Negotiating With an Insurance Company
After you submit your demand letter to an insurance company, it's time to
negotiate. If you have presented an insurance company with an organized demand
letter and the proper supporting documents , your claim negotiation process
will probably consist of nothing more than a few phone calls with an insurance
claims adjuster. Following is a brief explanation of how negotiations usually
work and some suggestions to help you succeed during the various stages of the
process.
How the Negotiation Process Works
During the first call with the insurance adjuster, you and the adjuster will
each make your points about the strengths and weaknesses of your claim. Then
the adjuster will make an offer to settle your claim for an amount lower than
what you requested in your demand letter. You will counter with a figure higher
than the adjuster's offer but lower than your original figure. Typically, after
two or three phone calls you will agree on a settlement figure somewhere in
between.
| Reservation of Rights Letter |
If you receive a "reservation of rights" letter from the insurance company,
don't be alarmed or intimidated. This letter informs you that the company is
investigating your claim, but that it is reserving its right not to pay you
anything if it turns out that the accident is not covered under the policy. The
letter simply protects the insurance company by preventing you from claiming
that the company's insurance policy covers your accident just because it began
settlement negotiations with you.
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Have a Settlement Amount in Mind
As part of putting together your demand letter, you should have determined what
you believe your claim is worth. Within that range, and before you speak to an
adjuster about your demand, decide on a minimum settlement figure that you will
accept. This figure is for your own information -- so you can keep your bottom
line in mind when under the pressures of negotiating -- but it is not something
you should reveal to the adjuster.
You do not, however, have to cling to the figure you set for yourself. If an
adjuster points out some facts you had not considered but that clearly make
your claim weaker, you may have to lower your figure a bit. And, if the
adjuster starts with an offer at or near your minimum, you may want to revise
your figure upward.
Do Not Jump at a First Offer
When the insurance adjuster makes you a first offer, it may be so low that it
is just a tactic to see if you know what you are doing (see below). Or, it may
be a reasonable offer but too low. If the offer is reasonable, you can
immediately make a counteroffer that is a little bit lower than your demand
letter amount. This shows the adjuster that you, too, are being reasonable and
are willing to compromise. A little more bargaining should quickly get you to a
final settlement amount you both think is fair.
Get the Adjuster to Justify a Low Offer
If an adjuster makes a first offer so low that it is obviously just a
negotiating tactic to see if you know what your claim is really worth, do not
immediately lower the amount you put in your demand letter. Instead, ask the
adjuster to give you specific reasons why the offer is so low, and make notes
of what he or she tells you. Then write a brief letter responding to each of
the factors the adjuster has mentioned.
Depending on the strength of any of the adjuster's reasons, you can lower your
demand slightly, but, before lowering the amount very far, wait to see if the
adjuster will budge after receiving your reply.
The next time you speak with the adjuster, begin by asking for a response to
your reply letter. The adjuster should now make you a reasonable offer upon
which you will be able to bargain and arrive at a fair settlement figure.
Emphasize Emotional Points
In these negotiations, don't bother to go over all the facts again. Just
emphasize the strongest points in your favor -- for example, that the insured
party was completely at fault, that you had a very painful injury, that your
medical costs were reasonable, and/or that you had long-term or permanent
physical effects.
However, it may help to mention any emotional points supporting your claim. If,
for example, you have sent the adjuster a particularly strong photo of a
smashed car or a severe-looking injury, refer to it. If your injury interfered
with your ability to care for your child, mention that your child suffered as a
result. Even though there is no way to put a dollar value on emotional factors,
they can be powerful in getting an insurance company to settle a claim.
Put the Settlement in Writing
When you and the insurance adjuster finally reach agreement, immediately
confirm the agreement in a letter to the adjuster. This letter can be short and
sweet, stating the amount for which you settled, what injuries or damages the
settlement covers, and the date by which you expect to receive settlement
documents from the insurance company.
| More Information About Negotiating Your
Claim |
For more details on negotiating an insurance claim, including sample letters to
insurance companies, suggestions for handling negotiations, and strategies for
dealing with an insurance company that refuses to make a good offer, see How to
Win Your Personal Injury Claim, by attorney Joseph L. Matthews (Nolo).
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