So you’ve been in an accident and suffered severe injuries. Chances are that — sooner than later — you’ll be contacted by an insurance adjuster to obtain a statement about what happened. The insurance company will use this statement to determine how much your settlement offer should be.
Then, they’ll come back to you with an offer to settle quickly — but it might not be what you have in mind.
Here, we outline what to do when your insurance settlement offer is too low.
Why You Shouldn’t Accept the First Offer
Being offered a check not long after your accident can be incredibly tempting — you know it’ll cover your immediate medical expenses and tide you over until you’re able to return to work — and that shouldn’t take long at all, should it?
The problem is, at this point, you likely haven’t had a chance to speak to a personal injury lawyer, and you don’t even know how long it’s going to take for you to recover, what medical treatment you may need, and whether the accident caused you permanent injury.
What may seem a tempting offer at first could be much less than what you deserve, and over the long term, it may end up being substantially less than what you need to cover your lost wages and medical expenses.
What you think is just a sprain could end up needing surgery and months of expensive physical therapy. Suddenly, what was initially a tidy sum is nowhere near what you need to cover your bills, and because you’ve already accepted the offer, you have to fund the rest of your expenses out of pocket.
You may feel pressured to accept the first settlement offer, especially if the insurance adjuster starts telling horror stories about claims taking years to settle — or not settling at all. When you’re out of work and need to pay emergency room fees, medication costs, and more, you might think you can’t afford to wait years and end up going to court only to potentially not receive any money at the end of it.
The crucial thing to remember is that you don’t need to accept the first offer — and while an insurance adjuster will hope you do, they don’t expect you to. Insurance companies are notorious for offering insurance settlements that are too low so that they can offer a fairer sum during negotiations.
Is the Insurance Settlement Too Low… or Just Less than You Want?
This is a crucial question to ask yourself. If you’re still in the early stages of negotiating a settlement, chances are that the settlement offer is too low, and you’re entitled to much more, but there may be a big difference between what you’re entitled to and what you want.
After an accident, it’s natural to want the maximum possible settlement, but you still need to be realistic.
In reality, massive settlements do happen, and we’ve secured million-dollar payouts for our clients. However, larger settlements tend to occur in complex cases involving multiple parties or when an individual has sustained permanent injuries that impact their independence and quality of life.
For example, if you sustain a spinal cord injury that leaves you needing to use a wheelchair for the rest of your life, you’ll be entitled to substantially more than if you’re in a minor fender bender and walk away with a few bumps and bruises.
To know if your insurance settlement offer is too low, it’s helpful to understand how personal injury settlements are calculated.
Types of Damages for a Personal Injury Claim
In a personal injury claim, you’re entitled to recover two main types of damages. These are economic damages and non-economic damages.
What are Economic Damages?
Economic damages are hard, quantifiable costs, such as past and future medical expenses (including fees for scans, tests, and other immediate treatment, surgery, medication, and travel to and from the hospital) and past and future lost income.
Evidence is critical to getting a fair settlement offer, which is why you should keep receipts and records of the costs and losses you’ve incurred after your accident.
What are Non-Economic Damages?
Non-economic damages compensate you for pain and suffering, loss of enjoyment, and mental anguish. These are harder to quantify, as it’s not easy to put a price on something so subjective. Non-economic damages are typically calculated by applying a multiplier between one and five to your total economic damages.
If you’ve sustained minor injuries, the multiplier might only be one-and-a-half or two, whereas if your injuries are life-changing and prevent you from ever working again, the multiplier might be four or even five.
To illustrate this with an example, if your total economic damages are $10,000, you will be entitled to anywhere between $15,000 and $50,000, depending on the impact of your injuries on your life.
The formulas insurance companies use to determine which multiplier to add vary, but having a rough idea of how much your economic damages total can help you figure out if an insurance settlement offer is too low.
Why Initial Insurance Settlement Offers for Personal Injuries Might Be Too Low
After suffering from a personal injury, coming up against an insurance settlement offer that seems to fall short of what is needed to compensate and address all of the event’s negative effects can feel devastating. But why do some insurance companies offer an initial settlement offer that could be seen as below the mark?
As well as the insurance formulas mentioned above, offering a lower amount is mainly down to the insurance company’s bottom line — it is in their interest to keep payouts to a minimum to keep profit up. These early offers also may not have taken into consideration the full spectrum of long-term effects or broader impact on life (both economic and non-economic), if there are any.
Combining the modus operandi of insurance companies with how complex cases may need the correct aspects drawn out in a specific way for the insurance companies to include them in their compensation offer, getting the help of a personal injury attorney can be pivotal in receiving an insurance settlement offer that is reflective of your injuries, incurred (as well as future) costs and impact of life.
A personal injury or car accident lawyer will use their knowledge to evaluate the settlement offer to reverse this imbalance — ensuring any counter-offer is presented correctly, clearly, and with an intent to gain the rightful amount as a result.
Related Reading: Clardy Law Firm’s Case Results
Negotiating a Fair Settlement
If your insurance settlement is too low, you can negotiate. As stated, insurance adjusters fully expect negotiations to occur — it’s a typical part of the process.
Before negotiating a new settlement offer, it’s helpful to have a rough idea of how much you’d be happy to accept. Again, this should be realistic based on the expenses you’ve incurred and the overall impact of your injuries.
If you have a permanent or long-term injury that needs ongoing treatment — such as physical therapy — you’re entitled to recover future losses, but you might not know how much it will cost. Your personal injury attorney will consult experts to predict the cost, which can then form part of your settlement negotiations. If you’re ever not sure what a fair offer looks like, ask your lawyer. They’ll be able to give you a realistic figure based on the strength of your case and their experience handling similar claims.
When negotiating with an adjuster, you can use this ballpark figure to gauge whether you’re on the right track. If the initial offers are very close to your ballpark, you can be fairly certain that the insurance settlement offer is too low, and you can adjust your target.
It can also be helpful to ask an adjuster to explain their offer, especially if it’s too low. For example, if they highlight a lack of evidence, saying that there are no witnesses to the accident, but you have a witness statement that supports your account, you can leverage this to negotiate a better offer.
Related Reading: How to Reject and Counter a Low Settlement Offer
Can a Personal Injury Lawyer Help Get a Good Insurance Settlement?
In a word — yes. Having a personal injury lawyer, someone with rich experience and understanding of the law and who has a track record of representing other car accident settlements, for instance, will know exactly what you need to get the insurance settlement offer you deserve.
One aspect of the personal injury claim process that professional lawyers will be well-versed in instances where an insurance firm will offer an initial insurance settlement offer that is not reflective of the events and their repercussions — this is where they go to work on your behalf, compiling everything needed to best present the case in its true light. This, therefore, would give you a huge leg-up on the journey toward the compensation you deserve.
Going to Trial
Most claims settle way in advance of any consideration of going to trial. But sometimes, insurance companies are stubborn and won’t deviate from an insurance settlement that is far too low. Going to court is a lengthy process, and even after getting a court date, it takes months or years to gather evidence and prepare for a trial.
There’s also no guarantee of success — for either party — which is why additional negotiations and mediation often occur. It’s not uncommon for cases to settle at the eleventh hour as a fair settlement is finally reached.
Only a tiny percentage of personal injury cases end up in court, but if it’s a step you want to take, your attorney can advise you on what to expect and your likelihood of success.
What Is a Typical Car Accident Settlement Amount?
The short answer is that the figure will vary — from hundreds or thousands of dollars to figures into the multi-millions.
“What is the average personal injury settlement claim?” This is, in a way, the million-dollar question — and the answer is complex and depends on various factors.
As each personal injury or car accident settlement is unique, and each state has different laws, let alone different counties, it’s easier to say that each case is based on its own set of facts and their legal implications, and therefore, insurance settlement offers will vary widely.
As mentioned above, there are both economic and non-economic considerations. A handful of common elements that will typically change the car accident settlement amount might include:
- How severe the injuries were
- If these injuries have any long-term or life-long repercussions
- The overall impact on quality of life
- Medical expense
- Property damage.
These elements of a personal injury or car accident claim are but a few that should be taken into consideration when insurance settlements are offered or renegotiated.
The complexity of the issue — coupled with the heavy knowledge of how important getting the correct amount of compensation for an accident — includes numerous reasons why enlisting the help of an experienced personal injury attorney is so important in order to navigate this path successfully.
A personal injury attorney will know each state’s laws (for example, a personal injury attorney for South Carolina will know this location’s area of law inside out), as well as precisely what evidence is needed in order to get the most out of your insurance claim settlement.
Consult Your Personal Injury Lawyer
If there’s one thing to remember when handling a personal injury claim, it’s that your attorney is there to support you.
Our personal injury attorneys are skilled negotiators who know when an insurance settlement offer is too low and will fight to secure you fair compensation.
If negotiations are unsuccessful and your insurance settlement is still less than you deserve, we can assess the strength of your claim and prepare your case for trial.
However your case plays out, we’ll be with you every step of the way, taking the stress off your plate and fighting to get you the compensation you deserve so that you can focus on your recovery.
The Insurance Settlement Offer Take Away
So, if you’ve experienced an accident and are tempted by the first sign of financial compensation from the insurance company — take a moment to think things through. This is, of course, an attractive prospect — especially if the accident has caused great harm and distress or you’re eager to resolve things quickly. But there is a case for not jumping straight in, especially if this settlement offer isn’t as much as you had expected.
But these first offers should be thoroughly considered. Insurance settlement offers are very nuanced, so if you think you’re entitled to more than what this first offer discusses, make sure you get professional advice from an accident or personal injury lawyer. This is to make sure that all aspects have been fully considered. For example, have all long-term effects of the accident been taken into account by the insurance company? An injury lawyer can help you determine if all avenues have been explored and ensure that the insurance settlement you accept is the right one.