Most car accident lawsuits settle. Settlement has many advantages, including a quicker resolution and faster money. However, you shouldn’t immediately agree to the insurance company’s first offer. Instead you need to know how much your injuries are worth and use the facts to your advantage.
Analyze Your Injuries in Dollars and Cents
Before you can tell whether a settlement offer is “fair,” you need to know how much your injuries are worth. Many accident victims never take the time to do these calculations, so they accept an amount that sounds like a lot of money—but really isn’t. In our experience, clients rarely understand how much their injuries are worth and frequently settle for far less compensation than they are entitled to.
First, add up your economic losses. These are sums of money you have spent (or will spend) to deal with the effects of the accident:
- Medical bills
- Rehabilitation costs
- Lost wage
- Lost future wages if you can’t return to your old job
- Property damage
Collect medical bills, pay stubs, and repair estimates for your car or other property. Total the amounts. This should give you an estimate of how much you have suffered in economic losses.
Second, you should analyze whether you have non-economic damages, such as:
- Pain and suffering
- Emotional distress
- Reduced quality of life
- Physical impairment
- Physical disfigurement
It is harder to translate these intangible injuries into dollars and cents because you don’t have a bill or receipt attached. Can you really put a price tag on peace of mind and a pain-free body? Nevertheless, you can multiply your economic losses by 2-3 to get a very rough estimate of what they might be worth.
One reason injured victims work with attorneys is that they can’t calculate how much their injuries are worth with any degree of certainty. An experienced lawyer can properly convert your injuries into a dollar amount that makes sense and is backed up by the lawyer’s experience in the field.
Compare the Amount Offered to What Your Injuries are Worth
Take out the insurer’s settlement offer and see if the amount comes close to your economic and non-economic losses. If the insurance adjuster made a verbal offer over the phone, get something in writing.
When you compare the numbers, you will probably see there is a big gap between what your injuries are worth and what the insurance adjuster wants to give you to settle. Chances are, the insurer is lowballing you. Some settlement offers are so low that they are insulting. Nevertheless, don’t be insulted. Instead, realize that the negotiation has begun!
Go through the letter a second time and identify any of the reasons given to support the offer amount. For example, the adjuster might think you are partially at fault for the accident or that your injuries are not as serious as you claim. You need to identify all of the reasons given so you can provide evidence to counter them.
Draft a Counteroffer
In your letter, you reject the amount offered as too low. You should also give reasons why. For example, the amount offered might not come close to reimbursing you for lost wages and medical expenses. Tell the insurer that since their insured is at fault, he or she should compensate you for your entire economic losses.
If the insurance adjuster thinks you are partially at fault, you can clarify for him or her what actually happened. Correct any misstatements and errors in the adjuster’s letter.
You should also counteroffer with an amount. Take a moment to come up with a good number to offer. Remember, the insurance company might reject your counter-offer, so you want it to be high enough so that you have room to come down.
Let’s say your economic and non-economic losses total about $100,000. The insurance company offered $25,000—a pittance. Do you really want to counter-offer with $100,000? No. If you do, then there isn’t room to move down during negotiations. Instead, make an offer 10-20% or so more than what you will settle for.
Always remember to keep your letter polite and your tone professional. Although you might be outraged at the low offer, there is no reason to take it out on the insurance adjuster, who is under pressure from his or her boss to settle the claim for as little as possible. Keep a copy of your letter for your file.
Waiting to Hear Back
Insurance adjusters differ in how soon they respond back. Some might immediately contact you, while others might drag their feet. If you hear nothing back for a week, call the adjuster and check that they received your letter. Always remember to mail letters certified mail, return receipt requested so that you will know when it was received.
If the adjuster rejects your counteroffer, he or she might call you. It’s important to remain calm and professional. Listen carefully for the adjuster to say he doesn’t have the “authority” to settle the claim above a certain amount. This information is usually partly true—that insurance agent doesn’t have authority to go over a certain amount, but her boss certainly does. Don’t allow yourself to be bullied into accepting a number you think is too low.
If the adjuster makes a counter-offer, get it in writing. You can then review the reasons given for rejecting your offer and either accept the adjuster’s counter offer or reject it again. Often, you need to go back and forth several times, each side moving incrementally to a number they both can agree to.
Speak with a Denver Car Accident Lawyer
The back-and-forth involved in settlement negotiations gives many of our clients a headache, so we are glad they hired us to represent them. At the Olson Law Firm, LLC, we have negotiated with some of Colorado’s largest insurers and we understand the process inside and out. Instead of hiring someone without any experience in negotiation, why not hire the best?