When Do You Get Your Compensation Offer?
Settlement negotiations are a standard part of a personal injury claim. After all, most personal injury claims are resolved out-of-court through settlement.
Within the settlement process, there is a point when the claimant receives an offer of compensation from the at-fault party’s insurance provider. When this offer arrives depends on the severity of your injury, the clarity of liability, and even whether you have an attorney.
Read on for more information about the factors that impact how long it takes to receive an offer of compensation from an at-fault party’s insurance provider. If someone else’s carelessness or recklessness injured you, an experienced attorney can assist you with your claim.
Early Offers of Compensation
It is not unusual for someone who has been injured in an accident to receive an offer of compensation in exchange for a quick resolution to the claim very early after the injury has occurred. The problem with these early offers of compensation is that they very seldom have little bearing on the reality of the injury and the expenses and impacts it will create.
Unfortunately, insurance companies know that these early days are when the claimant is least likely to have the guidance of an attorney and most likely to be worried about the expenses related to the injury and how they’re going to pay.
It is generally not a good idea to accept an offer of compensation until you have spoken to an attorney about your claim and have reached maximum medical improvement. You reach maximum medical improvement when your doctor determines that you have achieved the most recovery from your injury as possible and that continued treatment will not likely improve the condition.
Settlements are final, and with the settlement agreement, you will sign a release stating that you have no other claims against the defendant. You will be unable to go back and ask for more money if you later realize that the compensation you received was not enough.
Offers That Follow a Demand
Once you have hired an attorney to assist you with your claim, they will gather the evidence needed to:
- Prove that your accident was the result of someone else’s negligence.
- Justify the value they established for your claim by showing the expenses and impacts you have incurred.
After your attorney has established a value to your claim, they will send a demand to the insurance provider. The provider will assign an adjuster to the claim upon receiving this demand. An insurance claim adjuster is a person hired by the insurance company to investigate claims to determine how much (if any) compensation the company should pay you for your expenses and impacts.
Most states have laws requiring insurance companies to accept or deny claims within a specific period after they’ve been submitted, often around 30 days. If the at-fault party’s insurance claim adjuster reviews the claim and chooses to accept the insured’s liability and pay the value of the claim, then your case will quickly resolve.
If they choose to deny the claim, they must provide you with a reason, and you and your lawyer will likely consider filing your claim in court as a personal injury lawsuit. If they want to offer compensation for less than the claim’s value, settlement negotiations will begin.
Factors That Can Delay an Offer of Compensation
Any part of the personal injury claims process can result in delays. Some of the most common delays impacting the length of time an insurance adjuster takes to offer compensation are as follows.
The Severity of Your Injuries
As previously mentioned, the best time to file your personal injury claim is when you reach maximum medical improvement. Unfortunately, this can take a long time with certain injuries, but it is essential to wait until there is a clearer picture of the totality of your expenses.
Even after an accurate glimpse into the financial and psychological costs of your injury, the insurance adjuster will often question the treatments you’ve received or attempt to cast doubt on the severity of your injury.
Clarity of Liability
Liability is not always as simple as one at-fault party and one victim. In reality, there can be many victims and many sources of liability. There are even accidents where both parties are partially at-fault.
An insurance adjuster will often search for evidence that indicates something or someone was responsible for the accident other than their insured. In the meantime, your attorney will be looking for evidence that shows that the accident happened just as you said it did.
Back and Forth Negotiations
Settlement negotiations are seldom simply a back-and-forth ping-pong match of offer/counter-offer. Instead, questions about treatments and requests for documents often punctuate the back-and-forth negotiations of an insurance adjuster and an attorney. Your attorney will brief you throughout these conversations so you can make informed decisions about your claim.
Why the Initial Offer Is Rarely the Best Offer
What the insurance adjuster thinks your claim is worth is often very different from what your attorney knows it is worth. Likewise, what the insurance adjuster thinks your claim is worth is often very different from what they offer, as well.
Insurance adjusters determine what they will offer based on:
- The likelihood of the claimant winning if the case goes to trial.
- The amount the jury might award upon hearing the case.
Once they have determined what they will offer, the insurer makes an initial settlement. Generally, this offer is about 30-40 percent of the claim value. If an attorney does not represent the claimant, this amount will likely be less as they are banking on the notion that the claimant does not truly understand the value of their claim and is likely to accept anything offered.
The amount of the initial offer of compensation can be slightly more than 40 percent if the claim involves a particularly severe injury, clear liability on the part of the insured, and an attorney is representing the claimant.
What Happens Next?
When the insurance adjuster makes their initial offer of compensation, your attorney will explain the offer to you and help you determine your next steps.
You Can Accept the Offer
The decision to accept a settlement offer is always yours to make, not your attorney’s. Their role in the decision-making process is to help you understand the facts of your claim and the pros and cons of the offer you’ve been given, based on their experience and in accordance with your best interests.
As noted, once a settlement agreement is in place, the claim is final.
Because of this, you must consider whether the offer will cover at least these expenses:
- All injury-related medical expenses
- Wage loss
- Loss of earning capacity if the injury produces permanent deficits that impair your ability to earn an income
- Property damage you sustained in the accident, such as damage to a vehicle you were driving in an automobile accident
- Pain and suffering related to the injury, treatment of it, and its impacts on your quality of life
Your Attorney Can Negotiate a Higher Offer
If the offer of compensation you received is not enough to fully compensate for your injury, you and your attorney can provide a counter-offer. The counter-offer is generally as close to the original value of your claim. As with any bargain, settlement negotiations generally feature each side offering small concessions until they find a compensatory amount that both sides will agree to.
When Is a Good Time to File a Lawsuit?
Soon, negotiating a settlement cannot continue indefinitely, due to the statute of limitations. If the statute of limitations passes, a court cannot decide the claim.
A state’s lawmakers determine the statute of limitations, and they vary from state to state. In Florida, for example, personal injury claimants have four years, which is a more extended amount of time to file a personal injury lawsuit than is allowed in many other states.
At some point, as the statute of limitations approaches, your attorney will guide you as you consider if it is time to file a personal injury lawsuit. Insurance companies will often draw settlement negotiations out to this point to see if they can get a claimant to accept a lower offer.
Offers After You File Suit
Just because you filed a lawsuit doesn’t mean that negotiations between the insurance adjuster and your attorney have to stop. You can settle any time before the court renders a decision on the matter, even after the trial begins. However, insurance adjusters are often more serious about their offers after you file a lawsuit and they face the time, cost, and uncertainty of litigation.
While continuing to entertain settlement offers from the insurance adjuster and providing guidance to assist you in making decisions on those offers, your attorney will prepare your court case, depose witnesses, produce trial exhibits, and determine the best litigation strategy to present your claim.
What Happens If The Insurance Company Makes a Fair Offer of Compensation?
The goal of settlement negotiations is to procure compensation that covers the expenses and impacts of your injury, including your future costs. When the offer of compensation arrives that you feel is fair, your attorney and legal counsel for the at-fault party and their insurance company will work to get an agreement in place.
Part of this agreement is a release form that you must sign to obtain your payment. This release waives your right to seek additional compensation from the insurer on the claim in the future.
Once the agreement is in place, it will take several weeks to receive your compensation. The settlement money will go to your attorney, who will deduct their percentage of the award as outlined in your contingent fee agreement. It will also pay any liens placed on the settlement by your creditors, such as healthcare providers, group health insurance providers, or government health insurance (such as Medicaid).
After your attorney is paid for their services and you satisfy your injury-related debts, you and your attorney will meet to finalize the case. You must sign additional documents, and the remainder of your settlement will either come in the mail or via direct deposit into your bank account.