If you're making an insurance claim following a car accident, at some point you need to consider how much money you would be willing to accept to settle your claim (most accident cases do end up settling well before trial). In this article, we'll take a closer look at the settlement process, with a focus on putting a counter-offer together after you've received an initial offer of settlement from the insurance adjuster.

Overview of the Settlement Process

The settlement process usually begins after you or your attorney sends the insurance company a  demand letter. The insurance adjuster will either accept the offer or make a counter offer. This claims adjuster (also called an appraiser, examiner, or investigator) is the person in charge of deciding whether or not an insurance company must pay a claim and, if so, how much. Oftentimes, there will be a lot of back and forth between you (or your attorney) and the insurance company with regard to the value of your accident claim, until an agreement is reached.

Step One: Determining the Value of Your Claim

The first step in making a counter offer is to determine the value of your claim. To do this, simply:

Calculate special damages.  Special damages are measured by calculating the expenses incurred and earnings lost, due to the accident. This is easy to do for the cost of the damage to your car (or cost to replace it), medical expenses, and lost wages - but more difficult for future wages or lost earning capacity. It is a good idea to keep thorough and detailed records of every doctor or physical therapist that you visit, as well as all medication that you take as a result of your injuries.

Calculate general damages.  General damages are non-economic losses such as pain and suffering, shock and mental anguish, emotional distress, etc. Often, general damages equal 1.5 to 5 times special damages, depending upon the severity of the injury.

Add special and general damages together.  The sum of your special and general damages is a good ballpark estimate of the value of your claim.

Adjust the value to reflect savings.  Next, adjust the sum of the special and general damages down based on a rough estimate of the amount you will save, and risks you will not endure, by not going to trial. The extent that you will adjust the value of your claim will depend on a number of factors, such as whether or not the other party is clearly at fault.

Step Two: Compare Your Value to the Adjuster’s Value

The next step in making a counter offer is to compare the value of the adjuster’s offer with your valuation. This will require you to determine how the adjuster arrived at his or her valuation. The information you gathered in the first step will assist you in identifying the places where the adjuster may have made reductions. Then, compare where you differ. Check to see if the adjuster valued certain damages less than you did or if the adjuster did not provide compensation for certain damages at all.

Step Three: Prepare a Counter Offer

Finally, draft a letter as a counter offer. Start by summarizing the offer that was made to you. State that the offer is too low and explain why it is too low by drawing on your research. You might want to consider attaching some documents, such as bills, as exhibits. Finally, end by detailing the amount for which you would settle the claim.

Send this letter directly to your claims representative instead of the adjuster. The adjuster probably does not have the authority to engage in further negotiations at this point, and there is no harm in showing that you're willing to escalate the process and stand up for your rights.

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