How Do Insurance Companies Negotiate Settlements?

How Do Insurance Companies Negotiate Settlements?

Understanding the negotiation process is crucial when settling insurance claims. Insurance companies have a team of skilled professionals to negotiate settlements who use various strategies to ensure they pay out as little as possible. Let's take a closer look at how insurance companies negotiate settlements. If you must negotiate a settlement, allow a skilled Vero Beach personal injury attorney to handle the process for you.

Schedule A Consultation Today!

Settling Your Claim

Close-up of unidentified business people shaking hands after concluding a meeting. Concept of agreement, success, and communication.

The reality is that nearly every personal injury case will settle before it reaches the inside of the courtroom. You may, however, have a lengthy fight because the insurance company often tries to make obtaining a fair settlement as hard as possible. Personal injury attorneys experienced in insurance negotiations can skillfully navigate the process, providing valuable guidance and protecting your interests.

Before you even begin to negotiate with insurance companies, you should be well-versed in their ways. Otherwise, you will be at a distinct disadvantage and likely get the short end of the stick in a settlement negotiation. When you hire an experienced personal injury lawyer to handle your case, you will have a fierce advocate who will battle insurance companies when they try to take advantage of you. Without legal representation, you put yourself at risk of not getting the compensation you deserve.

Insurance Companies Want to Pay You as Little as Possible

Insurance companies assess the value of a claim by considering several factors. They review the details of the incident, such as the severity of the injuries or damages, medical expenses, property damage, and any other relevant information. Additionally, they may consult medical professionals or get multiple estimates for repairs to determine an accurate value.

The overarching principle is that insurance companies want to negotiate a settlement in a way that will pay you as little as they can. They will use every tactic to achieve this goal and try to wear you down, getting you to accept their low settlement offer. Insurance companies do not care about you and your injuries, but they do care about their bottom line and their profits. Any money they pay you is a line item expense for them, meaning that it comes directly from their earnings. Lower earnings than expected make shareholders unhappy and will hurt their share price.

How Insurance Companies Try to Get Away with Paying You So Little

Insurance companies have built an entire apparatus to get them to pay as little as possible on your claim. These companies have thousands of employees, some of whom have a direct role in lowering the amount of your settlement.

Close-up of an insurance adjuster handing a check to a colleague at their workplace.

Adjusters are the public face of the insurance company when it comes to claims and are the ones you will see and communicate with (even though you should never try to speak with the insurance company directly). The adjusters are very busy people with a punishing caseload, and they know that their performance evaluation depends on how well they please their insurance company bosses. Adjusters are well-trained and figuratively guard the gates for the insurance company. While you need to be wary of any insurance company employee, the adjuster is the public face who will be the one who most often tries to trick or trap you. They may try to shift blame onto you or argue that your injuries or damages are not as severe as you say.

Insurance companies also have actuaries and technology specialists whose job is to give them an edge over you in settlement negotiations. A national insurance company will have extensive data on every filed claim nationwide and in your area. They will have a detailed knowledge of your claim's worth as soon as they review it (which can take some time, given the insurance company's propensity to delay claims) and will know the exact value down to the dollar. You also need to know how much your claim is worth; otherwise, you will be at a steep disadvantage to the insurance company before you even begin the claims process.

Finally, the insurance company also has lawyers who are ready for battle. Insurance companies often go outside the company to find attorneys to help them fight you. They pay insurance defense firms to represent them in litigation (unless they keep the case in-house with their own attorney, to whom they still pay a salary and bonus). Unlike your attorney, who works for you on a contingency basis, the insurance company's lawyers get paid by the hour or flat per-case basis.

Insurance Companies Can Gain an Advantage Over You

This whole setup gives insurance companies an advantage over you at the beginning of the claims process. They have the infrastructure and the knowledge to gain superiority over you before you even file your claim. You need to equalize, and you do that by hiring a lawyer right after you have suffered an injury. The longer you go without legal help, the worse your position is. There are mistakes that you can make at the very outset of your case that you sink your claim before you even file it.

As for how insurance companies negotiate and try to settle your claim, it happens in sneaky and underhanded ways to keep you from getting what you deserve. They will do whatever is necessary to cut their own tab at your expense.

To counteract these strategies, a personal injury attorney can gather strong evidence, such as medical records, expert opinions, and witness testimonies, to validate the claim and build a solid case. They can also calculate the full extent of the damages, including future medical expenses and lost income, to ensure a fair settlement that covers all the associated costs.

Insurance Companies Might Delay Your Claim

The first tactic insurance companies will use during settlement and negotiation is delaying the process. They know you are struggling financially while their accounts are flush with cash. Insurance companies have recently hiked rates on their policyholders, meaning they have even more money in their coffers. They think that time is on their side in any settlement negotiation. In their view, the more time passes, the more desperate they think you are and the more likely you are to accept their low settlement offer.

Therefore, insurance companies may wait a long time to respond to your claim. State insurance laws usually only impose timeliness requirements on first-party insurance claims, meaning the ones filed by the company's own policyholders. Insurance companies may take a couple of months to respond to your claim. It can take even longer if your attorney begins the claims process with a more formal demand letter because the insurance company may take more time to review the case.

Insurance Companies Are Known for Making Low Settlement Offers

Insurance officer providing pen for client to sign agreement document, selective focus

When insurance companies respond to your claim, they either accept liability and make you a settlement offer or deny your claim entirely. If the latter occurs, you will proceed directly to litigation and present your evidence to a jury. When the insurance company makes you a settlement offer, it is not cause for celebration. Instead, you will soon realize exactly how much work you will still need to do in your case before you can reach an agreement.

Remember that the claims process is a negotiation, and chances are that neither party will get everything it wants. You will present your opening position, while insurance companies will take theirs. Unfortunately, the opening offer will be only a fraction of your case's worth. They are known for initially offering you pennies on the dollar before the real fight begins. Whether insurance companies expect you to accept the offer is an open question, and they may be testing the waters to see how you will react. If you have an experienced attorney, you know the offer is low and may need to fight.

Insurance companies will not give you what you expect overnight, and you may need to keep the pressure on to move them into the same ballpark because they generally do not respond to being asked nicely to be more reasonable. They will only move much from their position if they see an experienced and forceful attorney across the table who can make them pay.

Your Lawyer Knows How to Respond to a Low Settlement Offer

Once you receive a low settlement offer, your lawyer will review it and most likely advise you to reject it. As the client, you are the one who is making the ultimate decision with advice and counsel from your lawyer. Your lawyer can reject it by using a demand letter formally stating what you deserve and informing the insurance company that you will sue if you do not get it. You may counter with a negotiation figure that can move from your original position in the initial claim.

Over time, you and the insurance company may move closer in your figures. Remember that most claims and cases reach a settlement agreement at some point, even if it takes considerable time. Reaching a settlement agreement can take months or more than a year, so you should not expect insurance companies to raise their offer suddenly. Chances are that they will offer you more money incrementally because they are still trying to use time to their advantage. They have the capacity to settle your case overnight, but they often choose not to because the more time the money is in their account, the more money they earn, especially because interest rates are so high at the current time. Insurance companies earn some money through investment returns.

Your Attorney Can Always File a Lawsuit in Court

If the insurance companies are not reasonable, you have weapons at your disposal, and the most potent threat you have that can bring them into line is litigation. Although they act like they control your claim, the real power is a jury. Insurance companies do not want to cede anything to a jury because any group of human beings is unpredictable. In addition, they will also need to pay litigation expenses, which can be considerable.

Even if you file a lawsuit, you will continue negotiating a potential settlement with the insurance company. Simply stated, both parties have their own risks when going before a jury. From your standpoint, there is always a risk that the jury may not side with you, and you will end up with nothing. Nonetheless, you may have no choice but to go before a jury if the insurance company will not pay you what you deserve.

You Can Still Negotiate Even After Suing

You can expect continued negotiations with the insurance company as the trial approaches. It is common for personal injury lawsuits to settle after the conclusion of discovery when the court denies the defendant's motion for summary judgment. Knowing that they can lose the case and be out even more money, insurance companies may suddenly become motivated to settle your case and can begin to make you fair offers. You only have credibility and steady resolve in the legal process when you hire an experienced attorney to represent you.

Do Not Worry About How You Will Pay a Personal Injury Lawyer

Lawyers reviewing contract papers with brass scale on office desk. Legal services, justice, and law concept with film grain effect.

When you are concerned about how you will afford an attorney, you can take comfort in knowing that the personal injury law system wants you to get legal help. The system makes it easy for you by allowing your lawyer to work for you on a contingency basis. You do not need to make any upfront payments to your attorney when you hire them to represent you. All you need to do is sign an agreement that promises your lawyer will get paid a certain percentage from the proceeds of your case should you win. You do not owe anything if you lose and do not have to pay anything before you win.

Insurance companies negotiate settlements using various tactics and strategies to minimize their payouts. Engaging an experienced injury attorney's services is crucial for navigating the negotiation process effectively and securing a fair and just settlement. Attorneys are well-versed in handling insurance negotiations and can provide invaluable guidance and representation to ensure you receive the compensation you deserve.

Schedule A Consultation Today!