You should not generally accept the first insurance settlement, though in some instances where the insurance company will offer a fair initial settlement. Often, the insurance company hopes to avoid paying a full financial recovery, so they extend a lowball settlement offer. If you accept such an offer, it will hurt you financially.
There is no reason to rush the acceptance of an insurance settlement, even if you are in dire financial circumstances. If you accept a quick payment, you can find yourself paying significant out-of-pocket expenses. It is in your best interest to contact a Cape Girardeau car accident attorney as soon as possible.
Why Shouldn’t I Accept the First Insurance Settlement Offer?
To be clear, in some instances it makes sense to accept the first insurance settlement offer you receive. As a general rule, though, you should not blindly accept the first offer from an insurance company.
Whether you suffered an injury in a car accident, facing property damage after a natural disaster, or in any other circumstance where any insurance company owes you money, be wary of the first offer because:
It May Have Offered a Lowball Settlement
Insurance companies have robust systems for calculating the cost of accidents. In little time, an insurer may determine how much money you are entitled to. Once the insurer arrives at this figure, it may try to save itself money by offering less than you deserve.
If an insurance company can convince you to accept a lowball settlement offer, it may:
- Save itself tens of thousands of dollars (or more) in compensation it should have otherwise paid you.
- Free itself from further financial liability, as once you accept an insurance settlement, you cannot typically return to the negotiating table.
- Place the financial responsibility for the accident on you, as you may have to pay out of pocket for any losses the insurance settlement doesn’t cover.
A disabling car accident can cost the victim hundreds of thousands in economic costs alone, perhaps far more than that. However, you may not know the long-term cost of your accident immediately after the collision.
You might accept a $25,000 settlement, thinking it’s a large sum, only to realize later that your expenses will top $75,000—and you made a costly error in accepting the first insurance settlement offer.
You May Not Know the Cost of Your Losses
You cannot know the full cost of a covered event (such as a traffic accident) immediately after the event. It can take a long time to identify and value your losses.
To understand the cost of your covered losses, you may need to:
- Undergo multiple medical examinations.
- Speak with medical professionals about the future care you will likely need and the potential cost of that care.
- Receive an exam from mental health professionals to understand how psychological and emotional symptoms may affect you now and in the future.
- Identify secondary health problems that may result from your initial injuries.
- Calculate the exact cost of both economic and non-economic losses, including all future losses.
Your attorney can handle these responsibilities. They may draw from a network of medical experts, economists, and others who can help calculate the cost of your losses.
Completing these steps will take time. An insurance company may offer its first settlement before you complete these steps, in which case you cannot possibly know if the insurer’s offer is fair.
You Should Have a Lawyer Advise You Before Accepting Any Insurance Settlement
If you receive an insurance settlement before you can hire an attorney, take the time to run the offer by a lawyer.
A personal injury attorney will:
- Review your losses
- Calculate the cost of your losses (even if they don’t have time to do a detailed analysis)
- Review the insurance company’s settlement offer
- Advise you whether the insurance settlement is low (and by how much the insurance company’s offer undervalues your losses)
A personal injury lawyer will likely advise that you take a patient approach to your claim. Hire a lawyer and allow them to take the lead in resolving your claim.
Benefits of Hiring a Lawyer Before Accepting an Insurance Settlement
If an insurance company owes you compensation and extends a settlement offer, it can be tempting to accept a quick settlement. While you want an insurance company to offer you money (a sign that it intends to honor its policy), you must get a fair financial recovery. The first offer may not pay you a fair financial recovery.
Hiring a lawyer signals that you intend to get the full financial recovery you deserve, and working with a lawyer can:
- Grant you access to the lawyer’s experience and knowledge: Personal injury lawyers offer valuable experience, legal training, and knowledge of civil laws. Perhaps most importantly, a lawyer may have negotiated many settlements with insurance companies. Hiring an attorney gives you direct access to these priceless benefits.
- Provide a second set of eyes and unique perspective: Your lawyer will serve as an advisor and sounding board as you seek a fair insurance settlement. You can ask questions, hear the attorney’s perspective, and make wise decisions based on a lawyer’s informed advice.
- Insulate you from the insurance company: Insurance companies relish speaking directly with those they owe compensation. If an insurer can confuse you, catch you misspeaking, or cast doubt on your claim in any way, it will. Your lawyer will safeguard you from insurers.
- Allow a seamless transition into a lawsuit: You can only receive compensation from an insurer if representatives decide to offer the compensation. Your lawyer will work hard to convince the insurance company to pay the amount you deserve and may do so. However, if your attorney does not obtain a fair offer during initial negotiations, they may file a lawsuit and go to trial (if necessary).
Most civil cases lead to a settlement; your lawyer will want to settle your case. Nevertheless, an experienced lawyer always prepares for trial. If insurance companies prove stubborn and your lawyer decides a trial is necessary, they won’t skip a beat in transitioning from the negotiating table to the courtroom.
A lawyer’s service will also allow you to focus on your recovery. You may have physical injuries and psychological trauma that require avoiding stress and physical demands. Once you hire a personal injury attorney, you can remove your claim or lawsuit from your list of demands.
Your Lawyer May Face a Deadline for Filing a Lawsuit
Personal injury lawyers typically face a deadline for filing lawsuits. This deadline is one of multiple reasons to hire a lawyer as soon as possible.
If you wait to hire an attorney and the statute of limitations for your lawsuit expires, you may grant insurers all the leverage in settlement negotiations. Once an insurer knows you cannot sue, it has no reason to offer anything.
Plus, your lawyer may need to file a lawsuit. If the statute of limitations for your type of lawsuit (a personal injury or wrongful death suit) elapses, your attorney likely cannot file such a lawsuit. Furthermore, an attorney may not even accept your case if they cannot file a lawsuit.
Certain lawsuits, such as those against a municipality or those involving a wrongful death, may have especially short filing deadlines. Act quickly to hire an attorney.
How Will a Lawyer Determine if an Insurance Settlement Is Fair?
When a lawyer reviews an insurance company’s settlement offer, they should have a basis for comparison. Your attorney may develop this basis of comparison by:
Evaluating Your Economic Losses
If you’re seeking compensation from an insurer, your economic losses may include:
- Medical expenses
- Treatment for depression, post-traumatic stress disorder (PTSD), and any other types of pain and suffering you’ve experienced
- Lost income
- Diminished earning power
- Missed bonuses and promotions
- Property expenses (like the cost of repairing a damaged vehicle)
These are just a few examples of economic losses you might suffer. Your lawyer will evaluate your losses and calculate their total cost.
Evaluating Your Non-Economic Losses
You may also deserve compensation for non-economic losses, which may include:
- Physical pain
- Depression
- Anxiety
- Post-traumatic stress disorder (PTSD)
- Lost quality of life
Attorneys may also consider substance abuse, suicidality, and other severe problems as part of an insurance claim. While these kinds of losses don’t seem to have a direct financial cost, your lawyer will know how to calculate their monetary value.
Projecting Any Future Losses You Will Experience
One of the most challenging duties a lawyer handles is calculating unrealized losses. In cases where a client has a disabling injury or continues to suffer harm that persists past the time of negotiations, an attorney will need to project future economic and non-economic damages.
After completing these three steps, your lawyer will know if an insurer offered a fair settlement. However, completing these steps requires time, reinforcing why you should not rush to accept the insurance company’s first settlement offer.
What Happens if I Reject the Insurance Company’s First Settlement Offer?
If you choose not to accept an insurer’s initial offer, you hope to negotiate further and convince the insurance company to pay you fairly. After denying the first offer, it’s possible that:
The Insurance Company Agrees to Resume Settlement Talks (and Eventually Offers Another Settlement)
An insurance company may immediately agree to renegotiate if it operates in good faith.
our attorney may then meet with insurance representatives to:
- Explain why you rejected the first settlement offer
- Present documentation of your losses
- Present the calculation proving how much your losses are worth
- Negotiate a fair settlement offer
An insurance company may review your lawyer’s case and extend the offer you deserve. This is, for most, the ideal outcome of an insurance claim.
The Insurance Company Resumes Negotiations but Does Not Offer Another Settlement (or, at Least, Not a Better Settlement)
An insurance company may renegotiate with your lawyer but, ultimately, refuse to offer a better settlement. If you have denied the initial settlement, the insurer may even offer a lesser or no settlement.
An insurance company may refuse to offer a fair settlement because:
- It believes its calculation of your losses is fair and accurate
- It has not seen sufficient documentation or evidence to improve its offer
- It is engaging in hardball negotiation tactics
- It believes you will eventually accept its initial offer
- It is forcing your lawyer to take legal action, at which time it may extend a fairer offer
Insurance companies can negotiate relentlessly. You should find an attorney who is just as tenacious.
Your Attorney Takes Your Claim to Trial
If your attorney does not receive a fair settlement offer from the insurance company, they may file a lawsuit. Once your lawyer has filed the lawsuit, they may negotiate with the insurance company again. If your lawyer still does not receive a fair settlement offer from the insurer, they may take your case to trial.
What If I Choose Not to Hire a Lawyer?
If you accept the first insurance settlement or try to negotiate a better one on your own, you can face many challenges and complications.
Without an attorney leading the way, you may:
- Face stress and responsibilities that jeopardize your health
- Have great difficulty putting together a strong claim or lawsuit
- Have to negotiate directly with an insurance company, a potentially daunting and financially risky decision
- Fail to obtain the compensation you deserve
That’s why many who deserve insurance settlements hire personal injury lawyers to lead their claims.
Retain a Personal Injury Lawyer Who Will Fight for the Insurance Settlement You Deserve
Phillip J. Barkett, Jr. Personal Injury Lawyer in Cape Girardeau
If you miss your case’s filing deadline, you will make a catastrophic mistake that leads to immense financial harm.
Speak with law firms in your area and retain a personal injury lawyer as soon as possible. Once you have the right legal representation, you can relax and trust that you placed your financial future in good hands.