Insurance companies make money by accepting premiums from their policyholders. They spend money by paying out claims to people like you. Every dime they pay you is a dime less profit for them. Since insurance companies are businesses, their primary concern is making a profit, and that concern takes priority over ensuring you receive fair compensation. Negotiating a claim is a competitive process, and the insurance company is your adversary.
The Personal Injury Settlement Process
The process of personal injury settlement negotiations varies from case to case. Nevertheless, there are some common elements to almost every personal injury settlement. Following is an overview of the typical steps involved in settling a personal injury claim:
- Preliminary claim investigation: Gathering initial evidence and learning about your claim.
- The demand letter: A brief description of your claim and a settlement demand that you send to the insurance company.
- The reservation of rights letter: The insurance company sends you a letter reserving the right to deny your claim if it lacks merit.
- Negotiation: The back-and-forth process of offer and counteroffer.
- Filing a lawsuit complaint (sometimes): You may need access to the pretrial discovery process if most of the evidence you need is in the defendant’s possession.
- The pretrial discovery process (sometimes): A court-supervised process where each party demands access to evidence that is in possession of the other party (hospital records in a medical malpractice claim, for example).
- Further negotiation: The additional evidence gathered from the pretrial discovery process often changes the dynamics of the negotiation process.
- Drafting a settlement agreement: Your lawyer should either draft or review the settlement agreement.
- Signing the settlement agreement: A settlement agreement signed by both parties is a binding legal contract.
- The insurance company payout: The insurance company will send the gross settlement amount to your lawyer’s client escrow account.
- Deductions: Your lawyer will deduct case expenses and legal fees. They will also pay any medical lien your healthcare provider may hold against your settlement.
- Transfer of your net settlement into your bank account. This is the moment you’ve been waiting for!
The entire process could take several weeks to several months. Some court cases, by contrast, drag on for years.
Dirty Tricks That Insurance Companies Like To Play on Unrepresented Claimants
Insurance adjusters are savvy negotiators with a thousand different tricks up their sleeves. Here are some examples of common tricks they use.
- Pretending to be your friend: Watch insurance company TV ads for examples of this tactic. They will try it in person too.
- Offering to settle your claim quickly, but for an inadequate sum. Desperation could get the best of you if you are having trouble paying your bills.
- Setting an arbitrary deadline for you to respond to their (paltry) settlement offer. The only absolute deadline that binds you is the California statute of limitations deadline (usually two years after the accident).
- Denying your claim for no good reason. This is a dangerous tactic for an insurance company, but some adjusters still try it on claimants who represent themselves.
- Using numerous minor delays to lull you into missing the statute of limitations deadline.
- Asking you to give a recorded statement and then asking you questions designed to get you to “admit” to something damaging, like not being sure exactly how fast you were driving before a car accident.
- Asking you to consent to a general medical records release. This request is usually in preparation for a “fishing expedition” designed to find a pre-existing injury they can use to blame for your injuries.
- Over-interpreting policy language to your disadvantage. They won’t even try this on claimants who hire experienced lawyers representing them.
- Spying on your social network accounts. It’s best to stay off social media while your case is pending. In any case, don’t accept friend requests from strangers.
- Questioning the validity of your medical treatment They would like you to forget that insurance adjusters are not doctors and therefore are not qualified to assess your need for this or that medical treatment.
- Blaming you for the accident. Under California’s “pure comparative negligence” scheme, an insurance company can reduce the value of your claim if they can blame you for a small percentage of fault.
- Offering you a “partial” settlement check that turns out to be final. Under certain circumstances, cashing a “partial” settlement check can be interpreted as acceptance of the amount of the check as a full settlement.
- Nickel and diming you to death. Insurance companies have countless ways of reducing the amount of your claim by just a little bit, time after time. It adds up after a while.
- Minimizing or denying noneconomic damages, especially pain and suffering. Compensation for intangible losses is inherently subjective, and insurance companies skillfully exploit this subjectivity. With an experienced lawyer, pain and suffering damages might amount to more than half the total amount of your claim.
- Demanding a library of information from you so they can process your claim. They are trying to wear you down, and this strategy often works.
- Smooth-talking you into representing yourself instead of hiring a lawyer. This can be your worst mistake of all, at least if your claim is sizable. However, you might not know your claim’s actual value until after you consult with a lawyer.
These tricks add up to only a tiny fraction of the arsenal of tricks you might face in a settlement negotiation.
Insurance Bad Faith
Insurance bad faith is a civil claim you can use to sue an insurance company. If you win, you can collect additional compensation. Examples of insurance bad faith include:
- Excessive processing delays;
- Arbitrary denial of your claim;
- Lying about the coverage limitations of their insurance policy;
- Failing to provide adequate reasoning for why they denied your claim;
- Failing to make a good faith effort to settle your claim when liability is reasonably clear;
- Altering documents as an excuse to deny your claim; and
- Canceling an insurance policy to avoid paying a valid claim.
An insurance company is much less likely to try these tactics on you if they know you are represented by an experienced and capable personal injury lawyer.
Hire a Lawyer To Do the Negotiating For You
Your lawyer can handle insurance negotiations from start to finish with your authorization. What your lawyer cannot do is reveal your secrets or settle your claim without your permission. If the insurance company contacts you, you can tell them to direct all further communication to your lawyer.
If you were injured in an accident in Los Angeles, CA or you lost a loved one and you need legal assistance, please contact us to schedule a free consultation at (877) 300-4535. One of our Los Angeles Personal Injury lawyers at M&Y Personal Injury Lawyers will get in touch with you soon.