Dealing with insurance companies can sometimes feel like watching paint dry while balanced on a one legged stool. In other words, it’s unpleasant, and they aren’t always helpful. Insurance companies aren’t really “always on your side” or “there when you need [it] most.” You might find when trying to claim on your insurance they blame you for the accident or try and avoid paying out at all. When dealing with an unwilling insurance company, here are 5 tips on how to negotiate a settlement with an insurance claims adjuster.
Before we get to the tips, it’s important to understand what an insurance claims adjuster is and what they do. An insurance claims adjuster (sometimes known as a claims handler) is a person who investigates any insurance claim to determine the extent of the insuring company’s liability (yours or the other person involved in the accident with you). Their job is to interview the claimant (the person making the claim), any witnesses, consult the police, dig up hospital records, and inspect property damage in order to make a case and determine the payout.
In the US, the protocol of the claims adjuster is to do the following:
- Verify there is a policy for the insured person or the property (automobile). These policies are generally written by the policy-holding insurance company.
- They assess risks, loss, or property damage or bodily injury.
- After they investigate the above, they evaluate the covered injury or damage determined according to what's covered in the policy.
- They negotiate a settlement according to applicable laws and identify what coverage is outlined in the policy using best insurance practices.
- Claims adjusters do not and should not engage in any practice of law. If there is an issue of coverage, which is a matter of practice of law, then an attorney must step in.
Now onto how best to negotiate a settlement. You’ll want to negotiate if you have a personal injury claim, were in a car accident in general, or if you’ve received medical malpractice. However, since claims adjusters are experienced, often record calls, and are pushy, your best course of action is often to speak to an experienced attorney in order to best protect yourself, especially during the emotional and difficult time in the aftermath of a car accident. After you’ve submitted a demand letter to your insurance company, here’s how to negotiate the settlement.
1. The Counter Offer
When you submit a claim, your insurance adjuster will usually come back with a figure lower than the one you requested and ask you to settle. This point is where you make a counter offer, higher than the one the claims adjuster offered, but lower than your original ask, so keep in mind that there will be some negotiating to do before you submit your demand in writing. Shoot for a figure that is higher than the one you expect. Decide on a minimum offer that you’ll accept that will cover costs accrued in your accident (medical bills, new car, repairs to a damaged vehicle, and so on). Keep in mind that the unfortunate circumstance usually happens that in a car accident, you don’t really come out on top, nor are all of your expenses often covered with the exception of personal injury cases. And, in the event of personal injury cases, an experienced attorney is the best choice for handling the case.
Your demand letter to the at-fault party’s insurance company should detail the basic facts of the accident, and emphasize how badly you were hurt. It should itemize any damages, medical bills, out-of-pocket expenses, and lost income (known as “special damages”). Once you’ve calculated any “special damages,” it’s appropriate to multiply this figure by a number between two and five to reflect emotional damage, pain, and suffering (known as “general damages”). This combined amount will be your total settlement demand. Keep in mind, again, that the insurance company will try and give you a much, much lower figure in an attempt to either call your bluff (see how knowledgeable you are and hope you’ll accept an unreasonably low figure) or they may present a lower, but reasonable figure, knowing in either case you’ll negotiate. However, their sole job is to pay out as little as they possibly can. Attorneys can advise you on a reasonable and fair figure to demand from the insurance company since they have experience dealing with claims routinely, and often those in accidents do not.
2. The Reservations of Rights Letter
After your tete-a-tete, you’ll most likely get a Reservation of Rights Letter from the insurance company, which means that the company plans to investigate your claim, but will not pay you if the accident isn’t covered under your insurance policy. The letter protects your insurance company by preventing you from claiming that the fact that a case is open means the policy will cover your accident. The fact that you’re beginning settlement negotiations with your insurance company doesn’t guarantee that the claim is covered in your policy. The best way to protect yourself from any legal loopholes the insurance company might be exploring is by hiring an experienced attorney.
3. The Call from the Claims Adjuster and Explanation Demand
After the rejection of the first offer the claims adjuster will call again trying to negotiate. There may be two, three, four, or more negotiations, trying to break you down. Never reduce your offer more than once. Remain strong and hold out for the figure you’ve deemed reasonable (if it is reasonable, of course). Your reduction should be around 10-20% of your initial demand and no more. Again, an experienced attorney can help you deal with these claims. It can be exhausting for an individual to deal with negotiations, which is what insurance adjusters bank on so that you'll hurry up and settle for an amount that is in their best interests - and not yours.
If the adjuster keeps lowering the figure, demand an explanation of why the offer is so low. Often, when they know you have legal representation, they know they have to give fairer figures because your lawyer is just as experienced as theirs at understanding your legal rights. If they give an explanation for a low offer, take notes as to the specific reasons, and then write a brief letter explaining and responding to your adjuster’s claims; if you feel this step is intimidating, you - again - may want to have your attorney's advice on this step (and all portions of the process). Depending on how strong the reasons are of the adjuster, you can lower your demand slightly, but before budging, wait to see if the adjuster will up the offer after receiving your reply. When you speak to the adjuster again, start by asking for a response to your reply letter, and the adjuster should now make a reasonable offer, and you can bargain and decide on a fair settlement figure. Your attorney, however, will often get the best outcome than you yourself could negotiate.
4. Put Your Settlement in Writing
During these negotiations, the claims adjuster may make a final settlement offer. It’s up to you to decide if the settlement is reasonable and acceptable. If you agree with the settlement, then you can accept the offer. It's best, though, to consult an attorney so you can understand if the settlement is reasonable based on similar cases they've dealt with and based on your own personal circumstances.
If you reach an agreement with the insurance adjuster, confirm the agreement immediately and write it in a letter to the adjuster. It can be a short letter simply stating the amount for which you settled, the injuries and damages the settlement covers, and the date by which you expect to receive the settlement documents from the insurance company.
If you feel the offer doesn’t fully cover injuries or losses experienced, the next step will be filing a personal injury lawsuit. To do this yourself, you’d need special knowledge of the law and the legal system; if you do not have that knowledge, then it’s best to hire an attorney.
5. If the offer is unreasonable, hire an experienced attorney
Some people do handle their own claims successfully without hiring a lawyer, but it's rare that these people get a fair settlement, especially when considering that damages are often more than physical. An experienced attorney will know how to negotiate a fair settlement in a way you might not. If injuries were relatively minor and your demand is low, then it may be better to negotiate your own settlement (but it's not advised); however, if your case is more severe and you’ve suffered significant damages, it’s recommended you get an experienced attorney.
For serious car accidents where you’ve had to undergo extensive medical treatment and lost income, or are experiencing pain from your injuries, you might want to discuss your case with a lawyer. Hiring an attorney is your best chance of receiving fair compensation for injuries since legal teams have experience with dealing with adversarial insurance companies who are unwilling to make big payouts - and have entire legal departments with the aim of finding any nit-picky loopholes, misinformation, and misreporting they can exploit.
Furthermore, insurance companies do not want lawyers present because they know you’ll get more money, which is why insurance companies will try all they can to get you to settle without getting anyone involved.
Our attorneys at Coxwell & Associates, PLLC, have over 36 years of experience winning personal injury cases, and can ensure you’ll get a fair settlement for your personal injury case.
Dealing with an insurance company requires lots of patience. It’s never clear cut, simple, or fast. It can take days (absolutely best case scenario), weeks, or months to settle. In order to come to a fair agreement, you’ll need to make sure you keep accurate records of your accident and all of the paperwork necessary - medical bills, videos, photos, documents, etc. - and the best person to help you sort through the data and assist with your claim would be your attorney.
For more advice and help, check out our popular blog entries about what to do after an accident:
If you think you have a case, contact Coxwell & Associates, PLLC, for a free case consultation.
Disclaimer: This blog is intended as general information purposes only, and is not a substitute for legal advice. Anyone with a legal problem should consult a lawyer immediately.