Getting your first settlement offer from an insurance company can invite a lot of uncertainty, mixed emotions, and worry.
On the one hand, the offer might have been for much less money than you expected.
But on the other, you already have bills to pay, and you sure could use that money right now.
This sets up a very common dilemma for accident victims: take the money or wait and fight it out to get what you deserve?
If you’ve found yourself in that situation, this article is intended to help you understand what’s really happening here, as well as the options you have — which may include options that haven’t even occurred to you.
Why do insurance companies offer such low settlements? Here are eight reasons why your settlement offer might have come in lower than you expected (followed by an explanation of what you can do about it).
1. The Insurance Company Only Cares About Its Bottom Line
Insurance companies are for-profit corporations. They maximize their profits through three primary methods:
- Collecting premiums
- Investing those premiums
- Paying out as little as possible on claims
So why do insurance companies offer such low settlements? Above all else, it’s because low settlements protect their bottom line. If they can get away with paying you a smaller amount of money than you deserve, they’ll leap at the chance.
The insurance company isn’t your neighbor, ally, advocate, or friend. They are not working for you or in your best interest. But here’s the good news: insurance adjustors don’t get to decide what’s fair all on their own. They can be held accountable to their policy language and to the law. An experienced Kingston personal injury lawyer can help you hold them accountable.
2. The Settlement Offer Might Have Been Auto-Computed by Software
Major insurance companies receive a staggering number of claims every day. They have a legal duty to consider each claim fully and in good faith. Unfortunately, they sometimes let a hasty algorithm do the work for them — at least at first.
Computer-based estimates will try to compare your claim to similar claims and give you a settlement accordingly.
There are two problems with that:
- Your injury isn’t like anyone else’s. There are unique and complex factors that the software can’t and won’t consider. You deserve to have your claim fully and fairly considered by a human being and in full compliance with your rights under the law.
- The software is written to favor the insurance company’s interests over yours. Low settlement offers are calculated to offer just enough to be tempting for you to accept while still ultimately protecting the insurer.
Computer-based estimates often result in lowball offers or unfair denials. An experienced Kingston personal injury lawyer can help.
3. A Lot of People Will Just Accept the Low Settlement Offer
Why do insurance companies offer such low settlements? Because a lot of people take them, no questions asked!
The insurance adjustors realize that a lot of people will take the bait. Too many people have accepted far less money than they needed or deserved, either because they didn’t know better or because they were tempted by the lure of a quick payment. The adjustor might try to rush or pressure you too.
Remember this: when you get a low settlement offer, the insurance company is crossing its fingers and hoping you’ll take it. They wouldn’t have offered if they didn’t think it was the best outcome for themselves.
4. The Insurance Company Can Use a Low Settlement to Cheaply “Buy Off” Your Right to Sue Them
Did you know that accepting a settlement offer almost always means that you’ll never be able to claim more money from them relating to the same accident or injury? This kind of “release agreement” is a standard part of insurance settlement agreements and, generally speaking, it’s airtight. Courts typically enforce the agreements quite strictly.
Imagine if you accept a low settlement offer and then later learn any of the following:
- You were entitled to a lot more money.
- Your injuries are worse than you realized.
- You’ve developed complications, secondary injuries, infections, or disease as a result of the injury.
- Your recovery isn’t going as expected or your injuries are suddenly getting worse.
- Other people who suffered similar injuries in the same accident got a lot more money.
- A few months later, you receive costly accident-related medical bills that you never expected.
These kinds of things happen all the time. But if you’ve already accepted a lowball offer, you will most likely be unable to take further action. This is another reason why insurance companies offer such low settlements: it lets them off the hook, permanently, at a relatively low cost. Never sign anything without talking to a lawyer first.
5. They Don’t Think You’ll Hire a Lawyer
When insurance adjustors calculate settlement offers, one of the most important questions they ask themselves is, “How likely is this to go to trial? And if it does, how likely are we to lose?”
As a general rule of thumb, insurance companies don’t want to go to court. The trial itself costs them money (sometimes more than the claim is worth to them), and it comes with the risk that they could lose even more money than you’re asking for right now. Insurance companies aren’t always popular with juries, and the insurers know this.
One of the reasons insurance companies offer such low settlements is that they don’t believe you’ll do anything about it. Hiring a lawyer, however, sends a clear signal that you will indeed do something about it.
The right lawyer will work to persuade the insurance company that they are ready and willing to make an aggressive case on your behalf — in a court of law and in front of a jury — if that’s what it takes.
6. They Don’t Have All the Facts
The insurance adjustor might be missing (or overlooking) critical facts that would change the insurance company’s analysis.
For that matter, there may be important evidence you don’t even know about yourself! As Kingston personal injury lawyers, we frequently conduct extensive investigations into our clients’ accidents (going far beyond the police report or medical records in many cases). Such investigations can sometimes produce evidence that makes all the difference.
7. You’ve Said Too Much (or the Wrong Thing)
Insurance adjustors are trained to look for anything they can use against you, including:
- Statements you make to the adjustor
- Statements you make to law enforcement, witnesses, or the other parties
- Testimony from your family members, neighbors, or friends
- Social media activity from you or your friends
- Any conduct or activity that appears inconsistent with your claims
It’s all too easy to say or do the wrong thing. If the insurance company believes it has evidence to use against you, it may result in a lower settlement offer.
Be careful when talking to others about the accident. Say as little as possible. Stay off social media to the greatest extent possible, and don’t assume your privacy settings are enough. Don’t talk to the other side’s insurance company. Let your lawyer do the talking instead.
If you fear you’ve already said the wrong thing, don’t panic. Come in and talk to us as soon as possible.
8. “Deny First, Defend Later” Strategies
Sometimes, insurance companies operate on a “deny first, defend later” policy, which means they automatically send out denials or very low settlement offers without even properly evaluating the claim!
This kind of practice is a breach of the insurance company’s duties, and it may even make them vulnerable to an “insurance bad faith” lawsuit (something your lawyer can help you with).
Nevertheless, unfair denials and lowball offers are relatively common. If you’re wondering why insurance companies offer such low settlements, this unfortunate practice could be to blame.
But I Have Bills to Pay Now. How Can I Justify Waiting?
If the insurance company has made you a low settlement offer, or if they have denied your claim unfairly, please contact the Kingston personal injury lawyers at O’Connor and Partners as soon as possible.
Even if you have bills that you need to pay, there may be many options for taking care of those bills in the meantime without accepting an unfair settlement offer.
Our office is here to help. The right solution for you will depend entirely on the specific circumstances of your accident and insurance claim. We offer free consultations for you to discuss those circumstances with us and learn more about your options.
Free & Confidential Consultation with Our Kingston Personal Injury Lawyers
O’Connor and Partners is a personal injury law firm based in Kingston, NY that provides legal services throughout the entire state, including Kingston, Newburgh, Poughkeepsie, Ellenville, the Hudson Valley, New York City, and beyond.
We fight hard to maximize compensation for injured New Yorkers and their families. We are proud to offer confidential, no-cost, no-obligation consultations to injured people and their families all throughout the state.
If you choose to hire us after your consultation, we will not charge you a fee unless we get you money first.
If you can’t come to us, we will come to you. Just contact us online or call 845-303-8777 to talk with an experienced Kingston personal injury lawyer today.