If you're making a personal injury claim after any kind of accident, at some point it's probably going to be time to negotiate with the other side's insurance company. (Note: Even if you've taken the additional step of filing a personal injury lawsuit, keep in mind that settlement negotiations will be ongoing, and your case could reach an out-of-court resolution at any time.)
If you or your personal injury lawyer have presented the insurance company with an organized demand letter and proper supporting documents, the negotiation process might consist of nothing more than a few phone calls with an insurance claims adjuster. But the big picture typically looks like this: Whether through written correspondence or more informally, you (or your lawyer) and the insurance adjuster will each make your points about the strengths and weaknesses of your claim. Then the adjuster will make an offer to settle your claim for an amount lower than what you requested in your demand letter. You will counter with a figure higher than the adjuster's offer but lower than your original figure. Typically, after two or three phone calls you will agree on a settlement figure somewhere in between.
Let's look at how to best position your claim for success.
As part of putting together your demand letter, you should have determined what you believe your claim is worth. (Learn how insurers value a personal injury claim.) Within that range, and before you speak to an adjuster about your demand, decide on a minimum settlement figure that you will accept. This figure is for your own information—so you can keep your bottom line in mind when under the pressures of negotiating—but it is not something you should reveal to the adjuster.
You do not, however, have to cling to the figure you set for yourself. If an adjuster points out some facts you had not considered but that clearly make your claim weaker, you may have to lower your figure a bit. And, if the adjuster starts with an offer at or near your minimum, you may want to revise your figure upward.
If you receive a "reservation of rights" letter from the insurance company, don't be alarmed or intimidated. This letter informs you that the company is investigating your claim, but that it is reserving its right not to pay you anything if it turns out that the accident is not covered under the policy. The letter simply protects the insurance company by preventing you from claiming that the company's insurance policy covers your accident just because it began settlement negotiations with you.
When the insurance adjuster makes you a first offer, it may be so low that it is just a tactic to see if you know what you are doing (see below). Or, it may be a reasonable offer, just too low. If the offer is reasonable, you can immediately make a counteroffer that is a little bit lower than your demand letter amount. This shows the adjuster that you, too, are being reasonable and are willing to compromise. A little more bargaining should quickly get you to a final settlement amount you both think is fair.
If an adjuster makes a first offer so low that it is obviously just a negotiating tactic to see if you know what your claim is really worth, do not immediately lower the amount you put in your demand letter. Instead, ask the adjuster to give you specific reasons why the offer is so low, and make notes of what he or she tells you. Then write a brief letter responding to each of the factors the adjuster has mentioned. (See a sample reply to an unreasonably low settlement offer.)
Depending on the strength of any of the adjuster's reasons, you can lower your demand slightly, but, before lowering the amount very far, wait to see if the adjuster will budge after receiving your reply.
The next time you speak with the adjuster, begin by asking for a response to your reply letter. The adjuster should now make you a reasonable offer upon which you will be able to bargain and arrive at a fair settlement figure. Remember, most personal injury cases settle at some point, it's just a question of when.
In these negotiations, don't bother to go over all the facts again. Just emphasize the strongest points in your favor—for example, that the insured was completely at fault for the accident, that you had a very painful injury, that your medical costs were reasonable, and/or that you had long-term or permanent physical effects.
However, it may help to mention any emotional points supporting your claim. If, for example, you have sent the adjuster a particularly strong photo of a smashed car or a severe-looking injury, refer to it. If your injury interfered with your ability to care for your child, mention that your child suffered as a result. Even though there is no way to put a dollar value on emotional distress and "pain and suffering", these components of an injured person's losses ("damages") can go a long way toward getting an insurance company to come to the table with a fair settlement offer.
When you and the insurance adjuster finally reach agreement, immediately confirm the terms in a letter to the adjuster. This letter can be short and sweet, stating the amount for which you settled, what injuries or damages the settlement covers, and the date by which you expect to receive settlement documents from the insurance company.
For more details on negotiating an insurance claim, including sample letters to insurance companies, suggestions for handling negotiations, and strategies for dealing with an insurance company that refuses to make a fair offer, see How to Win Your Personal Injury Claim, by Joseph L. Matthews (Nolo).