Don’t Panic When You Hear the First Settlement Offer

One of the most common reactions I see from clients is frustration when the insurance company’s first settlement offer comes in.

“That’s it?”

Sometimes the offer is lower than expected. Sometimes it’s so low that it feels insulting. Occasionally, it causes a client to wonder whether the claim is even worth pursuing.

My advice is simple: take a breath and keep your cool.

It’s called a first offer for a reason.

Insurance companies almost never lead with their best number. The first offer is simply the opening move in a negotiation. It gives the adjuster a place to start, allows them to evaluate how serious you are about pursuing the claim, and provides a benchmark from which further discussions can take place.

Think about it this way. If you were selling your house and a potential buyer made an offer below your asking price, would you immediately assume that’s the highest amount they would ever pay? Of course not. You would negotiate. Personal injury claims work much the same way.

What you have to remember is that you can’t help but take this personally. This was an injury to YOUR body and it HURT! How can you not take that personally? I understand. But what you have to understand is that NO ONE ELSE in this process is taking this personally because it didn’t happen to them. To them, it’s a business transaction, so they’re viewing it as such. It’s just a number.

A low first offer does not necessarily mean the insurance company believes your case lacks value. It doesn’t mean I won’t be able to get you where you should be in terms of value. It may simply mean they are doing what negotiators do: testing the waters. We just have to be patient with the process.

Before I make a settlement demand, I spend time gathering medical records, bills, wage-loss information, and other evidence that helps tell the story of what happened and how the injury has affected my client’s life. Once that information is presented, the negotiation process begins. Rarely does it end with the first offer.

Most cases get settled! We have to be patient with the process. The Insurance Information Institute notes that most claims are resolved through settlement negotiations rather than trials, meaning the back-and-forth process is a normal part of how claims are handled. See: https://www.iii.org/article/settling-insurance-claims-after-a-disaster

What makes negotiating cases much more difficult these days, too, is that in the olden days adjusters had much higher “desk authority,” meaning they had more money to dole out for each case within their own personal discretion. Nowadays, many adjusters aren’t allowed to make ANY offer without first getting approval from a supervisor. This leads not only to delays, but incremental movements, which can be very frustrating to deal with. That means you have to remember that the person making the initial offer may not even have the power to offer what the claim is ultimately worth without obtaining additional approval. That approval process can take time and frequently requires multiple rounds of negotiation.

So what should you do when you hear the first offer?

First, don’t take it personally.

Second, don’t assume the case is over.

Third, talk with your attorney (me!?) about the strengths and weaknesses of the claim and develop a strategy for responding.

Sometimes the first offer is close to fair. Sometimes it’s nowhere close. Either way, it is simply one step in the process.

The goal is not to react emotionally to the first number that appears in the process. The goal is to reach a fair resolution based on the facts, the injuries, and the law.

If you’ve been injured in an accident and are dealing with an insurance company, give me a call at 919-929-2992. I’d be happy to discuss your claim and help you understand what a fair settlement may look like.