Why is the First Settlement Offer Often So Low?

signing documents at tableThe insurance company may sometimes surprise car crash victims by quickly offering a settlement. The insurance adjuster may say it is because he or she wants to resolve the claim as quickly as possible and make sure you receive compensation.

Unfortunately, some crash victims accept the offer and are satisfied that they at least got something. The problem comes later when the settlement runs out and they still have medical bills and other damages they cannot pay for themselves.

These settlements are bound to run out quickly because they are usually too low. Below, we discuss some of the main reasons why these initial settlement offers are so low. We also explain the danger of accepting these lowball offers and why you should talk to an attorney about your situation.

For decades, TSR Injury Law has been helping crash victims recover compensation. We are committed to aggressively pursuing maximum compensation.

Reasons Initial Settlement Offers are Low

Insurance companies have many reasons to make low offers to victims, such as the following:

Protecting Their Bottom Line

Car insurance companies are businesses, and they need to make money to stay in business. They collect premium payments and invest those payments to make money.  By paying out as little as possible, they keep the difference and make a billions of dollars per year in profits.

Another part of their strategy is paying as little as possible for claims so they can keep their money invested for a longer time maximizing profits.

Victims Often Accept Lowball Offers

Unfortunately, some victims accept these low offers. Insurance companies know there is a chance of this happening, so why not try? If the injured person accepts the low offer, the insurance company has even higher profits. If no one ever accepted these offers, there would be no reason for the insurance company to make them.

The problem is most victims do not know the potential value of their claims. They may underestimate what their claims are worth, they may believe their injuries are not that serious or they may not understand that even a “policy Limit” offer might not be true. Insurers also know victims may be desperate for compensation, so they hope you will just take what is offered.

Insurers know some victims will think it is too much of a hassle to negotiate or hire a Bloomington auto accident attorney to help them.

Insurers Do Not Think You Will Hire an Attorney

Many crash victims decide not to work with an attorney. Insurance companies know this, and they often assume victims will not hire an attorney. If a victim does not hire an attorney, they are more likely to accept a lowball settlement offer. Some victims may not even make a counteroffer after the first offer is made by the insurance company.

Insurance companies do not want victims to hire attorneys, particularly attorneys who regularly take cases to court. When a car crash claim goes to court, a jury may award significantly more than the insurance company would pay out after negotiating with a lawyer outside of court.

Without a lawyer, the insurance company does not feel pressure to make a better offer that more accurately reflects the value of your damages. There is no fear or danger to the insurance company because no jury will hold them accountable. The fear is often the best motivator to settling cases fairly and without an attorney, that concern is negated.

The Insurance Company Questions Your Credibility or Strength of Your Case

When the insurance company thinks the victim is partially at fault or that he or she does not have a strong case, they may be more likely to make a lowball offer. The insurance company does not feel much pressure if they think you have a weak case.

There are various reasons the insurance company may question the strength of your case, such as:

  • Statements you made that seem to indicate you are at fault or your injuries are not that serious
  • Social media posts you made undermine your case
  • You have missed doctor’s appointments without rescheduling them
  • Your account of the crash differs from the accounts of others involved or witnesses
  • You have preexisting injuries

Insurers Do Not Have All the Facts

Sometimes there is evidence that even the victim does not know about, much less the insurance company. The insurance company may still be investigating the crash. Additional evidence may help to validate the value of your damages and convince the insurance company to make a better offer.

Examples of missing evidence may include:

  • Camera footage
  • Witness statements
  • Errors on police reports

Your Claim May Have Significant Value

When a crash causes significant damages, the value of the claim can be quite high. That means it would cost the insurance company quite a lot of money. They have an incentive to try to settle it for as little as possible.

Even though the initial offer for these claims is far below the value of the victim’s damages, insurance companies are focused on their bottom line. If your claim is only worth a few thousand dollars, the insurance company may be more likely to settle for the full value of your damages. However, when a claim is worth tens of thousands or more, insurance companies would rather try to lowball the victim and hope he or she accepts the offer.

The Offer Was Created by Software

Sometimes settlement offers are created by a computer. These computers use algorithms to evaluate data collected by the insurance company to determine the value of a claim.

The problem with these offers is they do not consider specific differences between your situation and other claims. Computers cannot consider unique factors about your injury and other aspects of your case.  Bad results for the insurance company are often not entered as data, so future offers never reflect the true value of a claim.

Software used by these computers is designed to serve the interests of the insurance company.

Call TSR Injury Law Today to Discuss Legal Options

You have the option of hiring an attorney to represent your best interests at no upfront cost. At TSR Injury Law, we represent crash victims on contingency, which means we do not get paid unless you get paid.

Give us a call today to learn more about our services and the benefits of working with an attorney. We are here to help.

TSR Injury Law. Local. Licensed. Attorneys. (612) TSR-TIME