If you’ve suffered injuries due to the negligence or liability of another, you have a personal injury claim. Most claims are settled out of court, through negotiations with the insurance company of the individual or entity responsible for your injuries.
These formal conversations and transactions follow standard practices and you’ll want to understand how they work before initiating your claim.
People Involved in Settlement Negotiations
Dependent upon the circumstances of your claim, there may be several parties involved in the negotiations of any settlement:
- The claimant(s) – you and any other individual that may have been injured in the same incident or accident.
- The defendant(s) – the individual you name responsible for your injuries.
- The claims adjuster –the representative of the defendant’s insurance company.
- Legal counsel – your attorney, if you have hired one, but may also include an attorney or attorneys representing the defendant(s).
Most claims start out with only the claimant, his or her attorney, and a claims adjuster involved. The legal counsel of the defendant or the attorney of the insurance company may become involved at some point, even if the claim doesn’t go to court.
The Demand Letter
The first step in filing a claim is to issue a demand letter to the claims adjuster. This letter is the central document from which the rest of the negotiation will stem. It is therefore very important that the letter is well constructed and contains all the right information.
Be sure to include all costs you have incurred and WILL incur in your demand letter, as insurance companies are not required to pay for ongoing medical bills.
A personal injury attorney can assist you in putting together a winning letter that is able to influence not only the overall outcome of your claim, but also the amount of the settlement you receive.
The demand letter should outline:
- Your injuries, including the initial and ongoing complications you’ve suffered.
- The incident or circumstances of your injuries.
- How and why the defendant is responsible for your injuries.
- What medical treatments have been required.
- How much your medical expenses have already cost and will cost you in the future.
- The amount of any income you’ve lost due to your injuries and any future lost earnings.
- Any other damages you’ve suffered, including other expenses as well as non-monetary damages, like pain and suffering.
If you have a well-constructed, detailed demand letter that covers all the appropriate topics, then your settlement negotiations may only require a few conversations with the claims adjuster or defendant’s lawyer.
The Negotiation Process with Insurance Company
After you’ve sent your demand letter, you’ll be contacted by the claims adjuster or defendant’s attorney to discuss your claim:
- The First Phone Call or Meeting – The purpose of the first conversation is for you and the claims adjuster to make your arguments. You, or your attorney, and the adjuster will point out the strengths and weaknesses of the other’s position.
- The First Settlement Offer –
At the conclusion of the conversation, the claims adjuster will likely make you a settlement offer. That offer is also very likely to be lower than the dollar figure you’ve requested in your demand letter.
You or your attorney will make a counter offer that is higher than the offer the adjuster made but lower than the original dollar amount you requested.
- Additional Negotiations Calls or Meetings – A few additional negotiation calls are often necessary before a settlement agreement is reached. During each call, you, or your attorney, and the claims adjuster will get closer to an agreement.
- Reaching an Agreement or Proceeding to Trial – Eventually, you will settle on a dollar figure with which both you and the claims adjuster are satisfied. If a settlement you’re comfortable with can’t be reached, you may consider taking your claim to court.
If your claim involves multiple defendants, the negotiation process can take longer. Individual demand letters must be issued to each. Negotiation conversations must be conducted with each defendant or his or her claims adjuster or attorney. This process can be complex and a personal injury attorney can be invaluable in assisting you throughout.
Learn more on how to deal with your insurance company during a personal injury claim.
Succeeding with Your Settlement Negotiation
One of the most common pitfalls claimants make in negotiating a settlement is accepting an offer too soon. They often don’t know the true value of their claim and can be quick to take a settlement due to their own financial challenges.
You shouldn’t accept the first offer made by an insurance company. Nor should you fail to make strategic counter offers. Counter offers should continue until you reach a settlement agreement that’s close to the actual dollar figure your claim would be worth if it went to trial.
The “trial value” of your claim is essentially 100% of the value of all the injuries you’ve experienced. Most settlements offers are significantly less, though with the help of an attorney, you may receive between 70% and 90% percent of the trial value of your claim. In order to do so though, all steps in the negotiation process must be handled carefully.
The demand letter must:
- Clearly establish that you have the basis for a winnable lawsuit
- Inform the claims adjuster and the defendant’s legal counsel or insurance company that it’s in their best interest to arrive at a settlement agreement
- Convince the defendant's legal counsel or insurance company that it will cost them less to give you a good settlement than it will to fight your claim and eventually go to trial
After going through the process of settling a personal injury case, whether it be slip and fall or an auto accident, what next? What happens after a personal injury case has been settled?
How an Attorney Can Help with Settlement Negotiations
While it’s possible to go through a settlement negotiation without a lawyer, having an attorney can help you in many ways. Your lawyer can:
- Determine the damages you should seek and the dollar figure you should request in your demand letter.
- Construct a detailed, complete, and compelling demand letter.
- Prepare you for and advise you during negotiation calls or meetings.
- Handle each phase of negotiations, including the statement of offers and counter offers.
An attorney can help you determine when and if you should accept a settlement. They can also help you determine if you have a winnable lawsuit and whether or not you should go to trial instead of taking a settlement.