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Why is the Insurance Company’s First Settlement Offer So Low?

hand signing documentThere are several reasons why the insurance company’s first settlement offer is likely to be far below the true value of your claim. It is important to remember these reasons if you get a lowball offer.

You may be tempted to accept the settlement, but if you do you are playing right into their hands. They are not motivated by doing what is in your best interests.

Below, review some of the main reasons why the first settlement offer for a car accident claim is often so low. If your insurance company made a lowball offer, you can discuss it with one of the licensed attorneys at Schmidt Kramer. An initial consultation is free of charge and comes with no obligation to take legal action.

Reasons for Lowball Settlement Offers

If you receive a lowball offer from the insurance company, it could be for one of the following reasons:

The Offer was Calculated by a Computer

Insurance companies are inundated with claims each day. While they are legally obligated to handle each claim in good faith, the sheer volume of claims they get often results in them letting a computer do the work for them.

The problem with letting a computer do the work is that it often does not account for the unique details about your crash. Another thing to remember is the insurance company’s software is written to favor the insurance company, not the policyholders.

Victims Often Accept the First Offer

Unfortunately, crash victims are often so desperate for compensation they accept the first offer without asking any questions. If an injury keeps you out of work and requires expensive treatment you cannot afford, any compensation offer can be tempting.

However, the first offer is usually far below the full value of your claim. You may be able to get more money, particularly if you hire an experienced attorney to negotiate on your behalf.

Insurance Companies Only Care About Profits

There is a simple way to understand how car insurance companies operate. They focus on three things:

  • Collecting premium payments
  • Investing premium payments
  • Paying as little as possible for claims

Insurance companies have a right to stay in business. However, they also have a responsibility to act in good faith. If you suffer covered damages, you should receive compensation up to the limits of the policy. If the insurance company lowballs you, consider hiring an attorney to negotiate for you.

Once You Agree to Settle, You Lose the Right to Sue

One of the most important things to remember before agreeing to a settlement is that once you sign the offer, you are likely signing away your right to sue the insurance company for more money. Settlement agreements typically contain release agreements that release the insurance company from future liability for the same accident.

While there are rare exceptions to these agreements, such as for fraud, it is highly unlikely you would be able to get out of the terms of a settlement.

That is why it is so important to make sure a settlement offer provides the compensation you need. Your injuries could worsen. You could develop complications, or your recovery may take longer than you initially thought.

The Insurance Company Thinks You Will Not Hire an Attorney

Without an attorney, the insurance company may be unlikely to make a second offer for significantly more money. What is the worst that is going to happen if you do not get an offer that you are happy with?

Without a lawyer, it is very unlikely you are going to file a lawsuit. The insurance company knows this, which is why they often do not take victims very seriously when those victims do not have attorneys representing them.

However, your choice of an attorney is very important. You need to find an attorney with courtroom experience who regularly goes to court. Insurance companies know the attorneys who go to court and the ones who do not. If you hire an experienced, successful attorney, you can be sure the insurance company will take notice.

Call Today to Discuss Your Car Crash Claim

Unsure if you may have case? Unsure if the insurance company’s offer of compensation is fair?

Schmidt Kramer’s licensed Harrisburg vehicle collision lawyers have extensive experience representing crash victims and have obtained millions on their behalf. We are prepared to manage the legal process on your behalf at no upfront cost. Give us a call to learn more about how we may be able to assist you.

If the insurance company does not offer fair compensation, we are prepared to take them to court to secure the compensation you need.

Free Consultation. Millions Recovered. Phone: (717) 727-2089.