Wednesday, January 30, 2008

How to Negotiate a Fair Personal Injury Settlement

(Note: This is the second in a 2-part series on how to negotiate with insurance companies following an auto accident. To learn about property-damage claims, see How to Negotiate a Fair Settlement when Your Car Has Been Totaled.)

Maybe you’re familiar with personal-injury settlements. Maybe one time you barely tapped another driver’s bumper and he got out of the car clutching his neck, moaning in histrionic agony. Maybe a few months later you saw him driving around in a new convertible with a fistful of dollars, thrashing his head to the beat of his Alpine CD player...

Neck and back injuries are funny things. Often, they don’t show up on scans and X-rays. That’s why people are able to fake such injuries and "work" claims, accumulating unnecessary medical bills in order to get bigger settlements.

Not only are such people crooks, but they drive up the cost of insurance premiums for everybody else, and they make it harder for people with real injuries to get fair settlements. Understandably, insurance companies are often skeptical of personal-injury claims. That’s why it’s important to understand how the claims process works before you find yourself banged up in a wreck.

The Circling Vultures

If you’re ever involved in an auto accident that wasn’t your fault, get ready: you’re about to become a very popular person. Rather than actually chasing ambulances, chiropractors and personal-injury lawyers stake out police-records departments looking for no-fault accident victims such as yourself. Shortly after your accident report is issued, the doctors and lawyers will likely begin sending you letters soliciting your business.

Of course, whether you should hire one of these lawyers or visit one of these doctors depends on the specifics of your accident and your injuries. Before you make any moves, consider the following.

How a Claim Works

An insurance claim for an auto accident will result in a property-damage settlement and--if injuries are involved--a personal-injury settlement. These two kinds of settlements are calculated separately. (This article deals only with personal-injury settlements.)

If you’re injured in an auto accident, a smart insurance company will try to get to you fast, before the lawyers and chiropractors do. Often, an adjuster will visit you within 48 hours of the accident and offer you a check on the spot.

This may seem like good, quick customer service, but don’t be fooled--it’s a cost-saving strategy for the insurance company. Often, injuries from car wrecks (particularly neck and back injuries) don’t manifest themselves immediately, and often they require long-term treatment. By moving in quickly, the insurance adjuster seeks to minimize his company’s liability for such hidden injuries. Once you accept the check, you have "settled" the claim and the insurance company is off the hook; you are no longer entitled to additional money.

The adjuster may offer a settlement that includes a schedule of payments for any subsequent treatment you require over the next six months. That’s good, but what if you end up needing treatment for more than 6 months? And what if the cost of the treatment exceeds the settlement? Unless you want to end up paying huge medical bills, don’t accept the check, tempting as it may be.

Take Your Time

The first rule for settling a personal-injury claim is to take your time. Unlike a property-damage claim, which you should settle as soon as possible, a personal-injury claim shouldn’t be settled until you’ve seen a doctor and fully understand the extent of your injuries. Even if you’ve gone to the doctor and you check out okay, it’s a good idea to wait at least two weeks before settling with the insurance company.

Document Your Injuries

The second rule for settling personal-injury claims is to document your injuries. Without proof that you’ve been injured, the insurance company isn’t going to give you a dime.

Injury documentation starts at the scene of the accident. When the police arrive, they will ask if you want them to call paramedics. The answer to this question is YES. After an accident, you are full of adrenaline and incapable of assessing your physical condition. You know from looking at your car that there’s a good chance you’re hurt, even if you don’t feel too bad at that moment.

If the paramedics offer to take you to the emergency room for a more thorough examination, the answer again is YES. In fact, you should request it. Don’t take a chance with your health.

You should also document any visits to your personal physician and any time you miss from work.

How the Settlement Is Calculated

Unlike property-damage claims (where adjusters rely on comparables and NADA figures to establish the value of your wrecked car), there is no set formula for calculating personal-injury claims. In general, personal-injury settlements tend to be higher than property-damage settlements, and the adjuster usually has more leeway, dollar-wise, in negotiating the settlement.

You can expect the settlement to cover: 1) your medical bills (including prescriptions); 2) lost wages (missed time for doctor’s appointments, recuperation, etc.); and 3) an additional sum to compensate you for your pain and inconvenience (this is where the adjuster’s leeway comes in).

Lawyers & Chiropractors

Chiropractors like no-fault accident victims because they know an insurance company will cover the bills. And insurance cheaters like chiropractors because multiple visits to the doctor help jack up the pain-and-suffering component of their settlement.

However, if your back isn’t really hurt, don’t be tempted to rack up bills with the chiropractor. Insurance fraud is a crime, and if you get caught, you may jeopardize whatever legitimate claim you have to a settlement.

Lawyers like no-fault accident victims for similar reasons, and since the lawyer’s payment is based on the amount of your settlement, he may encourage you to "work the claim" by taking sick days and making repeat visits to the doctor. Obviously, this is sleazy, and whatever settlement you get, the lawyer will take a big chunk.

For these reasons, you should think twice before calling a personal-injury lawyer. However, if you’ve tried negotiating with the insurance company and they’re giving you the short end of the stick, an attorney may end up being your best course of action, particularly if large sums are involved.

Tips for Negotiating with Adjusters

  • If the adjuster says, "We won’t pay for your lost work time; you’re already getting paid by your employer," tell him that doesn’t matter; you’re still losing a benefit, and you’re therefore entitled to compensation for lost wages from the insurance company.

  • Veteran adjusters are good at spotting crooked claimants seeking to rip off the insurance company. As a person with a legitimate injury, you want the adjuster to know you’re an honest Jane seeking nothing more than a fair shake. A good adjuster will recognize that you’ve saved him money by not hiring a lawyer and not accumulating excessive medical bills. For this reason, he can afford to be a little more generous in settling your claim--and you can afford to insist on a satisfactory sum.

(For more tips on negotiating with adjusters, see How to Negotiate a Fair Settlement when Your Car Has Been Totaled .)


Comparables - Cars for sale which are used to help establish the value of your wrecked car by means of comparison.

Insurance adjuster - Insurance company employee who negotiates and settles claims (i.e. the person who writes you the check).

Property-damage settlement - The money an insurance company pays to repair or replace your car, plus additional costs such as a rental car.

Personal-injury settlement - The money an insurance company pays to compensate you for injuries sustained in an accident, including medical bills, lost wages, etc.

Settlement - Sum of money paid to you by the insurance company, usually in the form of a check. Your acceptance of this check constitutes the "settling" of the claim and releases the insurance company from further liability.

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