Should I Accept the First Insurance Settlement?

May 2, 2024 | By Francis Firm Injury Attorneys
Should I Accept the First Insurance Settlement?

You often hear nightmare stories about people who suffered an injury and had to deal with insurance companies.

Unfortunately, many of the tales you hear are true, insurance companies make the recovery process challenging. They like to throw around their weight and use power that they never had in the first place. The only way to go toe-to-toe with them is by hiring an experienced personal injury lawyer who knows how insurance companies work and how to negotiate.

A car accident attorney knows the tactics and strategies insurance companies use to reduce the amount of compensation they have to pay out. They have the knowledge and experience to handle the complex legal system and advocate for your rights.

With their help, you can level the playing field and protect your best interests. Only then will the insurance company fear you enough to either make you a reasonable settlement offer or continue to negotiate the size of your check into the right ballpark.

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The Initial Settlement Offer Is Only the Beginning

Insurance companies will often accept liability after you file your claim. However, this is just the opening salvo in what may promise to be a long battle.

Your attorney may have thoroughly investigated your accident and put forth sound evidence that the other driver was at fault. Even the insurance companies may not have a retort or counter for your claims.

They know right off the bat that they will owe you compensation and will simply shift the battlefield to a dispute over money. Their entire strategy is to minimize the liability that they know they have.

The real fight starts when the insurance companies make you the initial settlement offer, knowing full well what they owe you and what they will likely end up paying you. They have sophisticated technology and savvy adjusters who see claims every day. 

The insurance company will fashion a strategy designed to tire you out and wear you down so you will accept less compensation. They know that you are up against your own financial constraints and may be unable to hold out for a settlement forever.

You Should Know the Value of Your Case When You File the Claim

A settlement document signing is a crucial step in legal proceedings, typically occurring after parties have reached an agreement regarding a dispute or transaction.

Your attorney has likely given you an indication of what your case may be worth after crunching the numbers and reviewing your medical records.

They may have even worked with medical and vocational experts to determine the value of your case. However, they have also cautioned you that getting the money you deserve may take considerable time.

You are entitled to total damages for the harm you suffered from a personal injury.

These damages fall into two general categories:

  • Economic damages are payments for the actual financial costs of your injuries, as measured in dollars and cents. This category of damages includes medical bills, lost income, and property damage.
  • Non-economic damages compensate you for the effects of your injuries and how they have changed your life. These damages are more subjective and include things like pain and suffering and loss of enjoyment of life.

The insurance company will never pay you punitive damages in a settlement agreement, and the only way that you will receive punitive damages is if a jury awards them to you. The prospect of these damages is often enough to make the insurance company act more reasonably in settlement negotiations at some point.

You May Be More Angry Than Relieved When You Get a Settlement Offer

When you get the initial settlement offer from the insurance company, it is hardly a celebration. Instead, it tells you that the insurance company wants to settle the case at some point but is not working to resolve it right away. If the insurance company seems eager to settle immediately, you may even view it as a reason to be skeptical.

You will likely be very disappointed by the initial settlement offer that the insurance company makes you. There may be a range of emotions, from stress to anger, because you think the insurance company is trying to pull a fast one on you. 

However, the insurance company merely tries to do what it always does during the claims process, giving itself room to raise its offer in the future.

You will be highly vulnerable to the insurance company’s tactics if you do not hire a personal injury attorney. First, you may mistake the amount of power the insurance company has. Really, the only actual thing that the insurance company can do is make your life more difficult.

It may be a shock if the insurance company’s initial offer comes anywhere close to paying for your damages.

Insurance companies view the claims process as a negotiation and are trying to set things up to lead to the best possible result for themselves. They know that you will seek a high amount of damages at the outset, and both of you will eventually move from your positions.

Your Attorney Will Help You Understand Each Settlement Offer

A settlement statement form is a financial document used in various legal contexts, particularly in real estate transactions and legal settlements.

Once you receive a settlement offer, you and your attorney will review it together. The insurance company may have broken down its offer line-by-line, telling you what it offers for things like lost income and emotional distress.

You should have an idea of how and where the insurance company is trying to underpay your damages.

Your lawyer will then advise whether to accept or reject the initial settlement offer. Unless it is for the policy limit (which is the full extent of the insurance company’s liability), chances are that your lawyer’s advice will be to reject the offer.

The level of formality that you will use to reject the offer depends on the circumstances. Your lawyer may advise you to send the insurance company a demand letter, a more formal step in the process.

The Insurance Company Makes Offers, But It Does Not Dictate

Remember that insurance companies do not make any final determination in your case. They take a position to bring about the best possible resolution for them, namely, closing the claim for the least amount of money possible.

Insurance companies often employ adjusters and lawyers skilled at negotiating settlements in their favor. They may use various tactics to downplay your injuries' severity or the claim's value.

Hiring an experienced attorney puts you on even footing with the insurance company. They will negotiate on your behalf, pushing for the best possible outcome.

Once you reject the initial settlement offer, you are at a crossroads in your case. If you have filed a claim (instead of a lawsuit), you must decide whether to stick with the claims process.

Many attorneys will advise you to continue negotiating, knowing that the insurance company’s initial offer is not final. However, you also face the prospect that the insurance company can continue to run down the clock toward when your statute of limitations expires, perhaps forcing your hand in the process.

You also have the option to file a lawsuit against the responsible party at any time during the process. Nothing says you have to file a claim directly with the insurance company.

Depending on the type of case and the stakes at hand, your lawyer may even advise you to begin in court. If the responsible party had insurance coverage, you usually still deal with the insurance company.

Remember That Most Personal Injury Cases Eventually Settle

The insurance company may have made its settlement offer as part of the litigation process. Just because you have filed a lawsuit does not mean your case automatically goes to the jury.

Many off-ramps during the process allow you and the insurance company to reach an agreement and avoid trial. In fact, that is what both you and the insurance company often want because nobody really wins when your case goes to trial.

You take on the risk that you will get nothing, and the insurance company may have to go in front of the jury, which it only wants to do if it wholeheartedly believes that you do not have a strong case.

If your case is at trial, your negotiating position may get stronger as your case gets closer to the hearing. You may have built up solid evidence in the discovery process, and the insurance company gets much more motivated to settle your case as it gets closer to trial.

The most common time for a case to settle is between discovery and trial, where the defendant has filed motions for summary judgment and the court has denied them. Then, the insurance company faces the prospect of imminent litigation, and it may begin to think twice about its position.

The Insurance Only Fears You When You Have a Lawyer

If you negotiate independently, you may not get too far when rejecting a settlement offer. Insurance companies have no reason whatsoever to fear you. They do not think they will end up in court because you may be unable to file an effective lawsuit on your own.

However, when you have an experienced personal injury lawyer with a track record of successfully litigating and winning cases, the insurance company sits up and takes notice.

The insurance company knows that you have an advocate who can make it pay dearly, and it may want to hedge its own risk.

Your lawyer can handle the negotiation with the insurance company and make it clear that you are prepared to go to trial. When you have an attorney, insurance companies know you have the means to hold them accountable, and they cannot delay or deceive you.

Hire an Experienced Attorney at the Beginning of Your Personal Injury Case

A conceptual photo showing printed text "personal injury lawyer" could represent the idea of seeking legal assistance for injuries caused by accidents or negligence.

You do not want to bring a lawyer into the case only after the insurance company makes you an unsatisfactory offer. By then, you may have done something that may have complicated your legal picture.

Insurance companies always remember everything they see or hear and take notes on things they can use against you in the future. They are looking for any sign of weakness and leverage for settlement negotiations or to use as evidence if your case goes to a jury.

While you can technically bring an attorney onto the case at any time, the best period of your case to get legal help is at the very beginning. This way, your lawyer can work to build the strongest possible case for you, which puts you in a better negotiating position.

The work begins in the days after the accident when your lawyer may make the first contact with the insurance company. The last thing you want is for the insurance company to contact you without legal representation because bad things can happen.

You Do Not Pay Upfront to Hire a Personal Injury Attorney

Hiring a personal injury attorney does not cost you anything at the outset of your case. An attorney will not charge you any money from your pocket, and you will not have to pay legal expenses for your pocket during the case (they may get paid from your settlement before you receive your check).

Your obligation to pay your lawyer their fee only comes if you win your case by getting a settlement check or a jury award. Then, your lawyer receives a percentage of the proceeds of your case.

If you do not win your case, your lawyer comes away empty-handed for their time and services, though you may still need to pay some court costs and filing fees. Talk to your lawyer to ensure you understand their fee arrangement before you sign it.

To be clear, a lawyer cannot guarantee any result in your case, but the fact that they can get nothing means that they think you have a reasonable chance of success if they accept your case in the first place.

Hiring a personal injury lawyer to negotiate a settlement with insurance companies is always the wise decision. They have the knowledge and experience to protect your rights and ensure that you receive fair compensation.

Don't risk being taken advantage of by insurance companies. Consult a lawyer at the Francis Firm injury attorneys who will fight for your best interests and help you navigate the complex world of insurance claims.

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