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How Do Insurance Companies Negotiate Settlements?

By April 24, 2024No Comments

You need appropriate compensation for your injury claim. You may have significant medical bills and a host of ongoing financial challenges related to your injuries, especially if you have severe injuries that could offer long-term complications or require ongoing medical care. However, negotiating with an insurance company for that much-needed compensation can be more difficult and frustrating than anticipated. An experienced personal injury lawyer can take the burden off you in the insurance claim settlement process.

You might need to file an insurance claim for a wide range of damages arising from various accidents and incidents. These may include injuries sustained in car accidents, such as whiplash, broken bones, or traumatic brain injuries. Additionally, they can help with claims related to defective products that cause harm, such as faulty appliances leading to burns or electronic devices causing electrical shocks or fires. Other common cases involve slip and fall accidents resulting in injuries like sprains or fractures.

In each situation, the lawyer works on your behalf to negotiate an insurance settlement to cover your losses. What does the negotiation process look like, and how do insurance companies negotiate settlements?

Investigating Your Accident

Before submitting an initial settlement offer, the insurance company will investigate the conditions that led to the accident. The insurance adjuster wants to know several things about the accident, what injuries you sustained, and what your recovery looks like after the accident. It is advisable to talk to an experienced personal injury and product liability attorney as soon as possible to protect your rights to fair compensation.

#1. Who caused your accident?

When a lawyer looks into who caused your accident, they want to know all the parties that could potentially have contributed to the accident and why those parties owe you compensation for your injuries.

On the other hand, the insurance company wants to determine whether the party it insures bears liability for the accident and, if possible, whether any other parties-including you, as the injured party-bear a percentage of the responsibility for the accident. This would reduce some of the financial burdens on the company when it pays an insurance settlement.

The insurance provider will look for any way to put the liability for the accident on your shoulders. The more liability you bear, the less the insurance company must pay for your injuries. Even statements that you make about the accident, including accepting partial responsibility for circumstances leading up to the accident, could work against you when you file an injury claim.

#2. What injuries did you sustain in the accident?

To pay compensation for your injuries and financial losses related to the accident, the insurance adjusters will need to look at your injuries.

In some cases, you may simply need to submit your own evidence regarding those injuries. In other cases, however, the insurance provider may want to send you to an independent medical professional for a full evaluation of your injuries, the limitations associated with your injuries, and the challenges you have faced as a direct result of those injuries.

#3. What medical bills and other financial losses do you have due to the accident?

To decide how much compensation to pay out for your injuries, the insurance company must determine what financial losses you have sustained because of your injuries. During the settlement negotiations, you may need to submit copies of your bills or other evidence that you have sustained direct financial losses due to your injuries from the accident.

Keep track of your medical bills to make it easier to show the insurance company exactly what you needed to spend after your accident. This may include short-term emergency care for your injuries or long-term, ongoing medical assistance, as well as additional living expenses.

#4. What losses did you sustain because of your accident?

A key element of the personal injury claims process is estimating damages that may be less tangible. Long-term effects on your well-being should be accounted for in the settlement amount.

Your accident, and the injuries from your accident, can leave you with several challenges and limitations. You may have a hard time taking care of yourself, going back to work, or engaging in the activities you usually enjoy. You may find yourself struggling with ongoing physical pain or with significant emotional distress because of your injuries.

As part of a settlement package, your lawyer will consider those factors. Sometimes, however, insurance companies may not issue a fair settlement offer that includes compensation for your pain and suffering, especially in personal injury cases like car accident claims.

The Initial Settlement Offer

Once the insurance provider has had a chance to look at the initial information from the accident, you will likely receive an initial offer to settle the entire insurance claim. What insurers generally offer in that initial settlement includes enough compensation to look good at the moment. Especially if you have not yet had a chance to consider what your long-term medical costs and other financial losses due to the accident may look like.

However, that initial settlement offer will often reflect only a percentage of the compensation you deserve for your injuries. Some insurance companies, including auto insurance companies, use an AI to generate an initial settlement offer. The AI will calculate the actual cash value of the damages you have submitted, then issue a settlement offer based on its own formula. The insurance representative or adjuster you speak with as you handle your claim may have relatively little room to negotiate with you for the compensation you may deserve.

Always have a lawyer look over an initial settlement offer before accepting. Often, you may deserve substantially more compensation than that early offer indicates. If you accept it, you may not obtain the full compensation you deserve. A lawyer can help you decide what to do next about your insurance claim, including how to negotiate effectively for the maximum compensation you deserve.


Like the insurance company, your injury attorney will investigate the accident closely. However, unlike the insurance company, your attorney wants to help you get as much compensation as possible for your injuries.

Sometimes, if you have not received a fast settlement offer from the insurance company, your attorney will have the chance to put together a comprehensive demand package first. Other times, you may submit your demand package after you receive your initial settlement offer.

Your demand package will include a look at the specific demands you have related to your accident: the compensation you feel you deserve, based on the conditions that led to your injuries and the suffering you faced after your accident. An attorney can help you create a comprehensive demand package for insurance payments related to your injury that includes all the financial and non-financial losses you suffered because of the accident and a reasonable request for compensation based on those terms.

What happens when the insurance company and your lawyer have very different ideas of the compensation you deserve?

When you start negotiating with the insurance company, your lawyer may advise that you issue a high demand of your own. On the other hand, the insurance claims adjuster will often try to start with a very low offer, especially if you have sustained severe injuries and require substantial compensation for your injuries.

You may start far apart, but negotiation can help you come to a reasonable agreement.

Do you have to have a lawyer to negotiate with the insurance company?

Working with a lawyer can be incredibly beneficial when filing an insurance claim. A lawyer familiar with the claims process can help you get a better look at exactly how much compensation you deserve, which may make it easier to stand firm and negotiate based on your actual losses, not on what the insurance company wants to pay.

Working with a lawyer may also mean that the insurance company will ultimately take you more seriously and give more weight to your claim than if you handle it on your own. Often, private citizens who try to negotiate for compensation do not realize how much they deserve or how to receive it. On the other hand, a lawyer can determine how much you should pursue and show the insurance company that you plan to negotiate for the full compensation you deserve.

Your personal injury lawyer works to establish liability, gather evidence, and negotiate with insurance companies to ensure fair compensation for medical expenses, lost wages, pain, and suffering.

How long will I have to negotiate with the insurance company to get a reasonable settlement offer?

Just how long does it take to settle a personal injury claim in California? Plan to go through several rounds of negotiation with the insurance company to reach a settlement offer that fits the needs of both sides. Often, it can take time to resolve a personal injury claim, especially claims that involve severe injuries. Your lawyer can give you a better idea of the timeline for a specific claim; however, you should expect it to take considerable time to arrive at a reasonable settlement agreement following your accident.


Sometimes, you and the insurance company might not have the ability to come to a reasonable agreement about the compensation you deserve for your injuries. The insurance company might try to deny its covered entity’s liability for your accident or might try to push you to accept a low, fast settlement offer instead of working through the compensation you deserve for severe injuries.

Sometimes, your lawyer may find a loophole or rule in the insurance policy that the insurance company does not want to adhere to, which may lead to you fighting to get the compensation you deserve for those losses.

As the last step before you go to court to manage your claim, you can go through mediation. During mediation, you will work with a mediator-usually an experienced lawyer, judge, or former judge-to see if you can come to a resolution.

You may present your claim, including the extent of your injuries and suffering, and the insurance company will have the opportunity to show what settlement options it has offered and why, according to the terms of its policy, you deserve that compensation for your injuries. The mediator will listen to both sides, then try to help you come to a settlement agreement that works for both of you.


If you and the insurance company cannot reach a settlement agreement through mediation, you may have to go to court to resolve your claim. Going to court can significantly increase the legal costs for the insurance company, so most insurance companies try to avoid going to court, if possible. However, sometimes, it represents the only option.

If you do have to go to court, your attorney will present your case, and the insurance company will show why it feels that you do not deserve the compensation you claim. Once both sides have had a chance to present their cases, the judge or, in some cases, the jury, will present a final ruling on the case, and the insurance company will have a limited time to provide you with a settlement.

What are the odds that my claim will have to go to court?

Most of the time, the insurance company wants to settle any claim out of court, if at all possible. The insurance company will face much higher legal costs if you have to go to court. Most of the time, the insurance company does not want to pay those costs.

However, several things may increase the odds that you will have to take your claim to court.

  • Disputed liability. If the insurance company insists that its customer does not bear liability for the accident, or does not bear primary liability for the accident, you may have a much harder time pursuing the compensation you deserve.
  • Severe injuries. If the accident severely injured you, you may ask the insurance company for more in compensation, and the insurance company may work harder to decrease what it has to pay out.
  • Disputed injury severity. Sometimes, the insurance company may try to show that you did not sustain the severe injuries you claimed, or that your injuries do not limit you as much as your claim indicates. In those cases, your claim is more likely to end up in court.

Your lawyer can help you determine whether taking your case to court will increase the odds that you will recover the compensation you really deserve.

Contact a Personal Injury Lawyer for Help With Your Negotiations

Negotiating with the insurance company on your own can create enormous stress. A lawyer can decrease that stress and increase the odds that the negotiation will go your way. Contact a personal injury lawyer as soon after your accident as possible to learn more about the compensation you deserve.

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