlement offer. Some lawyers won't settle an injury case without discussing the claim and exchanging figures with the adjuster at least three times.

Don't let the adjuster rush you. If you need more time to think about an offer or counteroffer, say that and get off the phone or log off your computer. Do some research and contact the adjuster when you are ready to talk and make a decision. Your case might be one of many on the adjuster's desk, but this is your one and only shot for a fair settlement.

But don't delay too long. Each state has a deadline for filing a car accident lawsuit (called the "statute of limitations"). If you miss the deadline, your case will likely be dismissed and you won't be able to go after compensation for your losses in court. Talk to a lawyer if you have questions about how much time you have to negotiate an insurance claim and file a lawsuit in your case.

Should I Accept the Insurance Company's "Final" Offer?

At some point during your negotiations, an adjuster might make a "final" offer. Before you decide to accept or reject the offer, try to figure out whether the so-called "final" offer really is the best offer the adjuster is going to make. Ask the adjuster something like, "Are you telling me that this is the highest offer you are authorized to make and that the offer will never get better?" Or, "Is this a take-it-or-leave-it offer?"

Listen carefully to the adjuster's answer. Most adjusters won't flat-out lie to you. If the response is vague—such as, "This is all the authority I have at this time"—that means you may be able to get a higher offer at another time.

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 you think the offer is fair, and you are convinced that the adjuster won't make a better offer, accept it.

If the offer is less than your goal amount, you have to decide whether to invest the time and expense to try to get more. If the offer is far less than you think is reasonable, you should probably reject it and file a car accident lawsuit against the at-fault party. But if the offer is close to what you think is fair, you should think carefully about making a reasonable counteroffer.

How Do I Evaluate an Offer?

Your decision to accept or reject a settlement offer will depend on many factors, including:

  • how much money you think you can get if you file a lawsuit and win
  • the likelihood that you will win a lawsuit
  • how long a lawsuit will take
  • how much a lawsuit will cost, and
  • your comfort level with the uncertainty of going to court.

If you decide to go to court, you can't tell the judge or jury about the settlement offer you rejected. For example, you can't say that you were offered $6,000, but think your case is worth $12,000. You can't mention settlement negotiations at all.

When you evaluate an offer, try to think about your claim from the adjuster's perspective. You might not agree with the adjuster's offer, but the arguments the adjuster makes are likely to be the same arguments the at-fault party will make in court. Listening carefully to the other side can help you prepare for court if you decide to file a lawsuit.

Should I Talk to a Lawyer?

One of the biggest mistakes you can make when you're negotiating a car accident claim is to insist on handling your own claim when you would benefit from the help of a lawyer. Despite your best efforts to settle your claim yourself, you might want or need help when your claim is particularly big or complicated or the insurance company refuses to make a fair settlement offer.

For example, if the insurance company denies liability (legal responsibility) or says that the accident isn't covered by the insurance policy, a lawyer who understands the ins and outs of negligence claims can push back. You might also also want to talk to a lawyer if the stakes of your claim are high. For example, if you're dealing with a permanent injury that impacts your ability to work full-time, talk to a lawyer.

Most car accident lawyers work on a contingency fee basis. Under a contingency fee agreement, lawyers take a percentage (typically 33% to 40%) of the client's final settlement or court award as their fee if the client wins and no fee if the client loses.

Learn more about hiring a car accident lawyer. You can also connect with a lawyer directly from this page for free.

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