Why Is the Insurance Company Offering so Little Compensation?

Monday, January 8, 2018

Why Is the Insurance Company Offering so Little Compensation?

Written by Malman Law, reviewed by Steve J. Malman.

After an accident, insurance claims adjusters get involved to start processing the claim and give out a settlement.

As the plaintiff, you want to end things as quickly as possible. After all, you cannot work, you are in pain, and you have medical bills that are stacking up – without money to pay them. When you finally receive a settlement offer from the insurance company, you are relieved. Yet, when you examine the offer, the amount seems too low.

It is common for insurance companies to send a low offer initially, even more so when you are working without an attorney. While it is common, you do not have to accept that low offer and you should not – because there are ways to increase the amount offered and get what you deserve.

Chicago Insurance Settlements Are Not Final Offers – They Are Negotiating Starting Points

Realize insurance settlements are not final. When you receive your offer, that is an initial offer – even if the insurance claims adjuster tries to tell you that is the only offer. As with any settlement, you have the option to negotiate here.

When you do not believe the amount offered to you is fair, you do not have to accept the insurance company’s offer. Insurance companies are businesses; therefore, they want to minimize their losses as best as they can. They will try to pressure you into taking that first offer – even though no negotiations have occurred.

As the injured person, you have the right to negotiate and request fair compensation.

Realize Insurance Claims Adjusters Are Authorized for Higher

When you are dealing with claims adjusters, the adjuster gives you a settlement offer based on what they think your damages, injuries, and pain is worth.  During negotiations or even when you initially meet with the adjuster you will hear from the adjuster that they are authorized to go only so far with their settlement.

This is a known negotiating tactic, and while the adjuster tries to tell you they are authorized to go to your settlement value, no one knows what the actual authorized number is. Most likely they are trying to convince you that the offer you received was the best you will get – and most of the time the adjuster is bluffing.

Do Not Allow the Process to Stall

Even if you are offered a low settlement, do not delay the negotiator. Instead, speak with an injury attorney as quickly as possible. By allowing the insurance company to hold onto the money, they are earning interest on funds you should have in your bank account – not theirs.

If you have not received an initial settlement, do not let the insurance company delay the process. Stay in constant communication with them or have your attorney communicate with them. The more you push the insurance company to settle, the easier it will be to receive a higher settlement.

Know How Insurance Claims Adjusters Assess Cases

The insurance companies goal is to settle quickly so that they can minimize their losses. If your case were to go to trial, the insurance company knows they will spend more than an initial settlement. While they know this, do not assume that the first offer you get is a fair one.

As an active business, insurance companies must protect their bottom line, which means offering as low of a settlement as possible.

To better understand how your insurance claims adjuster comes to their settlement amount, you must first know the process they go through.

  1. Reviewing the insured’s side of the story. If your accident was caused by a negligent party, then the negligent party’s insurance is paying for your injuries. Therefore, the insurance claims adjuster will get in touch with the insured to find out their side of the story. They will also review the police report, get a statement from the insured, and contact any passengers involved in the accident.
  2. Investigate the plaintiff. Before insurance companies settle, they do a quick investigation into the plaintiff. Insurance companies have access to databases that allow claims adjusters to see if the plaintiff has received an insurance settlement before or been a plaintiff in an insurance lawsuit. For high value settlements the insurance claims adjuster will take the case further by investigating the plaintiff online.
  3. Requesting documentation from the plaintiff. The adjuster then requests documentation from the plaintiff or the plaintiff’s attorney. These documents help establish the injuries, values of those injuries, and the negligence of the defendant. Documentation might include medical records, wages, tax returns, and proof of property damage. Receipts for out-of-pocket costs, and bank statements proving financial losses might be requested too.
  4. Reviewing the documentation. A good adjuster will take his or her time reviewing the documents provided by the plaintiff. They scrutinize every detail, look for evidence that counters what they have, and look for any opportunity to reduce the settlement amount offered. Realize that an adjuster will not make an offer until they have every piece of evidence in front of them; therefore, leaving out documentation will only delay your settlement.
  5. Determining the value. The way insurance claims adjusters value an injury is taking losses and multiplying them based on the severity of the injury. First, the insurance adjuster thinks about what the chances are that the plaintiff will win the lawsuit if the case goes to trial. Next, they consider how much a jury might award the plaintiff. Then, the insurance adjuster separates damages by economic and non-economic damages. Economic damages are those that are usually reimbursed fully, such as medical expenses and lost wages.
  6. Determining pain and suffering. Pain and suffering is a non-economic damage. There is no receipt or exact dollar amount; instead, these damages are subjective. Adjusters today typically use a software program to assign values to the injury – which automatically determines pain and suffering values based on the injury’s severity score.
  7. Making the offer. Even if the insurance claims adjuster’s program comes back with millions for a settlement, they might not offer that amount first. Typically, adjusters offer a percentage of what their computer values the case for, then they see if the plaintiff takes that offer. Typically, if the plaintiff has no attorney the adjuster will issue a lower offer, because they assume the plaintiff will not counter.

Steps to Take After Receiving a Low Offer

While receiving a low settlement is frustrating, you still have options. Do not let the adjuster bully you into believing that this is your final or only offer.

Instead, take the following steps to help increase the next offer presented to you:

  • Analyze the offer. An offer is more than a dollar amount jotted down on a piece of paper. Instead, the adjuster will list several reasons behind their offer. While you are desperate for money, do not put too much into the reasoning behind the offer. Even if the adjuster claims you had unauthorized treatments, your physician’s statement along with an expert could prove that these treatments were necessary – and therefore compensable.
  • Respond in writing, not over the phone. While you might be tempted to call the adjuster, and tell them you disagree with their offer, you must respond in writing to establish your paper trail. Before you respond in writing, write down a list of questions about the settlement – including any questions about what the insurance claims adjuster said in their offer letter. Also, gather documentation that might counter any statement made by the adjuster. When you draft your letter, focus on the pain points – and how your injury affects your quality of life.
  • Formulate the counter offer. Now that you have a list of pain points and evidence to counter anything the adjuster used to lower your initial offer amount, you must formulate a counter offer. Do not respond with an unreasonable amount, because the claims adjuster will reject the offer. Also, do not undervalue your case, because the claims adjuster might agree to your low counter offer – leaving you with less compensation than you need and deserve.

Speak with a Personal Injury Attorney to Get the Settlement You Deserve

Putting a dollar amount on how much your injury is worth is not easy. After all, you are personally dealing with the pain, suffering, and financial losses every day. Sometimes, it is easier to hire a third party who can remain objective and get you the settlement you deserve.

A personal injury attorney knows how to negotiate with insurance companies. More so, they know the tactics used by these companies – and they know how to deliver a favorable settlement in return.

If you were injured in a serious accident, do not deal with the hassles and negotiations yourself. Instead, speak with an attorney from Malman Law. Call us today to schedule a free consultation at 888-307-7068 or request more information online.

Steve Malman

Malman Law’s founder Attorney Steven Malman has over 30 years of experience handling personal injury, nursing home, medical malpractice, truck accidents, car accidents, premises liability, construction, and workers’ compensation cases in Chicago, IL.

Years of experience: +30 years
Illinois Registration Status: Active and authorized to practice law—Last Registered Year: 2024

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