Why Insurance Companies Propose a Lowball Insurance Settlement Offer

If you’ve ever filed a personal injury claim or another similar claim, you probably know that insurance adjusters often make lowball settlement offers, even in response to their own policyholders. Insurance adjusters usually propose a lowball offer because their companies don’t want to pay more money than they have to, and they think they can get away with it if the claimants don’t have experience negotiating these types of claims.

After an accident that caused injuries, lost wages, and other damages, you will likely experience great stress and have a lot on your mind. Your focus should be on recovering from your accident, not how you will pay for the medical and other expenses you are now facing. In such situations, you may struggle to bring an insurance claim to pursue the fair compensation you need and deserve.

If you believe the insurance company representatives have lowballed you, talk to an experienced personal injury attorney who can fight for a fair settlement offer on your behalf. A tenacious legal representative can challenge lowball insurance company offers and submit a demand letter and accident claim to help you receive the compensation you need to cover the full cost of your injuries. A dedicated Orlando personal injury lawyer can reject a low insurance settlement offer and guide you through the insurance settlement negotiation process.

How Insurance Companies Make Money

Insurance companies make money in two primary ways:

1. Underwriting
2. Investments

1. Underwriting

Underwriting involves the process of accepting premiums and paying out claims. Insurance companies earn most of their income from the premiums that policyholders pay for insurance coverage. Each month, policyholders pay their premiums, and insurance companies collect this money, regardless of whether their clients use the insurance coverage to help them with a claim.

Of course, sometimes, policyholders do need to file insurance claims with their insurance company. For example, if you file a claim after a car accident, your car insurance company must pay you the amount specified in your policy to help cover any damages or other losses you’ve incurred from the car accident.

Insurance companies make a profit from underwriting when the amount they receive in premiums exceeds the amount they pay out in claims. For this reason, many insurance companies will do their utmost to save money by paying as little as possible in insurance settlements. That way, the insurance company can make a significant profit from the premiums.

2. Investments

Like many other companies, large insurance companies invest in the stock market, bonds, or properties. Investment income often works closely with underwriting income. For example, insurance companies may have to raise premiums if they lose investment money. They can lower premiums to gain more customers if they earn investment money.

Insurance companies can make money in other ways, but underwriting and investments constitute the main tactics they use year in and year out. Because insurance companies’ income greatly depends on how much they pay out in claims, insurance adjusters usually start with a lowball offer.

Insurers won’t offer the true value of your claim without a detailed review of your serious injuries, extensive medical treatment, or future medical care needed after an accident. An experienced personal injury attorney will present the evidence needed to support your insurance claim and provide the legal representation you deserve.

Why Your Insurance Adjuster Sent a Lowball Settlement Offer

Several reasons exist as to why insurance companies make lowball offers. Obviously, maintaining the company’s profit margin has a lot to do with how they handle claims. Consider these other reasons why insurance companies may make lowball offers:

1. Insurance Adjusters Use Artificial Intelligence To Calculate an Unfair Settlement Offer

Some insurance companies may set up software that calculates settlement amounts based on internal algorithms. This can save a lot of time for insurance agents who receive multiple claims every day. However, using artificial intelligence can lead to unfair insurance company offers.

In most cases, companies will create an algorithm to benefit themselves first. As a result, whatever potential settlement amount the computer spits out will amount to as low a figure as possible to ensure that your claim doesn’t cost the insurance company too much.

Most computer-generated settlement amounts will depend on similar settlement negotiations that the insurance company has made in the past. Unfortunately, this simple comparison can’t take into account the unique circumstances of your case. You suffered unique injuries and damages and deserve a unique settlement covering all of your out-of-pocket costs and other losses.

2. They Propose a Lowball Settlement Offer Because Many People Accept Them

If you’ve suffered injuries in an accident, you likely understand how desperate many people feel when filing insurance claims. You have bills piling up all around you, and you need the settlement money to pay these bills. If you don’t accept the lowball settlement offer from one of the big insurance companies soon, you’ll be in deeper trouble with more debt.

Unfortunately, many injury victims succumb to the pressure and accept the insurance companies’ lowball offers out of desperation. These individuals likely don’t realize that taking such a lowball offer could leave them without necessary funds when more bills turn up in the future. They don’t realize that the insurance company has intentionally attempted to deny their legal rights and cheat them of the fair value of their claim.

If you’ve suffered injuries in an accident caused by someone else’s negligence, don’t give up your legal rights. Contact an experienced attorney at a respected personal injury law firm before accepting any insurance company offers. Your dedicated personal injury attorney can explain how much you should request in your insurance claim and help you stand firm against lowball settlements. They will also negotiate with the insurance adjuster on your behalf so you can focus on receiving the treatment you need without worrying about how you will pay for it.

3. The Insurance Company is Trying To Avoid a Lawsuit By Offering A Quick Settlement

Once you accept a settlement offer, you can no longer sue an insurance company for damages or losses resulting from your accident. If you accept a low offer, you can’t request any more money from the insurance company.

In many cases, this can lead to problems. A lot of accidents lead to serious injuries that worsen over time. If you end up suffering from long-term injuries, infections, or other serious complications, you likely won’t qualify for additional compensation from the insurance company to pay for those extra costs. Instead, you’ll have to pay those future costs out of your own pocket.

Insurance companies want you to accept a settlement offer quickly because they don’t want to litigate cases in court. There is no guarantee the insurance company will win in court, and the cost of bringing a case to trial often far outweighs the claim’s value. As a result, insurance companies may make you a quick but low offer to resolve your claim as quickly as possible and avoid a long and expensive court battle.

4. The Insurance Adjuster May Have Missed Some Of The Facts

In some situations, an insurance adjuster assigned to work on your claim may miss some important facts or evidence. While not necessarily the adjuster’s fault, this could lead to a very low settlement offer because the adjuster doesn’t realize that you need more compensation for a variety of different damages.

If you don’t present all the evidence you need, you may struggle to prove that your situation warrants a higher offer. In addition, some accident victims mistakenly say something incriminating (such as admitting fault) while trying to negotiate a claim. If you do say something incriminating, your insurance company will reduce your offer because it will argue that you bear more fault than you actually do.

Work with a personal injury lawyer to ensure all the relevant facts are presented in your claim or lawsuit. Don’t speak with any insurance companies, not even your own, without consulting with legal counsel first. Your injury attorney can gather important evidence and build a strong case before the insurance company tries to settle your claim with a lowball offer.

5. Insurance Adjusters Hope You Won’t Hire A Lawyer

Negotiating with insurance companies without a lawyer’s protection can be stressful. Many accident victims try to handle negotiations on their own, believing the settlement will reflect their best interests. The opposite is actually true. If you don’t have an experienced attorney in your corner, the insurance company will likely make a much lower offer than they otherwise might. Plus, since a personal injury lawyer is paid a percentage of the settlement you receive, they are motivated to resolve your claim for the most money possible.

Personal injury lawyers have negotiated with insurance companies for years. These lawyers know when to accept an offer and when to continue negotiating. Typical crash victims just don’t have the experience to know what their claim is worth and how much they truly need to recover.

Insurance companies will usually make a low offer when a victim tries to negotiate alone, expecting that you will take the money, so you can start paying debts as soon as possible. When you hire a lawyer, the insurance company usually knows that it has to make a better offer, or your lawyer will advise you to reject the settlement.

How To Avoid A Lowball Insurance Settlement Offer From the Insurance Company

Before you speak with an insurance company about your pending claim, schedule a free consultation with a respected injury lawyer. If you are already struggling to negotiate a settlement with an insurance company, you don’t need to keep fighting alone. Hire a personal injury lawyer to advocate for you.

Your lawyer will try to negotiate a higher settlement by taking these steps:

1. Gathering important evidence. You may not know about or have all the evidence you need for your claim. Fortunately, a personal injury lawyer can help with this. Your lawyer will gather medical bills and records, police reports, witness statements, documentation of lost income, and any photos of the accident scene on your behalf. Your lawyer can also talk to experts to create an evaluation of how much your injuries might cost you, both now and in the future.
2. Preparing and filing an insurance claim. After gathering the necessary initial evidence, your lawyer will prepare a demand letter and file a claim to support payment for the injuries you suffered in the accident. Your attorney will explain why you qualify for compensation and the expected cost of your injuries.
3. Engaging in discovery and negotiations. After you’ve filed your claim, the insurance company must respond with either a rejection of your claim or a settlement offer. Once you have received an initial settlement offer, your lawyer will help you decide whether or not it includes the compensation you need and the full value of your injuries and other losses. Your lawyer will engage in discovery (gathering more evidence) and negotiate with the insurance company to achieve the best possible settlement. Your lawyer won’t stop until you’ve secured a fair settlement or filed a lawsuit.
4. Filing a lawsuit to take the case to court. If negotiations are unsuccessful and you cannot reach a fair settlement, your lawyer should take the case to court. A seasoned attorney will prepare a strong claim and fight for your right to compensation from a judge and jury.
5. Helping collect your award or verdict. After reaching a settlement or receiving a court verdict, you will know how much the insurance company owes you. Your personal injury law firm will help you collect the full amount of your recovery and finalize the legal documentation related to your case.

You don’t have to face bad faith insurance practices alone. After a serious accident, you will have to deal with your personal injuries, mounting bills, and other losses. Adding more stress by trying to fight with an insurance company won’t help your recovery. Let a knowledgeable and compassionate injury lawyer take this burden from you.

Retaining a personal injury lawyer will get you the support you need to make it through recovery without all the added stress of negotiations. As your legal representatives, your lawyers can fight for you while you focus on recovering and getting back to full health as soon as possible.

Finding the Best Personal Injury Lawyer for You

Not all personal injury lawyers have the same skills and abilities. Do your due diligence to find the best lawyer near you who will support you throughout your recovery process and advocate for your legal rights.

Most personal injury lawyers work on a contingency basis. This means they don’t receive legal fees until they win your settlement. At that time, they will take a percentage of your settlement according to the terms of your attorney-client agreement. This way, you don’t have to pay your lawyer any money out of pocket.

In addition, a good lawyer will offer you a free consultation before taking your case. This will allow the lawyer to determine whether or not you face a high chance of success. If the lawyer thinks that you do, they will explain the process to you and help you calculate how much you should receive in compensation.

The personal injury lawyers at the law firm of Michael T. Gibson, P.A. will meet with you during a free consultation to discuss your case and answer your questions. We work hard to seek justice and recover the compensation you deserve. Call (407) 490-1271 or complete our simple online form for your free case review today.