When you're seeking compensation for an injury, there is a very good chance you are going to be dealing with some type of insurance company. For example, if you get into a car accident, the insurance company for the at-fault driver will be the ones with whom you'll talk settlement. If you sue a doctor for medical malpractice, the doctor's medical malpractice insurer will handle the case. If you sue for premises liability, the homeowner's insurance or liability insurance is going to kick in.
Because you are almost always going to be dealing with an insurance company, it is very important to understand how insurance adjusters work.
Insurance adjusters are assigned to a case to investigate facts and determine how much the case is worth. They work for the insurance company, not for you as the insured or as the victim. They are interested in keeping the payouts as low as possible so the insurance company is more profitable.
While insurance adjusters want to pay out as little as possible, they also have the ultimate goal of avoiding a lawsuit. If a case does not settle outside of court, the individual who was injured usually has the option of going to court and filing a civil lawsuit. If the case makes it to trial, the judge or jury will make a decision on who is liable and what damages are appropriate. This is risky for an insurance company, as the damage award can end up being very high if the jury is sympathetic to the plaintiff. Legal fees and other costs associated with a trial can also become expensive for an insurer.
The insurance adjuster, then, generally has the job of getting the insured to accept the lowest settlement offer possible, without filing a lawsuit. Typically, adjusters decide on how much they are actually willing to pay out (the maximum) and then will make an offer that is lower than that max, sometimes as much as 25 to 50 percent lower. This gives them negotiating "wiggle room" during settlement talks.
In personal injury cases, insurance adjusters usually consider the same factors that juries would look at in deciding what damages are appropriate. This means the adjusters are usually looking at:
Some of these costs (those for actual expenses and losses) are very easy to determine. The numbers can just be added up. Pain and suffering, on the other hand, is much more subjective.
Because of the complexities associated with calculating pain and suffering, insurance adjusters usually have a formula or system that is used. Two examples of possible techniques used to calculate pain and suffering include:
Insurance adjusters also consider two other key factors: policy limits and the strength of the plaintiff's case.
An insurance company is never going to pay more than the maximum amount of the insurance policy. For example, if a driver bought $50,000 in liability insurance, the maximum the insurance company will ever pay out is $50,000 total in legal fees and damages.
If the plaintiff has a really solid case (like a medical malpractice claim where a doctor left a surgical instrument inside the plaintiff) then the insurer is more likely to offer a larger settlement because a plaintiff's victory in court will be almost certain. If a plaintiff's case is fairly weak, then the insurer is likely to offer much less, since the insurer and the plaintiff will be aware that there's a chance he could go to court and get nothing.
Once you have an understanding of how insurance companies work and of what the motivation of the insurance adjuster is, you can use that information to your advantage to negotiate the best settlement possible. There are a few key things in particular that you should do:
This lets the insurance company know immediately that you do take your rights seriously and that you will be filing a lawsuit if you aren't given a fair settlement. Your lawyer also knows how to determine what your specific case should settle for and can use her expert legal knowledge and negotiation skills to get you the best outcome.
(See our article, Are Lawyers Optional In a Personal Injury Case?, to learn about the types of cases you can handle on your own, and when it's best to get a lawyer involved).
Photographs, journals, extensive medical records, and records of all bills paid and work lost are all essential to maximizing your recovery.
This is essentially a letter where you state what you will accept in order to settle the case. If you send a demand letter, then the negotiations with the insurance adjuster can begin at the number that you believe is fair, rather than the number that the insurance adjuster decides is right. This can result in a more favorable final outcome for you.
This will let you know exactly what the maximum payout from the insurer will be. While technically you could get a judgment for a larger amount than the maximum payment from the insurer, you'd have to try to collect the leftover amount from the defendant personally.
The above steps should all help you to make the best deal possible with the insurance company. The main key, however, is to make sure you have evidence necessary to prove fault and to prove your injuries. With sufficient evidence, even if you are not able to reach a settlement, you will be able to go to court with confidence.