What to Do If the Insurance Settlement Is Too Low

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Most personal injury cases are settled out of court between the injured party and the insurance company representing the at-fault party. However, there are cases in which the insurer simply will not offer a fair amount. What should you do if the insurance settlement offer is too low? One of the most important steps to seek recovery is to hire an attorney. Elliott Frazier is here to work for you and help you get the compensation you deserve.

How Insurance Companies Determine Settlement Amounts

The ultimate goal of insurance companies is to protect their bottom line. In general, an insurer is going to weigh the benefits of settlement versus the risks of trial. If the insurance company believes that a particular dollar figure agreed to during settlement will likely be less than what a jury would award, there’s a strong chance the insurer will settle for that amount.

That being said, insurers don’t simply come up with numbers out of thin air. To understand how an insurance company determines what to offer a personal injury victim as settlement, it helps to first understand the two main categories of damages:

Economic damages

These are quantifiable, objective dollar amounts intended to compensate the victim for losses such as:

  • Medical bills
  • Estimated future medical expenses
  • Lost income
  • Lost future income earning ability (also known as decreased earning capacity)
  • Property damage

To determine the amount of economic damages, the insurance company is going to review such documents as hospital records, pay stubs, and vehicle repair estimates. Expert witnesses can also testify as to the losses that the victim is reasonably expected to incur in the future.

Non-economic damages

Non-economic damages compensate the victim for losses whose values are more subjective in nature. They include but are not limited to:

  • Pain and suffering
  • Disfigurement
  • Mental anguish
  • Emotional distress

There are no hard formulas to calculate the dollar value of non-economic losses. Rather, the insurer will usually apply a multiplier between one and five to the total economic damages. The more serious the victim’s injuries, the higher the multiplier. For example, the insurer may apply a multiplier of four or five to a victim who is unlikely to ever be able to work again.

Common Reasons for a Low-Ball Insurance Offer

There are several reasons why an insurance company’s settlement offer is too low. These are among the most common:

  • The victim doesn’t have legal representation: The simple fact is that if you do not have a lawyer, the insurer is going to assume it will be easier to take advantage of you by offering you very little money. Insurers in general know you mean business when you retain an attorney.
  • The goal is to limit payouts: Insurance companies are ultimately businesses, and they seek to protect their profits in any way they can. If the insurer thinks it can get away with underpaying or outright denying a claim, it will likely do so.
  • Insurers often don’t take non-economic damages seriously: Non-economic damages are viewed differently (and unfortunately, as less “legitimate”) than economic damages. However, just because these damages are more subjective does not make them any less real for the victim, nor should the insurer be allowed to discount them as such.
  • The insurer believes you are partly liable: If an accident victim is partly liable for their own injuries, the law does not entitle them to the full compensation they’d otherwise receive. Therefore, if the insurance company thinks you were somehow to blame for your accident, it won’t offer you as much.
  • The insurer is negotiating in bad faith: Some insurers are simply dishonest and will offer something low in hopes of getting you to go away. There’s a psychological component to this: the insurance company is hoping that by offering you very little, you won’t believe your claim is worth much.

Why You Should Consult a Personal Injury Attorney

If you accept the insurance company’s offer, regardless of whether it’s good or bad, that will settle the case as far as their policyholder. The insurer will require that you sign a waiver by which you agree to not pursue a lawsuit or any further action on the claim. In other words, once you sign, you can’t ask for more money. This is true even if your injuries turn out to be much worse than expected.

How an Attorney Negotiates on Your Behalf

Your personal injury lawyer will review the facts of your case, compare them to other cases, and determine what a ballpark settlement amount should be. This is not a hard and fast amount, but it gives you and your lawyer an idea of where the negotiations should start. Your attorney can readily determine that the insurance settlement offer is too low if the representatives and lawyers are nowhere close to the ballpark amount.

Not all victims fully understand the value of their claim, especially in terms of future damages they may have. An experienced personal injury attorney can review the evidence and consult with expert witnesses who can provide a reasonable estimate of how much compensation you will need later to address future losses. This amount will be figured into the insurance negotiations.

Lastly, your attorney will present the evidence needed to convince the insurance that you are prepared to go to court and demand fair compensation if the insurer won’t offer it. This includes offering evidence to rebut arguments that you were partly liable. The objective is to make it clear that it’s in the company’s best interest to negotiate in good faith.

Should You File a Lawsuit?

Whether to file a lawsuit will depend both on the insurance company’s final offer and the potential benefits of going to court. Your lawyer understands how jurors perceive victims’ arguments and their demand for damages, and will use this experience to either recommend that you accept the settlement offer or take it to court.

However, it’s important to keep in mind that no matter what the outcome of a trial it will likely take more time to win a court award. There is also the possibility that the insurer will appeal an adverse decision, further delaying your claim. Nonetheless, even after a lawsuit is filed the case can still be settled.

Your attorney will take all of these factors into consideration, including the specific facts of your case, to help you make an informed decision.

Contact Our Dedicated Personal Injury Team

We work hard to win the compensation our clients deserve, whether through settlement or trial.

Count on Elliott Frazier — Family, Personal Injury, & Car Accident Attorneys, LLC. We can start developing your personalized strategy by scheduling your confidential initial consultation. Call us today.

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