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Should I Take the First Offer of a Car Accident Settlement?

When it comes to your pursuit of financial compensation after an accident, one cliche that comes to mind the most is that “it’s a marathon and not a sprint.” Nothing happens quickly in personal injury cases. Progress can seem glacial, especially when you need the money you will get in a settlement agreement for your car accident.

The most important thing you can do is hire a Denver car accident lawyer to handle the process for you. They can minimize any unnecessary delays the insurance company might cause. You can focus on your physical improvement and treatment knowing your claim is in the hands of a trusted professional. While the process might take longer than expected, you do not have additional stress as you wait with the right legal team advising you.

Your lawyer needs time to gather evidence and identify liability. Once they file an insurance claim, they must prove the policyholder – and insurance company – must cover your losses. Even after you prove that someone else should pay for your injuries, you still need to secure enough financial compensation. Nothing makes the slow nature of the claims process more painfully apparent than when you receive the initial car accident settlement offer from the insurance company.

The Initial Settlement Offer Is the Start of a Long Process

Even when the initial offer seems arbitrary and unfair, you will not despair if you have a tough personal injury lawyer on your side. Your attorney may advise you to reject a low, unfair first settlement offer.

Nothing comes easy in the claims process, but things stand a better chance of going your way when you hire a lawyer.

When You Win, the Insurance Company Loses

If you think any insurance company is your friend, think again. Your interests and those of the insurance company directly conflict. Settlement negotiation is a zero-sum game. The money you get comes directly from the insurance company’s bottom line.

Insurance companies are for-profit entities. While they act like the boss in any settlement negotiation, their real bosses are their shareholders. Their stock can go down if their quarterly earnings report falls below expectations. The last thing that they want to do is disappoint Wall Street.

How Insurance Companies Earn Their Large Profits

Experience Car Accident Lawyers for Car Accident Settlement in Denver Co area.

Therefore, the insurance company will do anything to keep as much of the premiums as possible. The simple formula for an insurance company is as follows:

Premiums + Investment returns – Expenses – Payouts – administrative costs = Profits

The insurance company wants to keep the premiums to earn investment returns so that they can make money. Paying out your claim is an expense the insurance company wants to avoid. Thus, the entire claims process aims to get you to sign away your legal rights for as little as possible.

Insurance Companies Know the Real Value of Your Car Accident Claim

The insurance company knows how much your claim is worth after analyzing it. They use artificial intelligence and a deep knowledge of costs that they have gleaned from many claims like yours.

They will have a number in mind within short order. That number then becomes the absolute top that they will pay. Realistically, they are trying to get away with paying far less than that. Insurance companies think nothing of offering you $10,000 when your claim is worth $100,000. It is all in a day’s business for them.

The Insurance Company Does Not Show its Hand Right Away

Then, you need to look at the insurance claims process as one big negotiation between you and the insurance company. Each party will use negotiation tactics and strategy to achieve the best result. The insurance company has a strategy it’s used since the beginning of the modern insurance industry.

Like any negotiator, the insurance company does not want to show its entire hand first. No negotiator will put all their cards on the table at once.

Instead, the insurance company will begin to reveal its position little by little. A negotiator always starts with an initial position and is prepared to move from that position as negotiations progress. An opening offer is often just a placeholder showing an intent to begin negotiations.

The Insurance Company Never Thinks That You Will Take the First Offer

A negotiator does not realistically expect you to accept their opening offer. It rarely happens in any negotiation. Sometimes, a negotiator will make a very low opening offer to get you to show your hand. The insurance company may want you to make the first move by coming off the number you seek in your claim.

Realistically, the insurance company does not expect you to accept their opening settlement offer. Adjusters intentionally start with a lowball offer and are elated when someone accepts a minimal amount. The company saves the money you otherwise deserved.

Yet, some claimants do exactly that. They accept the insurance company’s first offer because they are happy to get any money for their case. Usually, people in this situation do not have a car accident lawyer advising and protecting them.

When the insurance company makes its initial settlement offer, it will show you exactly how much work you need to do in negotiations.

The initial settlement offer will likely pay pennies on the dollar. If your claim is worth $200,000, the insurance company may offer $40,000.

Just know that you can get more than what they first offer. Your lawyer can work to increase the offer.

The Insurance Company Gradually Raises Their Offer Over Time

Chances are that the insurance company will raise its offer more than once throughout the settlement negotiation. Your demand may decrease while the insurance company’s offer increases.

It will take time and effort, but you will likely move closer to a settlement. Practically every single insurance claim works that way. There is a reason why so few personal injury cases ever go to trial. Everyone, including the insurance company, realizes how much they have to lose in a jury trial.

The Insurance Company Negotiates the Same Way in Every Case

Even if you filed a personal injury lawsuit instead of an insurance claim, the settlement negotiation process will still work the same way. The insurance company will still lowball the initial settlement offer no matter where and how you negotiated.

The insurance company starts with a low settlement offer to wear you down over time. They know you have bills to pay and stress has overtaken you. They hope that you will run to accept what they offer.

Some claimants who do not know better fall into this trap. Since many claimants try to deal with the insurance company on their own, the insurance company knows how to condition claimants and maneuver them.

Everything takes on a different tone when you hire a personal injury lawyer.

Time Can Work for You in a Car Accident Case

The insurance company also thinks that time works in their favor because they have deep pockets and you need money.

Patience and discipline will help you outlast the insurance company.

The tables may turn if you file a lawsuit and the case gets closer to a trial. That may motivate the insurance company to settle. They likely do not want to face a jury.

If you do not have a personal injury lawyer, you will not even know how much your claim is worth or know exactly how poor the initial settlement offer is. Then, you will not have the confidence or the wherewithal to negotiate with the insurance company.

Hiring a Lawyer Means the Insurance Company Will Get Away With Less

If you have an experienced attorney, the insurance company will sit up and take notice. They will know when they face a tough and aggressive lawyer with a track record of making the insurance company pay.

The insurance company should know it cannot get away with much when you have an experienced attorney. They understand that the lawyer has already done their homework about what your case is worth, and they will be far more likely to call the insurance company out for their conduct.

Insurance Companies Know When You Are Serious About Your Claim

Claimants who trust insurance companies end up with regrets years into the future when their settlement money runs out and they still need money.

The insurance company can forget about you the second you sign the settlement offer’s release agreement. They can clear the claim off their books, knowing they settled it for less than its true value.

It does not cost you anything upfront to hire an attorney in your car accident case. It does not matter that you may not have any money in your account or are struggling with bills. Your attorney only receives legal fees in your case if you receive a settlement or jury award. If you do not come away with money, your Denver personal injury attorney does not charge for their time and effort.

Lauren Varner, Personal Injury Attorney

Lauren is a Personal Injury Attorney. She is Colorado native who became involved with the field of personal injury long before she became an attorney. Lauren’s professional philosophy centers around good old fashioned hard work, producing quality work product, and treating others professionally, with dignity and respect at all times.

Awards and as featured on

National Trial Lawyers Top 40 Under 40 Included in TOP 40 Under 40 by The National TRIAL Lawyers in Centennial CO Varner Faddis Top Lawyers Denver Badge – 5280 Magazine American Institute of Personal Injury Attorneys 10 Best Attorney Top 40 Under 40 5280 Denver Top Lawyers