Should I Accept a Settlement Offer from the Insurance Company?

No, you should not accept a settlement offer from an insurance company before the offer has been reviewed by an attorney. An experienced lawyer will review the offer, assess your damages, and determine whether the offer is adequate relative to your situation. Factors such as the extent of your injuries, the intensity of pain and suffering endured, lost wages, medical expenses spent, and all future costs for your medical needs should be carefully considered and calculated with an attorney first to come up with a fair and accurate settlement. If you need expert guidance for a settlement offer, contact Sneed and Mitchell at (866) 434-0014 or fill out our online form. Our lawyers will evaluate your case for free right away to determine the next steps you should take. We win 99% of our cases and work on a contingency fee basis so you don’t have to worry about burdensome costs or extra fees.

Understanding Insurance Settlement Offers

Settlement offers have lasting repercussions on your future legal rights and benefits. It is crucial to consider potential future medical issues or complications that may arise from your injury. Once the agreement is finalized, you will be incapable of seeking additional compensation, even if you accepted the offer verbally instead of in writing. An accepted waiver releases the liable party from any future obligations relating to that specific claim, so it is imperative to understand the full scope of your damage and factor that into the settlement negotiations. 

Evaluating the Initial Settlement Offer

The first initial settlement offer from an insurance adjuster is generally a low sum. Adjusters give low offers to injury victims in hopes that they will accept them immediately, unaware of the true value of their claims. If the adjuster is pressuring you to sign the agreement on the initial offer, it may be an indication that they are being untruthful about something. Consider if any damages are excluded or diminished in value, and compare them with your calculations to determine how much the insurer owes you. It is not uncommon for insurance adjusters to purposely leave out non-economic damages, so check to see if they are included. Ensure that liability is correctly assigned to avoid accepting the blame for things that were not your fault. Assessing these factors in an initial settlement offer will help you be able to determine whether the compensation is fair or not.

Key Considerations Before Accepting a Settlement

Before accepting a settlement offer, you should consider damages that have impacted you and your life such as medical bills, lost wages, the quantity of pain you’ve suffered, emotional trauma, the magnitude of your injuries, the activities you can no longer do, and future medical expenses. These factors are calculated by attorneys through different methods. For non-economic damages that are based solely on emotional and physical pain, attorneys often use the multiplier or per diem method to determine their monetary value. Economic damages like lost wages and medical expenses are calculated by using hospital bills, prescription costs, income statements, medical devices, and gas receipts for going back and forth to doctor's offices. 

To account for future expenses and long-term medical care, you will need to consult with your medical provider first to discuss future treatments, prescriptions, surgeries, or physical therapy that they believe you will need. An economist can help you accurately predict the inflation costs of these future medical expenses. Permanent impairments can affect your ability to work and land a future career, and should also be considered. Your current income and any expected promotions can be calculated to determine your lost earning potential. Consider if any adjustments need to be made to household or vehicle interiors to accommodate your new physical needs as they can greatly increase your settlement value. Lastly, take into account any trauma or mental health issues that arose after your accident that require therapy. 

Accepting a personal injury settlement carries consequential legal implications that should be considered such as its finality, tax deductions, confidentiality agreements, liability waivers, payment structures, and benefit eligibility clauses. Once signed, most settlement agreements will not allow you to back out of the agreement, barring you from seeking any further compensation. All future liabilities from the at-fault party will be released, meaning you can not take legal action against them later on. It’s important to check the tax policy in your settlement agreement because non-economic damages are typically susceptible to taxes. Make sure you understand the legal ramifications of discussing the details of your settlement, as you may be fined for releasing confidential information. Your settlement may come in the form of a lump sum or multiple small payments, and this amount may affect your eligibility for other benefits, so these things must also be considered.

The Importance of A Legal Consultation During Settlement Negotiations

It’s important to consult a legal professional for your settlement as they can provide an accurate estimate of your damages and future expenses, help you gather evidence to strengthen your claim, and negotiate on your behalf for a fair settlement. Lawyers typically have connections with experts who specialize in different fields and can provide professional opinions about vital aspects of your case. By combining expert knowledge with collected evidence, they can negotiate with insurers for an accurate amount of compensation. Lawyers understand complex legalities and can assess your claim to determine what legal factors may affect your case. This assessment can also help you steer clear of mistakes that could negatively impact your finances in the future. 

If you are managing a settlement without legal guidance, it’s imperative to know how to avoid common pitfalls. You will want to understand basic legal terms and clauses to ensure you are not waiving any of your rights. Keep in mind that insurers will typically offer the lowest amount first, so be prepared to show them evidence of your injuries and expenses that require coverage. You will want to avoid giving insurance adjusters any recorded statements, as they may try to use them against you later on. Similarly, do not sign any legal documents adjusters give you without carefully reviewing them first. Most lawyers give free consultations, so you may present the documents to them for review. Call (866) 434-0014 for a no-charge consultation to speak with a Sneed and Mitchell lawyer today.

Negotiation Strategies with Insurance Companies

If an insurance company offers you a low settlement, you will want to be prepared to give them a counteroffer. Once you understand the full worth of your claim, come up with a settlement number that’s appropriately higher than the one you are expecting to allow room for negotiation. Then write a counteroffer letter that explains why you did not accept the first offer, what your claim’s value is, the expenses the settlement needs to cover, and the new counteroffer amount. This provides a clear outline of your coverage expectations.

To effectively communicate during negotiations, it’s important to keep personal matters and emotions out of the conversation, remain professional, be concise with your words, listen intently, and have your goals in mind. Focus on the facts that surround your claim, and not how you feel about them. Avoid rushing conversations and evaluations, because this can cause you to miss important aspects of your claim. These qualities will help you be able to express your desires and worries clearly and efficiently without leading the negotiation into an argument. 

You should stand firm on the qualities of your case that are critical to your success. You do not want to compromise on aspects that have significantly impacted your life and overall well-being. Things like physical pain and mental suffering can add considerable weight to your case, and should not be overlooked. You can consider compromising if the offer is close to your desired outcome and meets the majority of your needs. If there is a chance you could be found partially liable for your injuries, or if the deadline for the statute of limitations is coming up, compromising may be the best alternative to secure your compensation. 

Alternatives to Accepting the Settlement

There are several alternatives to accepting a settlement such as pursuing litigation, using dispute methods, and utilizing the time you have until your deadline to review details of your case.

Pursuing Litigation: Pros and Cons

Litigation is the act of taking a case to court for it to be handled by a jury or judge. A lawsuit may be a good option if negotiation has failed to provide a middle ground between two parties, or if one party refuses to act reasonably and fairly to the other. It can also ensure that the claim is handled legally. Unfortunately, litigations can put a strain on both your wallet and your relationship with the person at fault. If you have a substantial amount of evidence that needs to be proven, it can require the opinions of expert witnesses, who typically charge hundreds of dollars per hour for their assistance. It’s important to consider these factors when deciding whether or not to pursue litigation.

Mediation and Arbitration as Dispute Resolution Methods

Methods such as mediation and arbitration are good alternatives to help solve disputes in settlements. Mediators are unbiased, trained professionals that help resolve a conflict between two parties by providing constructive guidance and enabling communication to help them come to an agreement. Mediation is a valuable alternative because it is generally inexpensive, non-binding, and protects relationships between parties. Mediators do not have any authority or say in the final settlement decision. Arbitration involves a legal professional, such as a lawyer, who exercises their knowledge of the law to review the facts of each party’s argument and make a legally binding resolution. Arbitration typically uses processes similar to court proceedings and relies on the authority of the arbitrator for a decision. However, the cost of hiring an arbitrator may exceed that of a mediator, ranging anywhere from a few hundred to several thousand dollars per hour. Both of these methods utilize a third party to assist in creating a fair settlement agreement.

Understanding the Timeline and Potential Outcomes

It’s important to understand how long these settlement alternatives may take, and what their outcomes may look like. Cases that are given to a court may take anywhere from a few weeks to several years to resolve depending on how complex they are and how much evidence is presented on both sides. Litigation typically involves the decision of a panel of jurors or judges, which requires court schedules and dates to be made months ahead of time. Once the judicial trial begins, it can take several more months for both parties to present evidence and testimonies to the court. With mediation, the process may be quicker if both parties are willing to see the other’s perspective. However, the case may have to be given to a legal authority if a decision can not be made. Arbitration is typically quicker than litigation and the decision is permanent once it is signed. The outcome of a case depends on a variety of factors, so it is important to keep them in mind when deciding on which settlement alternative to choose.

Real-Life Case Studies and Lessons Learned

Accepting settlement offers prematurely can significantly impact a victim’s future health and finances. The below examples demonstrate the importance of fully understanding the value of a claim before finalizing an agreement.

Cautionary Tales of Premature Acceptance 

Our firm received a call from a college softball player who suffered from a torn rotator cuff. She wasn't initially aware of the extent of her injury and accepted a verbal settlement offer of $1500 during a recorded statement with the at-fault party’s insurance adjuster. Later, she obtained an MRI after being unable to return to her sports program which revealed torn ligaments that needed surgical intervention. Unfortunately, her verbal offer was also a waiver of all claims, meaning she could no longer seek any further compensation. In reality, her injuries should have entitled her to the full policy limit of the liable driver, which was $100,000. The cost of the procedure, surgical center, post-operative care, and physical therapy, along with her non-economic damages in the form of pain, suffering, and disfigurement would have been included in our demand to the insurance company. 

Another person suffered puncture wounds across both arms after being attacked by a dog and signed a settlement for her bodily injuries for $2,000. She felt inclined to accept the small sum because the insurance adjuster also informed her that there was an additional medical coverage amount that would pay up to $15,000. However, the victim didn’t understand the additional amount was only to reimburse her health insurance company for paid costs, and none of that money would go to her. Our attorneys estimate she would have been entitled to $150,000 to $200,000. Her puncture wounds were incredibly painful and had a slow healing period due to their depth. She was left permanently disfigured with scarring on her arms.