Should You Accept the First Offer from an Insurance Company When Settling Your Personal Injury Claim?

Navigating the aftermath of a personal injury can be a daunting experience, especially when dealing with insurance companies. One decision you'll face is whether to accept the first settlement offer from the insurance company.

While it might be tempting to accept an offer quickly and move on — or because you have medical bills to pay for and a family to put food on the table for — there’s a strong chance the initial offer from an insurance company will not fairly compensate you for your injuries and losses.

In this article, San Antonio personal injury lawyer Dr. Louis Patino explains why accepting the first offer might not be the best decision and what to do instead.

Understanding the Tactics Insurance Companies Use

Insurance companies are businesses focused on minimizing payouts to maximize their profits. There are two main tactics insurance companies will adopt to do this:

• Lowballing
• Pressurizing

Lowball Offers

To minimize payouts, insurers will typically present a lowball offer. This is a strategic move based on the hope that a claimant will accept less than they’re entitled to out of urgency or the false belief that the amount is all their claim is worth.

Pressure Tactics

Insurance adjusters may also use pressure tactics to encourage a swift resolution. They might imply the initial offer is the maximum a person will recover or even suggest that delays could jeopardize their claim. In some cases, an insurance adjuster might scare a claimant into accepting a low offer, telling them stories about claims dragging out for months or years without resolution and painting a picture of an accident victim stuck in limbo and unable to move on until they settle their case.

Evaluating the First Offer

You should evaluate whether an offer effectively compensates you for your damages before accepting it. To do this, it’s vital to understand what damages are and how they are calculated.

Assessing Your Damages

Damages are the losses you have suffered in an accident caused by someone’s wrongful conduct. They fall into two categories: economic damages and non-economic damages.

Economic damages are your tangible costs that have a definitive monetary value. Examples include:

• Medical expenses, such as hospital bills, medications, surgeries, transport to and from doctor’s appointments, and ongoing treatments such as rehabilitation or physical
• Lost wages if you are unable to
• Vehicle repairs or the value of your car if it is

You are entitled to the expenses incurred since your accident and your future costs, such as if you need to take medication for the rest of your life, will require additional surgery or ongoing physical therapy, or if you cannot return to work for several months or ever again.

Non-economic damages compensate you for the long-term impact of your injuries on your life. These can be tricky to calculate because, by their definition, they do not have a fixed value. Examples of non-economic damage include pain and suffering, emotional distress, and loss of enjoyment. But how do you put a price on the chronic pain you will suffer every day for the rest of your life, or the emotional impact of being unable to kneel to play with your children or plant flowers in your garden?

Non-economic damages are typically calculated using a multiplier method. To do this, you must know the sum of your economic damages.

The formulas used to determine how your economic damages are calculated differ between insurance companies, although the number will typically be between 1.5 and 5. When injuries are severe and have a significant impact on an individual’s quality of life — such as a spinal cord injury that leaves an accident victim permanently disabled — a higher multiplier applies.

An alternative method of calculating non-economic damages is sometimes used, called the “per diem” or “for each day” method. Here, an insurer will assign a monetary figure that compensates you for one day of your life based on the pain you suffer and how the fallout of your accident affects you. Then, they will multiply this sum by how many days you have or are expected to continue to suffer. In some cases, this might be for the rest of your life.

Understanding your damages can help you determine if an offer made by an insurance company is fair. You may not know exactly how an insurance adjuster has calculated

your settlement offer, but by applying different multipliers, you can get a rough idea of whether a figure is significantly off what you are entitled to.

Getting a Second Opinion

A personal injury attorney can provide a clearer picture of your claim's value. They can not only calculate your damages to determine the approximate worth of your claim — which may include consulting with experts — and assess its fairness, but they can also negotiate with insurers to maximize your settlement. Personal injury lawyers are wise to the tactics commonly used by insurance companies and are effective communicators, allowing them to present the evidence in your favor and argue for an offer that will appropriately compensate and not leave you short when it comes to paying your future bills.

You should never sign any paperwork or verbally agree to accept a settlement without first discussing the terms with a personal injury lawyer. This is especially the case if you do not yet fully understand the long-term implications of your injuries.

Injuries can worsen over time and require additional treatment, but if these are not accounted for in your settlement, you risk having to pay for them out of pocket. A compensation payout should relieve the financial burden of your injuries — not put you in a difficult position months or years down the line. When you accept a settlement, you relieve the at-fault party from further liability, so you cannot sue them even if your injuries get worse and you need unforeseen surgery or more time off work.

Accepting the first offer from an insurance company for your personal injury claim is rarely advisable. By carefully evaluating the offer, consulting with a personal injury attorney, and understanding the full extent of your damages, you can make an informed decision that ensures fair compensation for your injuries and their impact on your life.