Why Do Insurance Companies Make Low Settlement Offers

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The short answer is that insurance companies are for-profit businesses. Their primary goal isn’t to fairly compensate injured parties, but to protect their bottom line. They employ a variety of strategies to minimize payouts, and a low initial offer is a cornerstone of that approach. They’re banking on the fact that many people don’t understand their rights, are overwhelmed by the process, or simply lack the resources to fight back.

Furthermore, insurance adjusters are trained to devalue claims. They will meticulously review your medical records, looking for any pre-existing conditions or gaps in treatment to argue that your injuries aren’t as severe as they seem. They’ll question the necessity of certain procedures, and often obtain their own independent medical evaluations (IMEs) – which, as a former defense attorney, I can assure you are rarely in your favor. Their goal is to portray your injuries as less serious, thereby reducing the overall settlement value.

As a personal injury attorney with over 13 years of experience practicing in San Diego, I’ve seen this playbook firsthand. I was initially trained by a former insurance defense attorney, giving me intimate knowledge of how these companies evaluate, devalue, and deny claims. Understanding their tactics is half the battle. They systematically exploit the common missteps people make post-accident, and it’s critical to be prepared.

What are some common tactics insurance companies use to lower settlement offers?

Insurance companies utilize a range of strategies to reduce settlement amounts, often capitalizing on a claimant’s unfamiliarity with the legal process. A frequent tactic is to request a “recorded statement” shortly after the accident. While seemingly harmless, these statements are often carefully worded to elicit admissions that can be used against you later. The adjuster might ask leading questions designed to downplay the severity of the accident or shift blame. It is almost always best to politely decline providing a recorded statement without consulting with an attorney.

Another common method involves scrutinizing medical bills and records. They may argue that certain treatments were unnecessary, or that your injuries are unrelated to the accident. They’ll also attempt to find pre-existing conditions to diminish the value of your claim. Insurance adjusters will also aggressively seek your medical authorizations and can use that information to challenge your treatment.

Finally, they often delay the claims process, hoping you’ll become desperate and accept a lower offer out of financial necessity. They might repeatedly request additional information, or simply fail to respond to your inquiries in a timely manner. These stalling tactics can be incredibly frustrating, but it’s important to remain patient and persistent, and to document all communication.

What should I do if I receive a low settlement offer?

Receiving a low settlement offer is not the end of the road. In fact, it’s often the starting point of a more serious negotiation. The first step is to not accept the offer. Do not sign anything or provide any further information without consulting with an attorney. The insurance company is hoping you’ll settle quickly and cheaply, and agreeing to their initial offer is almost always a mistake.

Next, gather all relevant documentation related to your accident, including the police report, medical records, bills, and any evidence of lost income. This will give you a solid foundation to build your case. It is critical to establish a clear connection between the accident and your injuries.

Then, I strongly advise seeking legal representation. An experienced attorney can evaluate your claim, negotiate with the insurance company on your behalf, and protect your rights throughout the process. We understand how these companies operate, and can level the playing field.

How long do I have to file a lawsuit if I can’t reach a fair settlement with the insurance company?

In California, you have a limited amount of time to file a lawsuit for personal injury. According to CCP § 335.1, California law provides a two-year window from the date of the accident to file a lawsuit for personal injury. If the claim is against a government entity (like a San Diego City vehicle), you MUST file a formal administrative claim within 6 months (180 days) under the Government Tort Claims Act.

This statute of limitations is strictly enforced, meaning that if you miss the deadline, you will likely lose your right to recover damages. It’s crucial to be aware of these timelines and to consult with an attorney as soon as possible to ensure your claim is filed on time. Even if you are in the process of negotiating with the insurance company, the statute of limitations continues to run.

Missing the deadline can be catastrophic. You could be left to bear the full financial burden of your injuries, even if the other driver was clearly at fault. An attorney can accurately calculate the statute of limitations based on the specific circumstances of your case.

What if the insurance company claims I was partially at fault for the accident?

If the insurance company alleges you were partially at fault, it can significantly impact your settlement. California follows a comparative negligence rule, which means that your recovery may be reduced based on your percentage of fault. For example, if you were 20% at fault for the accident, your settlement could be reduced by 20%.

The insurance company will likely present evidence to support their claim of negligence, such as witness statements, police reports, or even your own recorded statement. It’s crucial to carefully review this evidence with an attorney to determine its validity. An experienced attorney can also gather evidence to counter their arguments and minimize your percentage of fault.

Successfully challenging the insurance company’s claim of negligence can make a significant difference in the amount of your settlement. An attorney will analyze all available evidence, and build a strong case to protect your rights.

What are “independent medical evaluations” and should I submit to one?

Insurance companies often request an Independent Medical Evaluation (IME) to assess your injuries. However, the term “independent” can be misleading. These evaluations are typically performed by doctors hired and paid by the insurance company. As a former defense attorney, I can tell you these doctors are often biased towards the insurer and may downplay the severity of your injuries.

You are not legally obligated to submit to an IME, but refusing to do so can sometimes be used against you. Before agreeing to an IME, it’s crucial to consult with an attorney. We can advise you on the potential risks and benefits, and even attend the evaluation with you to ensure a fair and accurate assessment. We can also advise you of your rights and responsibilities.

Preparing for an IME involves gathering your medical records, documenting your symptoms, and practicing your responses to common questions. An attorney can help you prepare for this evaluation, and ensure your rights are protected throughout the process.