Imagine another car hits yours at a red light. They break your arm, and your head hurts. After going to the doctor, you receive a call from the liable driver’s insurance company, offering you $5,000 to settle the case.
What should you do?
First, understand that most auto accidents caused by another driver end with a settlement. A personal injury settlement is a sum the injured party accepts to end the case and not proceed to a lawsuit.
The at-fault party’s insurance company typically offers an initial settlement that is less than you deserve. Below, learn all about settlement offers and whether you should accept the first offer.
Do you have questions or think you have a case? Contact a car accident attorney in your community today for more information and a free consultation.
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Table of Contents
What Is the First Auto Accident Settlement Offer?
Car accidents happen every day in the US, and approximately 5.2 million people suffer injuries in auto accidents annually. The costs of an auto accident vary wildly, depending on the severity of the crash, injuries, and other factors.
Most injury victims must deal with the liable driver’s insurance company to receive compensation for losses.
The first settlement offer is the initial amount the liable insurance company offers to resolve the car accident claim. It is based on the company’s assessment of the claim’s value.
The first offer made by the insurance company after the crash is merely the opening pitch by the insurance adjuster to close the case.
The proposal to settle the accident claim usually covers the following costs related to the crash:
- Car repairs: These are the costs of repairing or replacing your vehicle. Fixing today’s complex, costly cars, trucks, and SUVs is more expensive than ever. Your vehicle can be totaled - the cost of repairs exceeds its market value - for what you think is repairable damage. CNBC reports that vehicle repair costs jumped 10 percent in a recent year alone.
- Medical costs: Medical expenses can include current and future costs for treating your injuries.
- Lost earnings: You may be entitled to lost earnings from attending doctor’s appointments, hospital stays, etc.
The intentions behind the first settlement offer are clear: to pay for your losses. However, the initial offer can be better and more generous than it appears.
What You Should Know About The First Settlement Offer
Many car accident victims want to know if they should turn down their attorney’s settlement offer. However, be aware that the car accident settlement offer isn’t coming from your auto accident attorney.
The driver who injured you in most states is usually responsible for your medical bills, lost earnings, vehicle damages, etc. Assuming the liable driver has auto insurance, the first settlement offer originated from their insurance provider.
Your auto accident attorney is simply conveying the offer to you. Occasionally, a settlement offer could come from your insurance provider if the liable driver didn’t have insurance.
The most important things to remember about the first auto accident settlement offer are:
- The offer will almost never equal what you deserve. The first offer is usually the minimum amount the at-fault insurance company will pay for your losses.
- The offer often comes far too early for you to understand what your full losses are. Suppose you had a head injury and broken arm from a car accident last week. You probably don’t fully know the extent of the head injury and how much it will cost and affect your ability to earn a living and enjoy life. How can you take the first settlement offer for severe injuries when you don’t know your full damages? But the insurance company wants you to do just that! Fortunately, a skilled auto accident attorney won’t let the insurance company take advantage of you.
- The offer is only the first, and it is rarely the last. Most auto accident claims are resolved with a settlement and never go to trial. The insurance company will likely offer more settlements when you turn down the first one.
Remember that insurance companies make more profits by minimizing payouts. The less they pay, the more their shareholders make. They will use various tactics to ensure they pay the minimum for as many claims as possible.
Insurance adjusters often undervalue injuries and may argue that your injuries aren’t as bad as you claim. They know if you have a severe injury and financial stress, you’re more likely to take a low offer.
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Why Should You Reject The First Settlement Offer?
Here are the top reasons to reject the first auto accident settlement offer:
The First Offer Is Never The Last
Every auto accident claim with injuries will involve an initial settlement offer from the liable insurance provider. It is rarely, if ever, the last offer. The first offer represents the bare minimum the insurance company is willing to offer you. The adjuster can increase the offer by a certain amount when you reject the first offer. You only have to reject it and ask for more.
Your Claim Will Take Time To Assess Properly
Getting a full account of your accident injuries and damages doesn’t occur overnight. You won’t fully understand what a severe auto accident injury will cost you in the first day or two. It can take weeks, even months, to fully grasp what your claim is worth.
For example, suppose you broke a vertebra in your middle back in a car accident. It didn’t damage the spinal cord, but you have nerve damage to your arms and legs and regular, radiating pain.
It may require months of medical care and rehabilitation to understand your degree of recovery. You also may require one or more surgeries to stabilize the injury and eliminate scar tissue.
Such a severe injury can cost hundreds of thousands in medical expenses, as well as thousands in lost earnings. You can even have a permanent injury that reduces your ability to earn income. These losses must be fully understood before settling a case.
One of the hugest benefits of hiring a car accident attorney is they will encourage you to wait until your injuries are fully healed before considering a settlement. A low settlement offer may tempt you because you lose income and have bills.
However, your lawyer may advise you to wait to negotiate until you attain maximum medical improvement (MMI). Skilled personal injury attorneys know not to negotiate a settlement until they know their client’s full damages.
A Settlement Agreement Is Final
A settlement agreement for car accident injuries includes a liability release. This means the insurance company offering the settlement is liable for no further payments outside of the settlement. You can’t change your mind a week after signing the settlement papers. The case is over.
Here’s a common scenario: A car accident victim, desperate for money, agrees to settle a severe auto accident case for $5,000 for inconvenience and full vehicle repairs. However, two weeks after settling, the victim notices regular headaches that don’t go away.
It turns out that they have a concussion and nerve damage from the crash. They didn’t follow up with the doctor. Now, they have settled and have medical bills and cannot work.
Always review any settlement offer with a car accident lawyer before deciding. A doctor should also check you over after a minor car accident.
Total Auto Accident Claim Costs May Be Higher Than Expected
Many initial settlement offers look enticing because accident victims don’t completely understand their claims’ value. The first offer will often cover current medical bills, lost earnings, and vehicle damages. However, the offer may not cover everything that costs in the accident.
A seasoned personal injury attorney can present evidence to the insurance company showing the full extent of your losses, such as:
- Car repairs: Recent inflation has skyrocketed car repair bills. Your vehicle can cost much more to repair than you thought.
- Replacement services for household chores, such as cooking, shopping, yard work, cleaning, and taking children to school and daily activities.
- Costs of future medical treatments at home.
- Lost future earnings because of a long-term disability.
- Mental health costs for anxiety or depression related to the auto accident.
- Loss of enjoyment of life, such as being unable to exercise or play with your children.
Rest assured that a seasoned auto accident attorney can fully account for your losses after a collision.
Auto Insurance Companies Want Control
When a car insurance adjuster initially contacts you for a settlement offer, do not relax. The adjuster isn’t calling out of the kindness of their heart. They want to control your future actions by getting information from you so you won’t call an auto accident lawyer. They also want to control your settlement and reduce what they pay you.
The best insurance adjusters know how to act empathetic and thoughtful so they can retain influence over you during the process. Remember that you are in control because their client injured you in an auto accident. You can reject any settlement and hire a car accident lawyer to negotiate for you.
You Haven’t Contacted An Auto Accident Lawyer
You should only accept a settlement offer from an auto insurance company with an attorney reviewing it first. The insurance company wants you to sign the settlement papers before you can call a personal injury attorney.
You should call a car accident attorney for a free consultation as soon as possible after the crash. If an adjuster calls and offers a settlement, ask for it in writing and call a car accident attorney before accepting.
What If You Reject A Settlement Offer?
If you reject a settlement offer, the insurance company will probably continue negotiating or saying they have made their final offer. In most settlement cases, you must refuse the initial offer to ensure a fair outcome.
The complexity and length of settlement negotiations depend on how seriously the crash injured you, whether the fault is disputed, the amount of insurance coverage, and much more. Unless the insurance company sees the accident claim without merit, the insurance adjuster probably expects you to reject the initial offer.
A car accident lawyer should have an estimate of your injury claim. They’ll tell you if an offer is fair or not. It’s up to you whether to take a settlement, continue negotiations, or file a lawsuit. However, you should listen carefully to your auto accident attorney’s advice because they do this for a living.
Never Settle Too Soon
If you remember anything, make it this: Only settle a personal injury claim after fully understanding your damages. The first settlement offer may come while you are still being treated for your injuries. The insurance adjuster hopes you will take a low settlement and end the case before you fully understand your injuries.
When you agree to a settlement, the insurance company will send you a release form that gives up your right to take additional legal action related to the case. Ensure you receive a fair settlement offer that completely compensates you for all your losses before signing anything. A car accident attorney should review any settlement offer you receive to ensure it fairly pays you.
Speak to a Car Accident Attorney Today
Were you recently injured in a car accident by someone else? You may have received a low settlement offer but don’t have to accept it. A car accident attorney can review your case immediately and negotiate the best offer for your losses.
Speak to an auto accident attorney in your area today for more information. They won’t charge legal fees unless they win your case.
Remember that hiring a personal injury attorney usually results in a larger award. A typical auto accident settlement award for someone who uses an attorney greatly exceeds what people recover when negotiating it themselves.