Following an incident that has caused you personal injury, you have to determine the extent and nature of your injuries and losses. The next step is you, or your attorney if you have sought legal advice, sending a demand letter to the at-fault party, their defense attorney or, more probably, their insurer. The insurance company, if they deem your claim justifiable, will then respond to your demand with an offer.
An insurer will always seek to protect its profitability. Therefore, insurance companies will pay the least amount they can get away with. Ergo, you can expect a low-ball settlement offer that falls short of truly meeting the direct and indirect costs you incur as a result of the injury. How you respond to this unreasonably low offer will be key in whether you’ll eventually receive fair compensation. Here’s a couple of tips on crafting an appropriate response.
1. Keep Calm and Evaluate the Offer
Personal injury, especially when severe, can be a cause of great mental anguish. So when you receive a low-ball offer, it’s easy to get caught up in the moment and almost immediately fire an angry, emotional response. The offer appears almost insulting. On the other extreme, financial distress may compel you to accept the offer without a second thought.
To avoid making these kinds of expensive mistakes, stay calm. Thoughtfully evaluate the offer and maintain professionalism during this high stakes negotiation with the other party. Remember that the other party doesn’t expect you to accept the offer without challenge but rather, are setting the stage for negotiations.
2. Respond in Writing
The low-ball offer may be as a result of the lack of adequate information on your injury and other losses claimed. It’s likely that your initial demand letter accurately covered the timelines around the incident as well as the treatment and recovery plan thereafter. In that case, you don’t need to repeat this information in your response.
Instead, provide updated itemized medical bills and proof of income loss. Mention the emotional points, inability to enjoy your favorite hobbies and other subjective aspects of your injury.
3. Formulate the Counteroffer
If the offer you received is unreasonable, that’s likely because you already have a reasonable offer in mind. Don’t make the mistake of adopting street-like haggling tactics by responding to a low-ball offer with an unrealistically high counteroffer. That will not only make future negotiations very difficult but will have the other party assume that satisfying your expectations could be impossible.
Instead, compute your counteroffer by looking at limits and requirements of insurance coverage, the at-fault party’s assets and data on claims typically paid for similar incidents. You may think you deserve a $70,000 payout but based on your review of these factors, realize that a realistic counteroffer would be in the region of $40,000.
Of course, this initial counteroffer will probably be the first of several that you’ll do as part of your negotiation. The back-and-forth may feel a little tedious but it’s a part of the settlement process.
4. Don’t Settle Before You Have All Required Information
Not all information that relates to your injury and is relevant to your claim will be known or available on Day 1.
Do not accept a settlement offer if you don’t have a complete understanding of not just present costs but also the long-term financial repercussions of the injury. That includes your ability to work (and find work) and any new skills you’ll have to learn to improve your job prospects. Remember that once you accept the at-fault party’s offer and sign the release, there’s no going back to ask for more money or filing your personal injury lawsuit. It’s best that you consult a lawyer regarding whether to settle or try the case.
Apply these tips to ensure you do not accept a low-ball settlement offer when you could get so much more.