After a car accident, you’ll face many decisions. One of the most important decisions you’ll have to make is whether to accept the first offer from the insurance company or pursue further negotiations. The decision of whether or not to agree to the first settlement offer can significantly impact your financial recovery and legal rights. To navigate this complex issue, it’s essential to understand the factors involved and the implications of accepting or rejecting the first offer from the insurance company. While you may feel the pressure, having a car accident lawyer in Woodstock on your side can alleviate some stress. An attorney can provide qualified advice and guidance, allowing you to make the most informed decision.
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What is a Settlement?
First, it’s important to understand what a settlement is. A settlement is a formal agreement to resolve a claim. You can settle several types of claims, including insurance claims and lawsuits. Settlements are often reached through negotiations, allowing both sides to discuss the issues and come to a mutually beneficial agreement. Settlement marks the end of your claim. In most cases, settlement is the ultimate goal and can help avoid further disputes, including trial.The First Offer: One of the Insurance Companies’ Most Used Strategies
During your claim, you’ll need to deal with the insurance company. You might quickly discover that dealing with insurers isn’t as easy as it may seem.
Insurance companies utilize several strategies to benefit themselves and weaken (or even ruin) victims’ claims. One of insurers’ most used strategies is the first offer.
When the insurance company makes a first offer, they’re trying to catch your attention with a dollar amount, hoping you’ll want to settle your claim quickly. The moment you accept the first settlement, it’s a win for the insurance company. While you may think it’s a benefit for you, it’s more of an advantage for them because they’ve closed out your claim and saved money in the process.
Why You Shouldn’t Agree to Settle with The First Offer
It can seem counterintuitive to deny the insurance company’s first offer for settlement. Isn’t the point of filing a claim to settle for compensation? Yes, but you shouldn’t settle for just any compensation. In most cases, the insurance company’s first offer isn’t the best for several reasons. When you hold off on settling, you can negotiate for a better settlement and potentially get more out of your claim.You Haven’t Reached Full Recovery Yet
When you’re hurt in an accident, you may suffer various injuries. Often, it takes some time to heal from these injuries and complete your medical treatment. When the insurance company offers their first settlement, it’s unlikely you will have fully recovered from your injuries. To know how much your claim is worth, you should wait until you’re well into your treatment plan and have a better idea concerning the future of your physical health. Additionally, some accident injuries can worsen after an accident, and you may face certain complications. When you settle too early, you may not receive compensation for the full extent of your injuries and related losses, such as future physical therapy or rehabilitation costs.You Don’t Know the Total Value of Your Claim
When you get a settlement offer very early in the process, it’s possible you may not even know the true value of your case. Everything is likely to change, and settling too quickly limits the amount of financial recovery you’ll receive. Waiting and allowing a skilled attorney to thoroughly evaluate your damages allows you to understand how much your claim is worth. Knowing the value of your damages helps ensure you settle for a favorable amount.The First Offer is Usually a Lowball Offer
The insurance company doesn’t want to spend more money than they have to. Therefore, the first settlement offer usually doesn’t accurately depict the full value of your claim. When the insurance company makes a first offer, it’s usually for a lower dollar amount than you might otherwise get. They do this hoping you’ll want to settle your claim quickly. Therefore, if you settle, you’re saving them money.You May Not Have Legal Representation Just Yet
Although you should consult a car accident lawyer soon after your car accident, hiring an attorney may take some time. When the insurance company offers you a settlement, it may be so early in the process that you haven’t even had the chance to get a lawyer. When you don’t have legal representation, this benefits the insurance company. Attorneys are familiar with the first offer tactic and are unlikely to let you blindly accept the offer. The insurance company wants to catch you at a time before you’ve hired a lawyer, so you don’t have a legal advocate guiding you in the process and negotiating on your behalf.Other Tactics Insurance Companies Use to Undervalue Victims’ Car Accident Claims
Along with the quick first offer, insurance companies may also utilize other strategies to make the process that much more difficult for you, including:
- Requesting a recorded statement: At some point, an insurance representative may call you asking for a recorded statement, claiming they want your side of the story. Although seemingly innocent, the insurance company really wants to use your words against you to harm your claim.
- Delaying your claim: Insurance companies will intentionally drag out your claim. By doing so, they aim to tire you out and motivate you to accept their settlement offer.
- Asking for medical authorization: The insurance company may ask you to sign a broad medical authorization, giving them access to private medical information. Once they get into your medical records, they’ll try to find evidence of prior medical conditions or injuries unrelated to your collision and claim your injuries are not new.
- Misrepresenting insurance coverage: Insurance adjusters may claim available auto insurance coverage is less than what it truly is. An attorney can find out the truth about insurance policy limits.
- Employing bad faith practices: Insurance companies must follow certain rules throughout the claim and settlement processes, but they often break them. Denying your claim or bullying you into accepting their settlement offer are common bad faith practices.
Accepting the First Offer Comes with Consequences
Before accepting any settlement offer, it’s crucial to understand what exactly that means for you and your claim. When you accept any settlement offer (not just the first offer), you’re not the only party supposed to “benefit” from the agreement. The other party gets something in return, too. Before you get your settlement check, you must sign certain documents, including a release. By signing the release, you agree to forfeit your rights to pursue any further compensation for this claim in the future in exchange for your money. Simply put, when you agree to settle and sign on the dotted line, this is the end of the line. You won’t have a chance to seek more damages in the future, even if you later determine your settlement was inadequate. When deciding whether to accept a first offer, a lot is at stake. Therefore, you should thoroughly consider the offer before proceeding.Evaluating the First Offer from the Insurance Company is Key
It’s natural to want to accept the first offer, especially when your medical bills and other expenses keep piling up. Still, it’s essential to consider whether the insurance company’s first offer is worthy of an agreement. As you assess your potential settlement, ask yourself the following questions:- How severe are my injuries?
- Have I reached the maximum possible recovery, or do I need ongoing treatment?
- Have my injuries affected my ability to work? Will I miss more work in the future?
- Has my lifestyle changed as a result of my injuries?
- How have my injuries impacted my mental and emotional health?
Understanding the Value of Your Collision Claim
When pursuing compensation through an insurance claim, it’s particularly helpful to understand how much your claim is worth. When you know the value of your claim, you’re not as likely to settle for less than you deserve. Your damages depend on the specifics of your case. You may be entitled to pursue economic and non-economic damages, including:- Medical expenses for current and future needs
- Lost income
- Diminished earning potential
- Pain and suffering
- Emotional distress
- Loss of enjoyment of life
What To Do if the Insurance Company Sends You an Offer
So you’ve received your first settlement offer – now what? Although you may be tempted to agree and be done with your claim, that’s not the wisest move. When you receive your first offer from the insurance company, you don’t have to rush to make a decision. If you’ve already retained a car accident attorney, send them the offer. They can review it and compare what the insurance company has offered to the monetary value of your claim. Should you still not have a lawyer when you receive your settlement offer from the insurance company, that’s okay. Hire a car accident attorney as soon as you can so they can examine the offer before making any decisions. Once you receive a first offer, the most important thing is for a skilled attorney to review it and give you their recommendations. Your car accident lawyer can determine whether the offer is even worth your consideration. If it isn’t, they can negotiate with the insurance company to get a better offer.What Happens When You Reject a Settlement Offer?
Many accident victims accept the first offer out of fear that this is their only shot at compensation. This couldn’t be further from the truth. If an offer doesn’t suit your needs, you can reject it. Rejecting an offer won’t negatively affect your claim, and you’ll still have the opportunity to negotiate for a more appropriate settlement. Rejecting a first offer is often a necessary step on the way to securing a favorable outcome, so don’t be afraid to give a “no.”If the Insurance Company Isn’t Willing to Settle Fairly, You Have Options
After your first offer, your lawyer can attempt to settle with the insurance company for a higher settlement. However, if the insurance company is playing hardball and doesn’t want to settle your claim fairly, you have other options.
Your car accident attorney can send the insurer a demand letter. Within the demand letter, they provide detailed information concerning your accident and resulting damages. At the end of the letter, they provide a dollar amount representing your losses and demand the insurance company settle. Should they refuse, your attorney is not afraid to take legal action.
The demand letter can motivate the insurance company to finally settle. If the letter still doesn’t yield favorable results, your car accident attorney won’t shy away from filing a personal injury lawsuit and continue the pursuit of just compensation.
