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If you have been injured in an accident and are expecting an insurance settlement, do not be surprised if the amount offered is less than you anticipated. Many insurance claims adjusters initially make a low settlement offer in hopes that you will simply accept it and go away. Many accident victims are struggling financially and willing to accept whatever they are offered, even if the amount is low.
Prepare for the real possibility that the insurance company will offer less than you deserve by keeping a record of your costs and losses related to your accident and injury. Save copies of all bills and receipts and keep a journal of your recovery.
You do not have to settle for whatever paltry sum an adjustor thinks he or she can get away with offering you.
You have the right to reject any settlement offer and respond with a counterdemand for the payment you deserve. But you have to wait until a settlement offer is made to reject it and submit a counterdemand. You can engage an experienced personal injury attorney to represent you in dealings with the insurer and settlement negotiations. If you try to deal with experienced insurance negotiators on your own, you will be at a disadvantage.
What to Expect in an Insurance Settlement Offer
After suffering an injury in an accident, you may be able to turn to insurance for coverage of medical costs and other losses. You might file a claim under a policy you hold (e.g., auto collision insurance, homeowners’ insurance, health insurance) or through another person’s liability insurance if he or she was at fault.
A claims adjuster should follow up on your claim by contacting you and investigating your case. The investigation may include reviewing your medical records, obtaining vehicle repair estimates, reviewing police accident reports, interviewing you and reviewing your initial claim documents.
Under Colorado law, an injured party may seek compensation for losses known as “special damages” and “general damages.”
Special damages include:
- Present and future medical expenses, from emergency care through hospitalization and rehabilitation
- Property damage (costs to repair or replace)
- Lost income during recovery or because of disability
- Out-of-pocket expenses, such as the cost of towing a wrecked car, prescription medication, travel to doctors’ appointments or wheelchair rental.
General damages include payments for:
- Pain and suffering (physical)
- Emotional distress
- Loss of enjoyment of life, such as inability to pursue recreation, hobbies, or other activities as you did prior to injury
- Loss of consortium (marital/partner relations).
An insurance settlement should account for all of these losses as they apply to you and your situation, up to the limits of the applicable insurance coverage.
However, a settlement offer may be less than what you expected if the claims adjustor decides that your losses were not as much as you originally demanded, or that your own negligence or recklessness contributed to your injury.
If you question the settlement offer, the claims adjustor may cite their “settlement authority,” a supposed limit on how much the adjuster’s supervisor will allow to be offered. Your settlement offer will be close to or at the adjuster’s settlement authority. Don’t be impressed by an offer close to the settlement authority limit.
A “settlement authority” is just a negotiating tactic. If an adjustor tells you about their authority, he or she is trying to convince you to accept the offer on the table. It’s a tactic to pressure you to accept an offer for less than the fair value of the claim.
Countering a Low Insurance Settlement Offer
You may receive a settlement offer in a phone call or email, which will be followed by a letter. Once you have the settlement offer letter, you have the right to make a counterdemand if you find the offer unacceptable.
Compare what the insurance company has offered to your record of costs and losses and the maximum payment provided by the insurance policy. The offer may not be far off, and the company may have a reasonable explanation for the discrepancy. Weigh the value of the time, effort and stress of a negotiation against the difference in what you have been offered and how much more you truly feel you need to be made whole financially.
If you cannot agree to settle, your reply should be a formal business letter that makes the case for your higher demand. Your letter should clearly:
- State that the offer you received is unacceptable
- Refute any statements in the adjustor’s letter that are inaccurate and damaging to your claim
- Re-state an acceptable figure
- Explain why your counteroffer is appropriate, including the reasons behind your general damage demands
- Document any special damages you demand by including copies of receipts, bills, and confirmation of work absences.
Your letter should be free of anger or accusations. As in any negotiation, your counteroffer should be for less than your initial demand to indicate you are willing to work toward a reasonable compromise.
It is hard to say how many rounds of offers and counteroffers will be necessary. The insurance company’s answer to your first counterdemand should indicate how much they are likely to move. Expect less movement toward your figure in subsequent offers.
You must also consider how slowly negotiations are going. If the insurance company is using delay tactics, you will need to keep in mind the statute of limitations for filing a personal injury lawsuit. You do not want to let the time limit expire.
If negotiations reach an impasse, the next step is filing a personal injury lawsuit. Colorado law contains statutes of limitations that limit the amount of time allowed to file a personal injury lawsuit. In Colorado, the statutes of limitations generally allow three years from a motor vehicle accident and two years for other accidents. That may sound like plenty of time, but a lawyer hired after your negotiations must start from the beginning with their own investigation and demands to insurers.
What Is a Good Settlement Offer?
Understanding what qualifies as a good settlement offer allows you to evaluate whether the insurance company is treating your personal injury claim fairly. A reasonable offer should thoroughly cover the expenses and losses you have suffered due to your injury. However, every personal injury case is different, so the dollar value of a good settlement offer can vary considerably from one case to the next.
Here’s how to determine if an offer meets that standard:
- Does it cover all your medical bills? A personal injury settlement offer should cover all medical expenses you have incurred due to the injury. This includes the costs of ambulance rides, hospital stays, doctor’s visits, ongoing treatments, and any medical care you might need to treat your injury in the future. A fair settlement will address the bills you have already paid and account for any projected healthcare costs you might have later.
- Does it cover all your lost wages? A good settlement offer should compensate you for any income losses related to your injury. If your injury kept you from working, your offer should include compensation for the time you were unable to work and the income you lost as a result. If your injury affects your ability to earn money in the future, a fair offer should reflect this loss, too.
- Does it cover your pain and suffering? An acceptable settlement offer should include compensation for your pain and suffering. This type of loss is more difficult to quantify but is just as crucial as reimbursement for medical bills. The term “pain and suffering” refers to the physical discomfort and emotional distress you have endured because of your injury. The severity of your pain and your injury’s impact on your daily life should significantly influence your final compensation amount.
- Does it cover all your other related losses? A reasonable settlement offer should factor in any additional losses or expenses from injury. This might include property damage, such as damage to your vehicle from a car accident, and other out-of-pocket costs related to the injury accident.
To determine whether a settlement offer is fair, add all these costs and compare them to the settlement amount. If the offer covers all these aspects fully, it might be a good settlement. However, if the offer falls short in any area, having your personal injury attorney negotiate for a better one is a good idea.
What If the Insurance Settlement Offer Is Too Low?
If your insurance settlement offer isn’t enough, it’s essential to take action rather than accept it. Accepting a settlement offer that is too low can have serious consequences. If you agree to an amount that doesn’t cover all your medical bills, you might have to pay the difference out of pocket. This can lead to financial strain, especially if you are already dealing with lost wages from your inability to work. A low settlement also might not provide adequate compensation for future medical treatments you need, which can be costly.
Accepting an offer means giving up your right to any further claims related to the injury accident. A smaller settlement could be financially devastating if your injury symptoms worsen over time and you require additional care. Always consider the full impact of your injury and consult a lawyer to ensure any settlement covers all your needs before accepting it.
What Happens If I Don’t Accept a Settlement Offer?
If you choose not to accept a settlement offer from an insurance company, you can continue negotiating until you reach a more favorable agreement. Start by clearly communicating to the insurance adjuster why you find the current offer unacceptable and provide evidence to support your claim for a higher amount. You should also escalate the matter by working with a personal injury lawyer if negotiations don’t result in a satisfactory offer. Your lawyer can provide legal advice, handle negotiations, and take your case to court if necessary to fight for the compensation you deserve.
Sample Rejection Letter for a Low Settlement Offer
If a settlement offer falls short, responding with a well-crafted rejection letter is key to negotiating a better payout. Below is a sample letter for rejecting a low settlement offer professionally and effectively. This template can help you articulate the reasons why an initial offer is insufficient and encourage the insurance company to consider your counteroffer:
[Full Name]
[Street Address]
[City, State, Zip Code]
[Email Address]
[Phone Number]
[Date]
[Claims Adjuster’s Name]
[Insurance Company’s Name]
[Company’s Street Address]
[City, State, Zip Code]
Re: {Claim Number]
Dear [Claims Adjuster’s Name],
I am writing in response to the settlement offer you presented on [Settlement Offer Date], related to claim number [Claim Number] for the incident that occurred on [Incident Date]. After careful consideration, I must reject this offer as it does not meet my needs based on the severity and ongoing nature of my injuries.
Upon reviewing the settlement offer, it has become clear that the amount does not sufficiently cover the extensive medical expenses I have already incurred. It also does not account for the projected costs of future treatments necessary for my recovery. The medical documentation I have collected is extensive and illustrates the long-term impact this injury will have on my health.
In addition to medical costs, the offer overlooks the full extent of the wages I have lost due to my inability to work since the accident. My settlement should include a comprehensive calculation of these lost wages, alongside considerations for the potential impact on my future earning capacity.
Moreover, the proposed amount fails to adequately address the pain and suffering I have experienced since the incident. My physical pain and emotional distress have been significant, affecting all aspects of my personal life. Compensation for these damages should reflect the ongoing challenges I face.
I have attached a detailed breakdown of all related expenses and losses for your review. This includes itemized medical bills, a statement from my employer detailing lost wages, and a personal statement describing the impact of the injury on my life. To cover the full extent of these losses, I would be willing to accept [New Demand Amount] to avoid requiring litigation to resolve the claim.
I am confident that with a more comprehensive understanding of the circumstances and consequences of my injury, we can agree on a fair and reasonable settlement. I am open to discussing this matter further and providing any additional information you need to facilitate a revised offer.
I am eager to resolve this matter amicably and appreciate your prompt attention to my concerns.
Thank you for considering my position. I look forward to your revised proposal.
Sincerely,
[Your Full Name]
How a Personal Injury Lawyer Can Help You Negotiate a Settlement
You could benefit from the assistance of an experienced personal injury lawyer if your insurance claim is disputed after an accident. Sometimes, just a letter on a law firm’s letterhead helps an insurance company get more serious about responding to a claim. The Wilhite Law Firm of Denver has devoted our practice exclusively to injury law in Colorado for more than 35 years. We are known and respected throughout the state and have dealt with all the large insurers licensed in Colorado.
We have the resources to investigate your accident and to keep track of all your expenses and losses. We know what is required of a proper demand letter, and we are highly experienced negotiators. If your case must proceed to a lawsuit, we will develop a case we are intent on winning. Finally, while consulting closely with you, we can take the burden of negotiating with insurers off of you and allow you to concentrate on your recovery and your life instead.
For more information about how we can help you obtain the insurance settlement you deserve, contact us today.
