Steven A. Bagen | October 19, 2024 | Personal Injury
If you’ve ever been involved in a personal injury accident, such as a car crash, slip and fall, product liability, or any other scenario that resulted in injury, you’ve likely encountered the difficult process of dealing with insurance companies. One of the most frustrating aspects of this process is receiving a lowball settlement offer from the insurance company. Many victims are left wondering why insurance companies would offer such low settlements, especially when their medical bills and damages far exceed the amount offered. Knowing why insurance companies make lowball offers can help you understand the personal injury claim process and protect your rights.
When you hire a skilled personal injury attorney, they can explore the reasons behind lowball offers from insurance companies and how to handle these tactics. They will handle the insurance company on your behalf. Remember that you don’t have to face the insurance company alone—working with an experienced personal injury lawyer is often the best way to ensure you receive the full and fair compensation you deserve.
The Business Model of Insurance Companies
Insurance companies are for-profit businesses, which means their primary goal is to make money. Unfortunately, for them, it’s not necessary to ensure that accident victims are fully compensated. Insurance companies achieve profitability by minimizing the amount of money they pay out in claims, even if it means offering less than what an injured party is entitled to. Every dollar they save by offering a low settlement is another dollar added to their profits.
When you submit a personal injury claim, the insurance company’s priority isn’t helping you recover or covering your full medical expenses—its priority is protecting its bottom line. Offering lowball settlements is a standard tactic insurers use to achieve this goal. The lower their initial offer, the more room they have to negotiate while keeping costs down.
Common Tactics Insurance Companies Use to Justify Low Offers
While it might feel shocking or insulting to receive a lowball offer, it’s important to remember that this is a deliberate tactic used by insurance companies. Here are some common strategies they use to justify their low offers:
Questioning the Severity of Your Injuries
Insurance companies often dispute the severity of injuries claimed by accident victims. They may argue that your injuries aren’t as bad as you say or that your medical treatment is excessive or unnecessary. By downplaying the seriousness of your condition, they attempt to lower the value of your claim and offer you a smaller settlement.
To combat this, it’s critical to have thorough medical documentation of your injuries. Keep records of doctor visits, diagnostic tests, and any treatments you receive. Your personal injury attorney can work with your healthcare providers to ensure your injuries are properly documented, making it harder for the insurance company to minimize their severity.
Disputing Liability
Another way insurance companies try to reduce your compensation is by disputing liability. They may argue that their policyholder was not entirely at fault for the accident or that you, the injured party, were partially to blame. By shifting some of the responsibility to you, they can attempt to reduce the amount they owe. Insurance companies attempt to manipulate various liability laws by trying to assign injured claimants as much fault as possible, resulting in a lower payout.
Underestimating Future Medical Expenses
When negotiating a settlement, the insurance company may focus on the immediate medical costs you’ve incurred while ignoring the potential long-term costs of your injury. Injuries such as traumatic brain injuries (TBI), spinal cord injuries (SCI), or chronic pain conditions can require ongoing medical treatment, physical therapy, or even surgeries years after the initial accident.
Insurance adjusters may rush you into accepting a low settlement before the full extent of your medical needs is clear. Once you accept their offer, you waive your right to pursue additional compensation for future medical expenses. This is why it’s essential to work with a personal injury lawyer who can help estimate the total cost of your injury, including any future medical care, before agreeing to a settlement.
Exploiting Your Lack of Legal Knowledge
Most accident victims are unfamiliar with personal injury law and the claims process. Insurance companies take advantage of this by offering settlements that seem fair on the surface but are far below the actual value of your claim. They might present a low offer as their “final offer,” hoping that you’ll feel pressured to accept it because you don’t know how to negotiate for more.
Without the help of an attorney, it’s easy to fall into this trap. Insurance companies count on the fact that you may not fully understand your rights or the value of your claim, which allows them to save money by offering less. As such, they may try to contact you to negotiate a settlement as soon as possible after the accident—before you have a chance to reach out to an attorney for help.
Reasons Insurance Companies Offer Low Settlements Early
Insurance companies often present lowball offers early in the claims process, and they do so for several strategic reasons:
They Expect Desperation
Accidents can leave victims with significant financial burdens. Between medical bills, lost income from time off work, and other unexpected expenses, it’s easy to feel overwhelmed. Insurance companies know that many accident victims are in financial distress and might be eager to accept any offer they receive, even if it’s far less than they deserve.
By offering a quick but low settlement, insurers hope to take advantage of your immediate need for cash. They rely on the fact that you may prioritize getting some money quickly over negotiating for more compensation later on.
They Want to Avoid Litigation
Insurance companies prefer to settle claims outside of court. Going to trial can be costly and time-consuming for them, and there’s always the risk that a jury will award a much larger sum than what they initially offered.
Offering a low settlement early in the process is one way insurers attempt to avoid litigation. They hope you’ll accept the offer and waive your right to sue, thereby saving them the potential costs of a trial.
They’re Testing Your Resolve
Offering a lowball settlement is often a tactic to test how determined you are to pursue your claim. If you accept a low offer without much pushback, it signals to the insurance company that you may be willing to settle for less than your claim is worth. On the other hand, if you refuse the offer and continue negotiating, they’ll know that you’re serious about getting the full compensation you deserve.
By starting with a low offer, insurance companies leave room to increase the settlement if necessary. They hope you’ll accept something below the total value of your claim during the negotiation process.
How to Respond to a Lowball Settlement Offer
Receiving a lowball offer from an insurance company can be frustrating, but it’s important not to panic. Here’s what you should do if you receive a settlement offer that’s far below what you deserve:
Consult with a Personal Injury Attorney
If you haven’t already hired a personal injury attorney, now is the time to do so. A seasoned attorney can assess the value of your claim and negotiate with the insurance company on your behalf. They can also advise you on whether the offer you’ve received is fair or if you should push for more.
A personal injury attorney can gather the evidence needed to strengthen your claim, including medical records, expert testimony, and documentation of your financial losses. Insurance companies are more likely to take your claim seriously if you have legal representation, and your attorney can fight for the full compensation you deserve.
Don’t Accept the First Offer
Insurance companies often present lowball offers, hoping you’ll accept them without question. It’s important to remember that you’re not obligated to accept the first offer you receive. In fact, it’s usually best to reject the initial offer and continue negotiating.
Your attorney can counter the low offer by presenting evidence of the full extent of your injuries, medical expenses, and other damages. They can also demonstrate why the initial offer was inadequate and why you deserve more.
Be Patient
One of the reasons insurance companies offer low settlements early is to see if you’ll accept a lower amount out of impatience. It can be tempting to settle quickly, especially if you’re dealing with financial stress, but it’s important to be patient.
Rushing into a settlement can mean leaving significant compensation on the table. Instead, work with your attorney to build a strong case and be prepared to wait for a better offer. If necessary, your attorney can take your case to court to ensure you receive the total amount you’re entitled to.
Document Everything
One of the best ways to strengthen your claim and justify a higher settlement is by keeping thorough documentation of your injuries and losses. This includes:
- Medical bills
- Records of doctor visits and treatments
- Prescriptions and other medical expenses
- Proof of lost income
- Evidence of property damage
- Photographs of your injuries
- Testimony from witnesses
The more documentation you have, the harder it will be for the insurance company to dispute the value of your claim.
What is a Good Settlement Offer for Your Personal Injury?
A good settlement offer fully compensates you for the damages and losses you’ve suffered due to your injury. These damages go beyond medical bills and can include lost income, future medical expenses, pain and suffering, emotional distress, and other non-economic damages. Each personal injury case is unique, and what might be considered a fair offer in one case may not be in another. That’s why understanding the true value of your claim is essential before accepting any settlement offer.
Insurance companies often offer settlements that are much lower than what you deserve, trying to save money and close the case quickly. However, a reasonable settlement should reflect the severity of your injuries and how they will affect your life moving forward. For example, if you’ve sustained a long-term injury that will require ongoing medical treatment or affect your ability to work, the settlement should account for those future expenses. A good offer will ensure you don’t bear the financial burden of someone else’s negligence.
Working with a reputable personal injury lawyer is the best way to determine whether the settlement offered to you is fair. They can evaluate the full scope of your losses and negotiate for a better offer. Before accepting any offer, contact a personal injury attorney to protect your rights and ensure you receive the compensation you deserve.
Why Working with a Personal Injury Lawyer is Key
Dealing with insurance companies can be overwhelming, especially when they’re offering less than what you need to cover your medical bills, lost income, and other damages. This is why working with a skilled personal injury lawyer is critical to getting the compensation you deserve.
An attorney well-versed in personal injury law knows the tactics insurance companies use to minimize payouts and can protect your rights throughout the process. They’ll gather evidence, negotiate on your behalf, and ensure you’re not taken advantage of by lowball offers.
Remember, insurance companies have their own legal teams dedicated to protecting their interests—it’s only fair that you have a legal advocate on your side, too. Many personal injury attorneys offer free consultations and work on contingency fees. This means you pay nothing to have a personal injury lawyer review your case. If you decide to move forward together, you owe them nothing until they obtain compensation on your behalf.
Hire a Personal Injury Attorney Today
If you’ve suffered an injury and are facing a low settlement offer, contact a personal injury lawyer today. Their knowledge of insurance laws and regulations can be invaluable and ensure you are not shortchanged by the insurance company’s lowball tactic. You deserve fair compensation, and a lawyer can help ensure you receive it. Don’t let the insurance company dictate the outcome of your case—reach out to a professional who can obtain the settlement you deserve.