You always have the right to refuse an insurance company’s offer to pay you for your injury-related losses. But don’t make the decision to accept or refuse an offer lightly. Consulting with an experienced personal injury attorney before you respond to an insurance company’s settlement offer is the safest and most reliable way to get the maximum payment available.
Overview of Injuries and Insurance
If you’ve suffered an injury in an accident or due to someone’s mistake or misconduct, there’s a good chance an insurance policy covers at least some of your losses.
Two general categories of insurance could apply to your circumstances:
- Insurance you purchased or that someone purchased for your protection
- Insurance that the party at fault for your injuries purchased to cover their liability to you
You may have the right to make a compensation claim under either or both types of insurance. Here’s a general overview of how those rights work.
Claims Against Your Insurance
You may carry various types of insurance to cover losses you sustained because of a preventable injury.
For example:
- Health insurance
- Auto accident personal injury protection (PIP) or MedPay insurance
- Long-term disability insurance
- Workers’ compensation insurance
Your request for payment under these sorts of insurance policies is known as a first-party claim. You (or someone acting in your interest) purchased the policy to cover injuries and losses you might sustain in the future. Now that that’s happened, you have the right to ask the insurance company to pay you according to the terms of your policy.
Some first party claims happen more-or-less automatically. Your medical provider, for example, might take your health insurance information and bill your insurer directly for your care. In those cases, you usually only find out after-the-fact how much insurance agreed to pay.
In other circumstances, it’s your responsibility to initiate a claim by contacting your insurance company to let them know about your injury or loss and then proving that they owe you a payment.
For example, in some states it’s up to you to apply for workers’ comp disability benefits and to prove you’re disabled, if you want to receive income replacement benefits. In those cases, you might have to wait for the insurance company’s decision about whether to accept or reject your claim before incurring a covered expense or receiving a payment.
An experienced lawyer can claiming compensation from your insurance for you. That’s often the best way to ensure that your insurer treats you fairly. Having a lawyer oversee your claim is especially useful when you have responsibility for initiating a claim, or when an insurer refuses to pay a claim that was made for you automatically.
Claims Against an At-Fault Party’s Liability Insurance
The party who caused your injury may also carry insurance that covers their liability to you. Generally speaking, anyone whose careless, reckless, or intentional misconduct causes injuries to others will owe monetary damages to the persons harmed.
The law may require them to pay for your:
- Medical and other injury-related expenses
- Costs for repairing or replacing damaged property
- Past and future lost income and job benefits
- Physical pain and emotional distress
- Loss of independence
- Diminished quality of life
- Scarring or disfigurement
At-fault parties who cause harm by engaging in extremely reckless or intentional misconduct may also have to pay you additional, punitive damages as a punishment.
Many people purchase insurance that covers this sort of liability. For example, state law requires most drivers to carry auto accident liability coverage to pay for the harm they cause to others in a crash. It’s also common for individuals and businesses to purchase coverage protecting them against liability in other circumstances. Commercial liability insurance covers businesses for liability to people who get hurt on their premises or by their employees or products. And homeowners insurance usually covers liability for injuries a guest suffered at someone’s house.
A claim under someone else’s liability insurance policy is called a third-party claim. It almost never happens automatically. It’s up to the person who suffered harm to initiate the claim and prove to the insurance company that the at-fault party is liable for monetary damages and that an insurance policy the insurer issued covers that liability.
An experienced personal injury lawyer can, and in most cases should, handle pursuing a third-party claim on your behalf. A liability insurance company will typically resist paying what it owes until a lawyer representing you has presented evidence sufficient to prove in court (if necessary) that their policyholder has liability to you and you’ve suffered the claimed amount of monetary damages. Until an insurer believes your side has the ability to prove a case, it doesn’t have a reason to pay you.
Insurance Offers Explained
Insurance companies that believe they have an obligation to pay for your injury-related losses will generally:
- Pay you the full amount owed or up to the insurance policy’s maximum coverage limit
- Pay something less than the full amount owed and wait to see if you object (this is common in health insurance claims)
- Offer to pay something less than the full amount owed and wait for you to respond
Notice we used the word owed and not claimed. That’s because although insurance companies will usually wait to receive a claim from you (or someone acting for you) before they pay or offer to pay, that’s not always the case. Sometimes an insurer will offer to pay before you’ve submitted a claim (more on this below). And sometimes, if you unintentionally filed a claim for less than the insurer actually owes, they may pay or offer to pay what you asked for, and then take steps to avoid paying anything more even though they owe it.
What does it mean to receive an offer from an insurer?
At its most basic level, an insurance company’s offer means two things. First, it means that the insurance company recognizes that if push came to shove, your lawyer could probably prove in court that the insurer owes you at least some money under the terms of a policy it issued to you or a party liable to you. Second, it means that the insurance company thinks, for any number of possible reasons, that you might agree to take less than the full amount it owes or that you claim it owes.
An offer, in other words, can be both a good and bad sign, depending on how you look at it. On one hand, it means the insurance company recognizes it owes you something. On the other, it means you might have a fight on your hands to get everything you deserve.
Why You Can’t Trust Insurance Offers Made to You Directly
Insurance companies will deal with you directly until you have a lawyer representing you. Then, they usually must deal only with your lawyer. Guess who they prefer?
When it comes to making an offer, it’s not even a close call. An insurance company that has an offer to make always wants to make it to you directly, not to your lawyer. Why? Because you are a soft target.
Experienced personal injury lawyers speak the language of insurance and know the tactics insurers employ to avoid paying what they owe. Insurers can’t get away with anything when dealing with an attorney. It’s a fair fight when your lawyer and an insurance adjuster negotiate an offer to pay for your losses.
In contrast, you’re someone an insurance adjuster has a shot at manipulating, bullying, and pressuring into taking less than you’re owed. From experience, insurance companies know that individuals who don’t have lawyers will agree to lower offers than those who do.
As a result, an insurance company will virtually always offer significantly less than what the insurer offers you via your lawyer.
Insurance companies won’t admit this to you, of course. They’ll tell you that the offer made to you directly is fair, even generous. They’ll insist it’s the maximum they owe and that you won’t do any better by holding out.
But that’s often untrue. An offer made directly to you by an insurance company represents a precisely calibrated bet on the absolute minimum amount you’ll agree to take as compensation for your losses without first consulting with an attorney. And it’s usually a smart bet, because insurance companies can draw on a vast body of data, representing millions of offers they’ve made to other people in your position who don’t yet have lawyers, to guess at what they can get away with in your case.
Why You Really Can’t Trust Offers Before You File a Claim
As mentioned above, an insurance company will sometimes reach out to offer you money before you’ve submitted a claim for payment under a policy it issued. Most frequently, this happens when the insurer has issued liability coverage to someone who harmed you. Rather than waiting for you to submit a third-party claim, the insurer takes the reins and offers you a quick payment straight-away.
Receiving an unsolicited offer like this should set off all sorts of alarm bells. Common sense tells us that businesses don’t just hand over money willy-nilly. An insurance company that makes you an unsolicited offer must be really, really sure that it’s on the hook to you for a significant amount of money. And it must really, really want to avoid the full impact of that liability.
Which is to say, you can never trust a direct offer from an insurance company that arrives out of the blue, without you having submitted a claim first. It’s a reliable sign that the insurer thinks it owes you substantial payments, and that it’s trying to tempt you into agreeing to far less than what you deserve.
May Reject an Insurance Offer
No matter what an insurance company representative says about an offer, you always have the right to reject it. After all, by definition an offer requires a response, and that answer can always be “no”. The decision is always yours to make.
Of course, “No” isn’t usually the answer the insurance company wants to hear, especially when it makes an offer directly to you. Because, remember, a direct offer represents the bare minimum they think they’ll need to pay to get out from under their obligation to pay for your injuries. They view convincing you to take it while avoiding dealing with your lawyer as the surest way to minimize their losses on your claim.
Still, saying no to an offer also isn’t something you should do purely on impulse or principle. You may have significant legal, financial, or personal interests at stake that make accepting an offer worthwhile, even if you could hold out for more. Sometimes the immediacy and finality of saying “Yes” to an offer benefits you more than the potential future benefit of saying “no”.
Which is to say, responding “No” to an insurance offer can empower you to demand fairer compensation. But it might also come with risks. And that’s why the key to making the best decision for you is to seek complete and accurate information about your rights before you do anything — the sort of information you can only get by having an experienced personal injury attorney on your side.
Always Consult a Lawyer Before Responding to an Insurance Offer
Andrew Finkelstein, Personal Injury Lawyer
The safest, most reliable way to respond to a settlement offer is to consult with an attorney first. And if you decide to say “no”, hiring an attorney to handle your claim gives you the best shot at negotiating the maximum payment possible from an insurance company. Lawyers have the experience, know-how, and resources to go toe-to-toe with insurance companies to get you the money you need to pay your expenses and plan for the future.
If you’ve received an insurance offer and want to explore how to respond, contact an experienced personal injury lawyer immediately for a free case evaluation.