Here are Some Key Points to Remember When You Negotiate a Settlement After an Auto Accident

This article has been reviewed by licensed insurance industry expert Moshe Fishman on 2/23/2024.

Being involved in a car accident can be a tense, traumatic experience that can cause serious injuries and long-lasting consequences. Many drivers are disappointed to learn that after years of paying for auto insurance, the car accident settlement offered by the insurance company is much lower than expected. Sometimes the initial offer is not even enough to cover the cost of the repairs or replacement of your vehicle. At this point, the impulse to hire an attorney may be strong.

Car crashes and accidents are stressful enough, and unfortunately for many claim holders, the claims negotiation process only adds to the anxiety in the aftermath of an accident. If you’ve received what seems like an unfair settlement from the insurance company, don’t despair. The initial settlement offer is often the first step in what can be a lengthy negotiation process. This article will guide you through the steps of negotiating a fair settlement with an insurance company after an auto accident. 

What this article covers:

• Steps you should take to ensure that you receive a fair settlement from your insurer following a car accident.
• What to expect regarding a settlement from your insurer and why you may receive a low offer.
• The negotiation process and how to begin to prepare your counter-negotiation strategies.
• How to determine your vehicle’s value after an auto collision.

What you should know: 

• It’s not unusual for an insurance company to offer a low settlement.
• A quick settlement offer should be scrutinized to be sure the settlement is fair before accepting it.
• It’s important to get your agreement in writing outlining what both parties agreed to, the amount, and what is covered.

Why did I receive a low settlement offer?

When an insurer offers a low settlement amount, it’s all part of their settlement process. So, it is important to understand their reasoning. Although it’s in the best interest of the insurance company to pay the least amount possible, these factors could be influencing what may seem like a lowball offer:

• The insurance adjuster may not have all the necessary documents to support your claim.
• There wasn’t a lot of damage to the vehicles. 
• There were large gaps in your medical treatment and pre-existing injuries.
• The insurance adjuster isn’t taking into consideration other factors such as lost wages and pain and suffering.

Some insurance companies will quickly send a settlement offer in the hope that you’ll accept it without questioning the amount. However, some insurance companies will take what seems like forever to offer a settlement. At that point, settlement negotiations may begin.

What should I do after receiving a low settlement offer?

The first thing you’ll need to determine is if you wish to proceed on your own or with the help of an attorney. If your claim is fairly straightforward and if there’s no question about which driver was at fault, you should be able to successfully negotiate your claim on your own. If the following apply, you may wish to hire a car accident attorney to negotiate with the insurance company for the best possible settlement:

• Who’s at fault is in question
• There are extensive damages to the vehicles
• You’ll require long-term medical care
• You’re unable to work
• You’re unable to participate in activities you enjoyed before the accident

Determine the value of your vehicle

If you decide to try and negotiate on your own, the first thing you should do is determine the actual value of your vehicle. Knowing the true value of your car is essential to the negotiation process.

• Use an online car value calculator to obtain the pre-market value of your vehicle.
• Check the value on websites such as Kelley Blue Book, Edmunds, and the National Auto Dealers Association (NADA).
• Get damage estimates from at least two repair shops.
• Obtain diminished value appraisals.

A car’s diminished value is the difference between the value before the accident and the value after an accident. A car that’s been involved in an accident automatically has a lower value, even after all repairs have been completed. A diminished value claim provides compensation on the difference between the car’s value before and after the accident.

Begin the negotiation process

You should have a settlement amount in mind when you begin negotiating with the insurance company’s claims adjuster. You should also determine the minimum amount that you’ll accept. Because the adjuster is likely to offer less than your desired settlement amount, you’ll probably want to set this amount higher than what you actually need. 

Your high and low numbers should reflect the estimates you’ve obtained from your internet research and the estimates from the repair shops. They should also take into account your medical bills, loss of wages, and pain and suffering. Be prepared to show how you came up with your desired settlement. The more documentation you have, the stronger your case will be.

The next step is to respond to the settlement offer. Ask the adjuster to provide specific reasons as to why the payout was low. Then, write a detailed letter responding to each of their reasons.

Depending on the strength of the adjuster's reasons, you can lower your initial demand accordingly. If the adjuster sees that you are indeed open to the negotiation process by offering to lower your settlement amount, they’ll usually follow by raising theirs.

Remember, the insurance adjuster is a person, just like you. Although you may be frustrated by and angry about the negotiation process, it’s important to keep your tone respectful and neutral. However, be sure to include a personal reflection of the hardships you’ve endured and explain the specifics of your situation.

Include details of how you and your family members’ lives were impacted and continue to be affected by the accident. Doing so will hopefully make the claim’s adjuster more sympathetic to your plight and see that the amount you’re asking for is reasonable. 

Turning down an offer is entirely within your rights. So long as you’re not asking for an exorbitant or unreasonable amount, don’t back down when attempting to negotiate a fair settlement for your damages, and pain and suffering. Remember, it’s in the insurance company’s best interest to negotiate with you and settle the claim without litigation. Most auto accident insurance claims are settled eventually without attorneys; it’s just a matter of when. Of course, having access to a car accident lawyer in your back pocket is a good idea.

Get the settlement agreement in writing

Once you’ve reached a settlement agreement with the insurance company, you’ll want to obtain the terms of the agreement in writing. This agreement protects both parties and documents that everyone has agreed on the settlement amount and what it covers.

You can get the settlement agreement in writing by sending an email or letter to the insurance company, stating the agreed-upon settlement amount and what it covers. You can also include the date by which you expect to receive the settlement and accompanying documents from the car insurance company.