Negotiating a car accident claim is a bit like selling your house or your car. You have to do your research first, figure out how much you're willing to accept, and be prepared for some haggling from the other side.
As you prepare to negotiate a car accident settlement, here are some common questions that might come up.
When Should I Start Negotiating My Car Accident Injury Claim?
You should start gathering information to support your claim right after the car accident. But you shouldn't negotiate a final settlement until you have a clear understanding of your injuries and any future treatment you'll need.
Once you settle your case, you give up your right to sue the at-fault driver for the accident. If your injuries turn out to be worse than you first thought, you can't ask for more money. Your case is closed as soon as you sign a settlement agreement. So wait until you have a clear picture of your car accident-related losses (called "damages" in the language of the law).
How Should I Kick Off Car Insurance Settlement Negotiations?
If you're making a claim with the other driver's insurance company (called a "third party" car insurance claim), you might send a demand letter to the insurer to begin settlement negotiations. Your letter should:
- tell your side of the story
- explain how and why the other driver was at fault for the car accident, and
- provide a detailed account of your injuries and losses, including supporting documents (like police reports, witness statements, photographs, medical treatment records, and medical bills).
A lack of supporting documents can doom your case, or at least leave you with a settlement that doesn't cover your losses.
Learn more about writing an effective demand letter in a car accident case.
How Do I Estimate the Value of My Car Insurance Claim?
Insurance adjusters often use a "multiplier" method to estimate the value of a car insurance claim. You can use the method too if you:
- total up your accident-related medical bills (called medical special damages)
- multiply your medical special damages by a number between one and five (the "multiplier") to get an estimate of harder-to-measure damages, like pain and suffering (called general damages), and
- add up your medical special damages, estimated general damages, lost wages, and property damage to arrive at an overall estimate of your car accident claim.
Adjusters choose a multiplier based on the seriousness of the injuries, the obviousness of the other driver's fault, the length of your recovery, and other factors. Relatively minor injuries would be on the low end of the multiplier range, while serious or long-lasting injuries would likely be at the high end of the range.
Another way adjusters estimate general damages is by assigning a "per diem" (per day) value to each day you have to live with the pain caused by the accident. The problem with this method, of course, is figuring out the daily rate to use.
One option is to use your daily earnings. For example, let's say you were sideswiped. You suffered a moderate neck strain. You were in pain for three months (about 90 days). You earn about $400 per day at your job. An adjuster using the per diem method would assign a value of $36,000 (90 x $400) to your estimated general damages, and then add that number to your medical special damages, lost wages, and vehicle damage.
Do I Simply Ask the Car Insurance Company to Pay the Amount I'll Accept?
Your settlement demand figure should be considerably higher than the amount you'd be satisfied accepting in the end. Your demand figure is the beginning, not the end of negotiations. Allow yourself some wiggle room.
The insurance adjuster will typically start with an offer that is much less than what the insurance company is willing to pay out. You can make a counteroffer, and the back-and-forth process will go on until you reach a settlement agreement or you decide to file a personal lawsuit over the car accident.
But don't make your initial demand figure outrageously high, or the adjuster might dismiss you as unreasonable. Remember, negotiating a car accident claim is like negotiating for a used car. If a car is priced at $25,000 and you offer $22,000, the dealer will probably think you're serious, and negotiate with you. But if you offer $8,000 for a car that's priced at $25,000, the dealer probably won't waste their time.
Your initial demand number should be higher than your claim is worth, but still believable. A good rule of thumb is to ask for 75% to 100% more than you hope to recover. For example, if you think $10,000 is fair, ask for $17,500 to $20,000, and negotiate from there.
How Long Should I Continue Car Insurance Settlement Negotiations?
Ideally, negotiations will go on for as long as necessary, until a fair agreement is reached. You could reach an agreement in one or two phone calls or emails, but you might have to go back and forth with the adjuster many times before you get the adjuster's very best settlement offer. Some lawyers won't settle an injury case without discussing the claim and exchanging figures with the adjuster at least three times.
Don't let the adjuster rush you. If you need more time to think about an offer or counteroffer, say so. Do some research and contact the adjuster when you're ready to talk and make a decision. Your case might be one of many on the adjuster's desk, but this is your one and only shot for a fair settlement.
But don't delay too long. Each state has a deadline for filing a car accident lawsuit (called the "statute of limitations"). If you miss the deadline, your case will likely be dismissed and you won't be able to go after compensation for your losses in court. Talk to a lawyer if you have questions about how much time you have to negotiate an insurance claim and file a lawsuit in your case. Learn more about the statute of limitations for car accident lawsuits.
Should I Accept the Car Insurance Company's "Final" Offer?
At some point during your negotiations, an adjuster might make a "final" offer. Before you decide to accept or reject the offer, try to figure out whether the so-called "final" offer really is the best offer the adjuster is going to make. Ask the adjuster something like, "Are you telling me that this is the highest offer you are authorized to make and that the offer will never get better?" Or, "Is this a take-it-or-leave-it offer?"
Listen carefully to the adjuster's answer. Most adjusters won't flat-out lie to you. If the response is vague—such as, "This is all the authority I have at this time"—that means you may be able to get a higher offer at another time.
Once you get to the point that you think you have the insurance company's best offer, whether you decide to accept it is up to you. If you think the offer is fair, and you are convinced that the adjuster won't make a better one, it might make sense to accept the offer.
If the offer is less than your goal amount, you have to decide whether to invest the time and expense to try to get more. If the offer is far less than you think is reasonable, you should probably reject it and file a car accident lawsuit (or at least threaten to do so). But if the offer is close to what you think is fair, you should think carefully about making a reasonable counteroffer.
How Do I Evaluate a Car Insurance Settlement Offer?
Your decision to accept or reject a settlement offer will depend on many factors, including:
- how much money you think you'd get if you filed a lawsuit and won
- the likelihood that you'll win a lawsuit
- how long a lawsuit will take
- how much a lawsuit will cost, and
- your comfort level with the uncertainty of going to court.
If you decide to go to court, you can't tell the judge or jury about the settlement offer you rejected. For example, you can't say that you were offered $20,000, but think your case is worth $50,000. You can't mention settlement negotiations at all.
When you evaluate an offer, try to think about your claim from the adjuster's perspective. You might not agree with the adjuster's offer, but the arguments the adjuster makes are likely to be the same arguments the other driver or their lawyer will make in court. Listening carefully to the other side can help you prepare for court if you decide to file a lawsuit.
Do I Need a Lawyer to Settle a Car Accident Case?
Not necessarily, but one of the biggest mistakes you can make when you're negotiating a car accident claim is to insist on handling your own claim when the circumstances indicate that you'd benefit from the help of a lawyer. Despite your best efforts to settle your claim yourself, you might want or need help when your claim is particularly big or complicated, or when the insurance company refuses to come to the table with a fair settlement offer.
For example, if the insurance company denies liability (legal responsibility) or says that the accident isn't covered by the insurance policy, a lawyer who understands the ins and outs of negligence claims can push back. You might also also want to talk to a lawyer if the stakes of your claim are high—for example, if you're dealing with a permanent injury that impacts your ability to work.
Most car accident lawyers work on a "contingency fee" basis. Under a contingency fee agreement, a lawyer takes a percentage (typically 33% to 40%) of the client's final settlement or court award as their fee, and the lawyer received no fee if the client comes away with nothing.
Having the right lawyer on your side can be crucial to getting a fair result. Learn more about when you might need a lawyer for a car accident case and get in-depth information on working with a personal injury lawyer.