Once the settlement negotiation process starts to heat up in your injury case, you'll need to have an effective strategy in place. Following these six settlement tips is a great way to start.
In putting together your settlement demand letter, you figured out a range of what you believe your claim is worth. Before you speak to an adjuster about your demand, decide on a minimum settlement figure within that range that you would accept. This figure is for your own information, not something you would reveal to the adjuster. But once the figures and discussions start going back and forth, it helps if you already have your bottom line in mind. That way, you don’t have to make a snap decision if an adjuster makes you a take-it-or-leave-it offer on the phone. You will know whether it meets your minimum level or not.
However, you do not have to cling to the figure you originally set for yourself. If an adjuster points out some facts you had not considered but which clearly make your claim weaker, you may have to lower your minimum figure somewhat. And if the adjuster starts with a low settlement offer or a number at or near your minimum -- or if you discover evidence that makes your claim stronger -- you may want to revise your minimum upward.
For a list of the most important factors determining the value of your case, see this checklist.
It is standard practice for insurance adjusters to begin negotiations by first offering a very low settlement amount -- or, sometimes, denying liability altogether. With this tactic, the adjuster is trying to find out whether you understand what your claim is worth and to see if you are so impatient to get some money that you will take any amount.
When a first offer is made, your response should depend on whether it is a reasonable offer but too low or whether it is so low that it is just a tactic to see if you know what you are doing. If the offer is reasonable, you can immediately make a counteroffer that is a little bit lower than your demand letter amount. That shows the adjuster that you, too, are being reasonable and are willing to compromise. A little more bargaining should quickly get you to a final settlement amount you both think is fair. In these negotiations, don’t bother to go over all the facts again. Just emphasize the strongest points in your favor -- for example, that the insured was completely at fault.
If in your first conversation, the adjuster makes an offer so low that it is obviously just a negotiating tactic to see if you know what your claim is really worth, do not immediately lower the amount you put in your demand letter. Instead, ask the adjuster to give you the specific reasons why the offer is so low. Make notes of the conversation. Then write a brief letter responding to each of the factors the adjuster has mentioned. Depending on the strength of any of the adjuster’s reasons, you can lower your demand slightly, but before lowering your demand very far, wait to see whether the adjuster will budge after receiving your reply letter.
The next time you speak with the adjuster, begin by asking for a response to your reply letter. The adjuster should now make you a reasonable offer upon which you will be able to bargain and arrive at a fair final settlement figure.
See Responding to a Low Settlement Offer for more on crafting your reply.
During negotiations, mention any emotional points supporting your claim. If, for example, you have sent the adjuster a particularly strong photo of a smashed car or a severe-looking injury, refer to it. If there was a bottle of beer found in the other party’s car, refer again to the possibility of alcohol use. If similar accidents had occurred in a similar way at that location, remind the adjuster. If your injury interfered with your ability to care for your child, mention that your child suffered as a result. Even though there is no way to put a dollar value on these factors, they can be very powerful in getting an insurance company to settle an accident claim.
Do not reduce your demand more than once until you have a new offer from the adjuster. Never reduce your demand twice without an intervening increased offer from the adjuster; it’s simply not good bargaining.
If the adjuster comes up with more reasons for a low offer, go over each one. Once you have dealt with all the adjuster’s arguments, you will either get a reasonable offer, or you will have found out that no reasonable offer is coming and you will have to try to put some additional pressure on the insurance company.
If at some point you feel negotiations are not going as you'd hoped, you may consider talking to a lawyer. An attorney should be consulted when any of the following are true:
For more when to get an attorney, see Are Lawyers Optional in a Personal Injury Case?
When you and the adjuster finally agree on a number, immediately confirm the agreement in a letter to the adjuster. The letter can be short and sweet. See this sample settlement confirmation letter to get a feel for what this document might look like.
This article is an excerpt from How to Win Your Personal Injury Claim by Attorney Joseph Matthews (Nolo).