How Personal Injury Settlement Negotiation Works

The basics of negotiating your personal injury settlement after an accident or injury.

Updated by , Attorney UC Berkeley School of Law
Updated 2/09/2023

Negotiating a personal injury settlement is a little like bargaining to buy something at an outdoor market where haggling is commonplace. You and the buyer (the insurance adjuster) both know roughly how much an item (your total injury-related losses or "damages") is worth. You know how much you're willing to take for it, and the adjuster knows how much the insurance company is willing to pay. But neither of you knows how much the other side is willing to pay or receive.

So you and the adjuster go through a process of testing each other, a dance of bluff and bluster that goes like this, sometimes in just two or three emails or phone calls:

  • You ask for a high amount in your written demand letter.
  • The insurance adjuster tells you what's wrong with your claim—for example, there are questions about who was at fault, or that your lengthy physical therapy seems excessive.
  • You respond to these arguments.
  • The adjuster makes a low counteroffer to feel out whether you are in a hurry to take any settlement amount.
  • You concede a little bit concerning the adjuster's arguments and make another demand slightly lower than the one in your demand letter.
  • The insurance adjuster increases the company's offer.
  • You either accept that amount or make another counter-demand.

It's usually as simple as that. The main factors determining how an accident settlement comes out are how well you have prepared all stages of your claim— investigation, supporting documents, and demand letter—how much you are willing to settle for, and whether you're in a hurry to settle.

Subjects of Negotiation with an Adjuster

During negotiations, an insurance adjuster has a right to ask questions and dispute facts in an attempt to limit your right to compensation. Questions or disputes might concern:

Coverage. Whether the insurance policy in question actually covers the accident.

Liability. Who was at fault for the accident and your potential share of negligence.

The extent of your injuries. Whether an injury was disabling or had a long-term permanent effect.

The nature and extent of medical treatment. Whether the type and duration of procedures or therapies were medically necessary, and whether you had preexisting problems that contributed to your claimed losses (damages).

You should meet an adjuster's reasonable questions and inquiries with reasonable answers—we'll talk more in the next section about how to handle the process.

Keys to Successful Injury Claim Negotiation

How you approach settlement negotiations can go a long way toward making them run smoothly and quickly, with a minimum of stress or aggravation for you, and with a satisfying settlement as the result. Here are some basic rules about dealing with a claims adjuster. (Check out more tips for negotiating with an insurance company.)

Be Organized

If you have a conversation with the adjuster, make a note of what was said. If either you or the adjuster have said that you will or won't do a certain thing, or that something is to occur by a certain date, write a confirming letter or email and send it to the adjuster. Keep a copy of everything you send. If you've agreed to provide the adjuster with information, do it promptly.

Be Patient

Although you may have already had to wait a considerable amount of time to get all your medical and income records, try not to be in too great a hurry to settle your claim. One of the tactics claims adjusters use is to make a low initial settlement offer and see if you are too impatient to continue negotiating. If you can stand to wait, do not jump at a first offer. Holding off for a little while often increases your settlement. After some time passes, it will be the adjuster who will want to settle your claim as soon as possible, and then you will be able to get the full value of your claim.

Be Persistent

The flip side of being patient is being persistent. Don't let the adjuster sit on your claim. If the adjuster has said that they will do something— make you another offer, or check with a supervisor, for example—get a specific date by which it will be done. Put everything agreed upon in a confirming letter or email, and when that date rolls around, call and politely ask for a response. If you've asked for information or for a new settlement offer, set a reasonable deadline by which you would like the response. Don't pester an adjuster by calling every day, but make sure the adjuster knows you're out there and that you'll be regularly and thoroughly following up on your claim.

Be Calm and Straightforward

Insurance adjusters are overworked and underpaid, and they hear a lot of stories every day. They're also human, which means they don't respond well to abuse or threats. Even if you get an inconsiderate or unsympathetic adjuster, keep your cool and don't get into a personal battle. Your job is simply to show the adjuster that you know how the process works and that your claim is an honest one. Let the adjuster know you believe in the facts you have presented. Avoid high emotions. If you show the adjuster you are making a good-faith claim, you will likely get a good-faith settlement offer in return.

Improper Insurance Company Tactics to Watch Out For

Most adjusters take an ethical approach to their jobs, but it's important to be ready in case you encounter one who tries to bend (or break) the rules. Let's look at some improper negotiating tactics adjusters sometimes use, and discuss how to respond if an adjuster tries one on you.

"Settle With the Other Company"

An adjuster might tell you that you should contact another party's insurance carrier, because that other party was more at fault for the accident than their insured. Politely remind the adjuster that you're entitled to proceed against any responsible party until someone agrees in writing to be the primary insurance carrier.

"You Waited Too Long"

Don't let an adjuster convince you that a delay between your accident and the start of the claims process means you should give up, or that you need to accept a lowball settlement offer. Remember:

  1. There's no time limit for filing a liability claim with a third party's insurance company. You should know the relevant statute of limitations for filing a lawsuit in court, but this is not a deadline for filing a liability claim with the insurance company.
  2. If you plan to file a claim under your own insurance coverage, take the deadlines listed in your policy very seriously. But remember that your insurance company can't deny a claim unless it can show that a delay negatively affected ("prejudiced" in the language of the law) its ability to conduct its claims investigation.

Do not concede to the adjuster that the timing of your claim is unreasonable, or has anything to do with the value of your settlement. Keep in mind, though, that there are good reasons to start the claims process as soon as possible. Learn more about deadlines for making a car insurance claim.

"You Weren't Out of Pocket"

It's none of an insurance adjuster's business whether your lost time from work was covered by sick leave or vacation pay. And, except in California (see below), it's none of the adjuster's business if your medical bills were paid by your health insurance company or some other insurer.

Under the so-called "collateral source rule," it's improper for an adjuster to consider—or even ask about—other sources of payment in determining a reasonable settlement amount. That's because it wouldn't be fair for the person who caused your injuries (or their insurance company) to benefit financially from things you've bought or earned yourself—like insurance coverage, sick pay, or vacation time.

If an adjuster raises this issue, remind them that they're prohibited from asking about other payments that might help you cover your medical bills or lost earnings. Don't be afraid to escalate the issue to the adjuster's superiors if you have to, or to tell them you'll report the matter to your state's insurance department.

There's an important difference here if your claim arises from an accident in California. Insurance companies make deals with health care providers to pay less than the full amount listed on medical bills. In the case Howell vs. Hamilton Meats & Provisions, the California Supreme Court ruled that the lower amount the insurance company actually paid—not the amount listed on the bill—should be used to calculate economic damages in a lawsuit.

If a California adjuster mentions Howell, or wants information about how your health insurance might have covered your medical costs, remind them that the Howell vs. Hamilton rule only applies in lawsuits, not during the claims process. Even in California, you can tell the adjuster that your actual medical bills should be the starting point for calculating a fair settlement.

More Information on Negotiating Your Injury Claim

You can learn more about how to negotiate with insurance companies after an accident, the best approach to settling a car accident claim, and what to do when personal injury settlement talks fail.

For an in-depth guide to navigating each step of an injury case, get How to Win Your Personal Injury Claim, by Joseph L. Matthews (Nolo).

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