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How to Reject and Respond to a Low Insurance Settlement Offer

August 8, 2018 by The Sawaya Law Firm

Man refusing the insurance offer by the agent.

If you have been injured in an accident and are expecting an insurance settlement, do not be surprised if the amount offered is less than you anticipated.Many insurance claims adjusters initially make a low settlement offer in hopes that you will simply accept it and go away. Many accident victims are struggling financially and willing to accept whatever they are offered, even if the amount is low.

Prepare for the real possibility that the insurance company will offer less than you deserve by keeping a record of your costs and losses related to your accident and injury. Save copies of all bills and receipts and keep a journal of your recovery. 

You do not have to settle for whatever paltry sum an adjustor thinks he or she can get away with offering you.

You have the right to reject any settlement offer and respond with a counter demand for the payment you deserve. But you have to wait until a settlement offer is made to reject it and submit a counter demand. You can engage an experienced personal injury attorney to represent you in dealings with the insurer and settlement negotiations. If you try to deal with experienced insurance negotiators on your own, you will be at a disadvantage.

What to Expect in an Insurance Settlement Offer

Frustrated man getting worried of the car accident.After suffering an injury in an accident, you may be able to turn to insurance for coverage of medical costs and other losses. You might file a claim under a policy you hold (e.g., auto collision insurance, homeowners’ insurance, health insurance) or through another person’s liability insurance if he or she was at fault.

A claims adjuster should follow up on your claim by contacting you and investigating your case. The investigation may include reviewing your medical records, obtaining vehicle repair estimates, reviewing police accident reports, interviewing you and reviewing your initial claim documents.

Under Colorado law, an injured party may seek compensation for losses known as “special damages” and “general damages.”

Special damages include:

  • Present and future medical expenses, from emergency care through hospitalization and rehabilitation
  • Property damage (costs to repair or replace)
  • Lost income during recovery or because of disability
  • Out-of-pocket expenses,such as the cost of towing a wrecked car,prescription medication,travel to doctors’ appointments or wheelchair rental.

General damages include payments for:

  • Pain and suffering (physical)
  • Emotional distress
  • Loss of enjoyment of life, such as inability to pursue recreation, hobbies, or other activity as you did prior to injury
  • Loss of consortium (marital/partner relations).

An insurance settlement should account for all of these losses as they apply to you and your situation, up to the limits of the applicable insurance coverage.

However, a settlement offer may be less than what you expected if the claims adjustor decides that your losses were not as much as you originally demanded, or that your own negligence or recklessness contributed to your injury.

If you question the settlement offer, the claims adjustor may cite their “settlement authority,” a supposed limit on how much the adjuster’s supervisor will allow to be offered. Your settlement offer will be close to or at the adjuster’s settlement authority.Don’t be impressed by an offer close to the settlement authority limit.

A “settlement authority” is just a negotiating tactic.If an adjustor tells you about their authority, he or she is trying to convince you to accept the offer on the table. It’s a tactic to pressure you to accept an offer for less than the fair value of the claim.

Countering a Low Insurance Settlement Offer

Man suffering neck pain from accident.You may receive a settlement offer in a phone call or email, which will be followed by a letter. Once you have the settlement offer letter, you have the right to make a counter demand if you find the offer unacceptable.

Compare what the insurance company has offered to your record of costs and losses, and the maximum payment provided by the insurance policy. The offer may not be far off, and the company may have a reasonable explanation for the discrepancy. Weigh the value of the time, effort and stress of a negotiation against the difference in what you have been offered and how much more you truly feel you need to be made whole financially.

If you cannot agree to settle, your reply should be a formal business letter that makes the case for your higher demand.Your letter should clearly:

  • State that the offer you received is unacceptable
  • Refute any statements in the adjustor’s letter that are inaccurate and damaging to your claim
  • Re-state an acceptable figure
  • Explain why your counteroffer is appropriate, including the reasons behind your general damages demands
  • Document any special damages you demand by including copies of receipts, bills, confirmation of work absences.

Your letter should be free of anger or accusations. As in any negotiation, your counteroffer should be for less than your initial demand to indicate you are willing to work toward a reasonable compromise.

It is hard to say how many rounds of offers and counteroffers will be necessary. The insurance company’s answer to your first counter demand should indicate how much they are likely to move. Expect less movement toward your figure in subsequent offers.

You must also consider how slowly negotiations are going.If the insurance company is using delay tactics, you will need to keep in mind the statute of limitations for filing a personal injury lawsuit. You do not want to let the time limit expire.

If negotiations reach an impasse, the next step is filing a personal injury lawsuit. Colorado law contains statutes of limitations that limit the amount of time allowed to file a personal injury lawsuit. In Colorado, the statutes of limitations generally allow three years from a motor vehicle accident and two years for other accidents. That may sound like plenty of time, but a lawyer hired after your negotiations must start from the beginning with their own investigation and demands to insurers.

Our Personal Injury Lawyers Can Help

You could benefit from the assistance of an experienced personal injury lawyer if your insurance claim is disputed after an accident. Sometimes, just a letter on a law firm’s letterhead helps an insurance company get more serious about responding to a claim. The Sawaya Law Firm of Denver has devoted our practice exclusively to injury law in Colorado for more than 35 years. We are known and respected throughout the state and have dealt with all the large insurers licensed in Colorado.

We have the resources to investigate your accident and to keep track of all your expenses and losses. We know what is required of a proper demand letter, and we are highly experienced negotiators. If your case must proceed to a lawsuit, we will develop a case we are intent on winning. Finally,while consulting closely with you, we can take the burden of negotiating with insurers off of you and allow you to concentrate on your recovery and your life instead.

For more information about how we can help you obtain the insurance settlement you deserve, contact us today.

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