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Do Insurance Companies Often Make Low-Ball Settlement Offers for Car Accidents?

2 Mins read

If you got into a car accident, you have likely contacted the other involved party’s insurance company to get compensation for the damage caused by the accident. It may sound like an easy thing to do because you’re entitled to compensation for the negligence of the insurance company’s client.

Usually, insurance adjusters will try their best to settle your claim using as little money as possible. They try their best to give you a deal that will suit the company’s needs the most, and insurance adjusters are highly trained in the art of negotiation. Such offers may sometimes be unsettling, especially if the car accident caused devastation.

When contacting an insurance adjuster, you should know the compensation you should be getting for the accident, which may include medical coverage in the case of injuries, compensation for pain and suffering, and even compensation for the wrongful death of a passenger (if you were related to them).

What Is a Low-Ball Settlement Offer?

When you make a claim with an insurance company, you are asking them for money to cover expenses related to the accident. In a perfect world, after you do everything right and provide all of the required information, the insurance adjuster would draw up a contract for you and agree to provide all of the compensation you would need.

However, this is rarely the case. Insurance settlements are essentially negotiations that take place. On the one hand, you are probably trying to get compensation for lost wages and coverage for the medical expenses you had to bear; while, on the other hand, the insurance adjuster is making you a minimal offer with the best interests of the insurance company in mind. This initial offer is known as a low-ball settlement offer.

Why Do Insurance Companies Make Such Offers?

There are several reasons why insurance companies make low-ball settlement offers:

Making a Profit

Insurance companies run on three basic principles. First, they collect premiums from their client at the time of writing up an insurance contract. Next, they invest these premiums in attracting more clients and collect even more premiums. Finally, they offer minimal compensation for all claims that are made.

Generating Computer-Based Estimates

Some of the busier or more popular insurance companies develop estimation software that provides those making claims with computer-generated settlement offers. These offers are low by default as a way to get more (unknowing) claimants to accept them.

Hoping that You Will Accept the Low-Ball Offer

Many insurance companies make low ball offers because people accept them without any negotiations. Accepting low-ball offers is often done unknowingly or because of the fast payout or the claimant may not want to go through the hassle of making a negotiation. And, this tactic mostly works for the insurance company.

Accepting the low offer also means that you are giving up your right to sue the insurance company for any more money. This is called a release agreement and is always strictly enforced by the court. So, if you realize later on that you were entitled to more money, chances are that you cannot do anything about it.

They Think You Will Not Hire a Lawyer

Insurance companies are allergic to court. So, when calculating a settlement that is in their best interest, they will also think about how likely it is you will hire a lawyer or take them to court. Insurance companies make such low offers because they usually believe that you will not go through the hassle of hiring a lawyer. However, if you hire a Milwaukee car accident lawyer, you will be showing them that there are chances of you taking them to court.

Conclusion

Thus, never settle for the first offer the insurance company makes. Always make a counter offer or hire a lawyer to show the insurance company that you mean business.