You’ve probably negotiated a new vehicle, a salary package, or some other important deal. When you’re hurt in a car crash, negotiating your injury claim involves that same intense give and take. Settlements are inherently different, of course. You’re trying to agree on the value of your pain and scarring, permanent impairments, and lost opportunities. Despite these obvious differences, effective negotiators have one rule in common. You never accept the first offer.
Injury claim negotiations usually involve insurance companies and/or their attorneys. While technology has changed the way insurance companies collect information, issue policies, and evaluate claims, negotiation often relies on decades-old traditions. The insurance company enters the exchange with one primary goal: pay as little as possible. To overcome this dynamic, you must know as much as you can about the process before you consider their first offer.
How Do Insurance Companies Decide Injury Claim Values?
Insurance companies usually set aside funds for auto accident injury claims as soon as basic information is available. This is called a reserve and it sets a ceiling for claim negotiations. The immediate claim handler recommends a reserve based on their investigation. The initial reserve and any subsequent increases go up a chain of command. Depending on the dollar amount, a reserve must have approval at every step along the way.
Your claim reserve should be based on your injuries, disabilities, wage losses, and how the injury affects you and your lifestyle. Under New York’s Contributory Negligence statute, Article 14 A, §1411, an insurance company can reduce your claim based on your percentage of negligence. After taking all of these elements into account, some reserves may also reflect these additional factors.
- The insurance company’s claim philosophy
- The claim representative’s personal biases
- Your past claim history
- Values determined by reserving software such as Colossus
- Predictive modeling based on big data
- A company’s attempt to save claim dollars
It’s You versus an Experienced Insurance Team
When you’re negotiating your auto accident injury claim, it seems as though it’s you versus the dreaded insurance adjuster. It’s never just that. In fact, while you may be the only one on your side, the individual with whom you negotiate usually represents a long list of people and entities. A claims representative often speaks for an insurance company, an individual policyholder, a corporation, or a self-insured entity. That’s just the beginning.
Experienced claim representatives may have enough settlement authority to resolve your claim without checking in with a boss. Inexperienced claim representatives often don’t know enough about negotiation to handle cases on their own. In some instances, claim supervisors actually control the offers and consider any counter-demands. They often coach inexperienced adjusters, telling them what to say and how to say it.
If your claim has a high-dollar value, a committee may decide how much it’s worth. A department manager, home office Examiner, or a Home Office Claim Department VP may approve claim reserves and monitor settlement negotiations. Any of these people might control the negotiations through a designated representative. You’ll probably never think about the people behind the scenes unless the claim representative says, “Let me discuss your demand with my boss.”
Insurance Companies Play Games
Whomever you’re dealing with, you can expect a game-style negotiation strategy. Just like basketball or tennis, you make a move, then they make a move.
In most cases, an insurance company won’t make an offer until you tell them what you want. Your request for a settlement is considered a demand (even if they don’t call it that.) It’s a tricky tradition that puts you in charge of making the first move. The insurance company realizes that the demand tradition works in their favor for a number of reasons:
- When you make a demand, you establish the settlement parameters.
- If you don’t have a legal advisor, you might not know the full worth of your pain, suffering, and other general damages.
- If you do make a demand, it might not be as high as they would have offered.
- If you fail to make a demand, they probably won’t offer you anything.
- If they haven’t heard from you in a while, they’ll simply ignore you and wait for the statute to run.
- If you miss the statute of limitations, they will close out their case file and their claim reserve.
Whether your demand is too little or too much, the insurance company will likely tell you that it’s more than your claim is worth. With that rebuttal, an insurance company can manage to reduce your expectations. After they’ve put you on the defensive, they’ll likely make their first offer.
The Lowball Counter
Whatever your demand, the insurance company will likely counter it with an unreasonably low offer. A lowball offer is based on the idea that you never know until you try. When an injured person doesn’t know a lot about injury values, any cash offer that exceeds their medical expenses and wage losses might sound attractive enough to seal the deal. This is the point where you must toughen up and insist on a better offer. The insurance company will offer more eventually, but first, they’ll wait for a counter demand. That’s so they can avoid what they call bidding against themselves.
When an injured person is unrepresented, insurance companies work the same old games. They rely on the same retorts, rebuttals, and traditional negotiation techniques
- Downplay your injuries, your pain, and your recovery difficulties.
- Minimize the significance of high dollar medical bills
- Use an index bureau search to find information on past injuries and use it as a negotiation tool.
- Assess you with a high degree of comparative negligence to reduce your claim.
- Troll you on social media and use your activities against you
- Pretend to ask their boss for more authority, then tell you they can’t go any higher
- Pretend they have high authority but feel your claim isn’t worth that much
Insurance Companies Know What They’re Doing
An insurance company usually knows everything about you, your background, and your injuries. They know your work history, your personal history. They know your financial history because they sometimes run credit checks. They’ve looked at liability. If you’ve cooperated and sent in your medical bills, they understand everything about your injuries.
Even if the claim negotiator doesn’t have a lot of experience, the supervisors, examiners, VPs and other claim personnel do. The more they know, the more convincing their representative sounds as he or she negotiates your claim.
Insurance companies also know what a case might cost them if they don’t get it settled before you hire an attorney and file a suit. They understand claim values and defense costs. They know that they have no control over a jury even if they’ve done the verdict research. Insurance actuaries make sure everyone knows that the longer a claim stays open, the more expensive it will be. Legally, they must raise their reserves each year to reflect this reality.
When you realize that an insurance company has restrictions and limitations, you can use it to empower you and negotiate from a position of strength.
Should You Hire an Attorney?
You have a right to negotiate your own car crash injury claim. If you feel you can stand up to an insurance company and everyone they represent, take your time, research the case details thoroughly, and make sure to do it right. Hiring an experienced lawyer to handle your negotiations can greatly increase the odds of a favorable outcome in your case.