You've been injured in a car accident, and now just a week after the crash the at-fault driver's insurance company is offering to settle your claim for a few thousand dollars. Here's what to know at the outset:
- When you're making an injury claim through the at-fault driver's insurance company (this is known as a "third-party claim") it's standard practice for a first settlement offer to come in fast, and most often low.
- You absolutely don't need to accept this first offer. In fact, saying yes to the car insurance company's first settlement offer is almost never in your best interest.
The First Car Accident Settlement Offer Is Almost Always a "Lowball" Offer
Perhaps the two most important things to understand about the car insurance company's first offer to settle your car accident claim are:
- it's almost certain to be a "lowball" offer, and
- it's almost never going to be the insurance company's last offer.
The car insurance company isn't interested in making sure you get full compensation for all losses stemming from your car accident; far from it. The insurance company’s goal is to resolve your claim as quickly as it can, in the most cost-effective way possible. So think of the first offer as the insurer's most optimistic attempt at meeting its goal: it sends you an offer very early on in the process, in an amount that is the very definition of a "lowball offer," in the long-shot hope that you'll accept it, so that your car insurance claim can be closed at minimal cost to the company.
What Comes After the First Car Accident Settlement Offer?
Once you understand the insurance company's angle, and you decline (firmly but politely) to accept their first offer, the insurer will likely regroup and come back with a second, higher (at least slightly) offer.
Around this time, you (and your attorney) will probably put together a formal car accident demand letter. This will include:
- a description of the car accident, including discussion of why the insurance company's covered driver is clearly at fault for the crash
- a detailed summary of all medical treatment you’ve received to date (including the cost of that treatment)
- an itemized list of all other economic losses caused by the accident (lost income, cost of rental car, etc.)
- a summary of how the car accident has impacted your life in non-financial ways, including emotional distress and any negative psychological effects of the crash (these kinds of losses are often categorized as "pain and suffering"), and
- your counter-offer: a dollar amount you’d be willing to accept to settle your car accident claim.
(To get an idea of what this kind of correspondence might look like, see a sample car accident demand letter.)
Once the insurance company receives your demand letter/counter-offer package, this is when settlement negotiations will really begin in earnest. Your attorney and the insurance company's claims adjuster will likely talk on the phone a number of times and exchange correspondence in an effort to arrive at an agreeable settlement figure. During these discussions, your attorney will argue to keep the number close to your counter-offer, and the adjuster will advocate for lowering it.
Eventually, your attorney and the adjuster will hopefully arrive at a number that works for both sides. At that point, you'll sign a release (giving up your right to take any further legal action over the accident) and the insurance company will send you (or your lawyer) a settlement check.
There probably won't be much back-and-forth if you received minor injuries and very little medical treatment. But when your injuries are serious and the accident has had a big impact on your life (and/or livelihood), settlement talks can drag on, and you might need to consider filing a personal injury lawsuit in court.
Who Decides Whether to Settle a Car Accident Claim?
When is it time to accept the insurance company’s settlement offer? It’s your case, so ultimately the decision is yours. But you hired your lawyer for his or her expertise, so it’s a good idea to put faith in the lawyer’s opinion as to the value of your car accident claim and the fairness of a settlement offer—especially when measured against what’s likely to happen if you continue to fight (by filing a car accident lawsuit in court, for example).
Don’t Settle Your Car Accident Claim Until You've Fully Healed
Putting aside the dollar figure attached to the car insurance company’s settlement offer, you (and your attorney) need to be sure that you’re at a point in your claim where it’s a good idea to accept any settlement at all.
One of the biggest questions that must be answered involves the course of medical treatment made necessary by your car accident injuries. Before you accept a settlement from the insurance company, you need to be sure you’re fully recovered from the crash. That’s the best strategy. In the alternative, you need to at least have a full understanding of:
- the nature and extent of your injuries
- the medical care you’ll require in the future, and
- the anticipated cost of that future care.
Why is this so important? Once you sign a release and accept the insurance company's offer to settle, that's the end of your claim. You can't go back and ask for more money if a few weeks later you realize your injuries are worse than you first thought. (Learn more about the insurance company's release form and injury settlements.)
Getting Legal Help With a Car Accident Settlement
If you've been involved in a car accident and the insurance company has made you a first settlement offer, it's crucial to figure out the right strategy to make sure you end up with a fair resolution to your claim.
Especially when your injuries are significant and there's a lot at stake, it might make sense to discuss your situation—and your best path forward—with an experienced attorney. You can connect with a lawyer right on this page, or learn more about when it might make sense to hire a car accident lawyer.