Anatomy of the Insurance Company Negotiation Process

It’s been perhaps several weeks since the accident that injured your child; perhaps she is still undergoing treatment, or perhaps she’s been released to your care. You’ve dealt with the initial trauma and chaos surrounding this life-altering event. Now comes one of the most critical stages of your case: The all-important negotiation process with the at-fault party’s insurance company.

Why is this negotiation dance so important? According to The Law Dictionary, only 4-5 percent of all personal injury cases ever make it to trial—which means your case has at least a 95 percent chance of being settled out of court. If this statistic holds true for your case, your child’s settlement amount will be determined in these negotiations. The right point made at the right time can add thousands to the settlement, while saying/doing the wrong thing can cost you. (For these reasons, your attorney needs to be just as skilled at negotiating as he is with arguing before a judge—if not more so.)

So what can you expect during this process, and what are the various steps? Take a look at the following overview.

The Stages of Negotiation

    1. Filing a claim. The negotiation process technically begins when you file the initial claim with the other party’s insurance company—preferably as soon as possible after the accident occurs.
    2. Acknowledgement letter. The insurance company responds with a “reservation of rights” letter that acknowledges the existence of your claim and promises to investigate it—without admitting fault, of course.
    3. Demand letter. Once you and your attorney determine how much to ask for (which we’ll cover in the next post), your lawyer will send a demand letter detailing the facts of the accident, the estimated costs of damage, medical expenses, out-of-pocket expenses, pain and suffering, etc.—culminating in a demand for payment.
    4. Claims adjuster response. The insurance company’s claim adjuster will typically respond to the demand letter by trying to convince you that your demands for damages are too high for the nature of the accident. The response usually includes a settlement offer that is lower than the demanded amount.
    5. Counteroffer. In most cases, the insurance company’s initial settlement offer is lower than you and your attorney will be willing to accept—at which point your attorney submits a counteroffer.
    6. Repeat steps 4 and 5. The negotiation process may follow a path of offers and counteroffers between your attorney and the insurance company, to iron out a settlement that meets your child’s and family’s needs.
    7. Accepting or rejecting the final offer. At some point, the insurance company will submit its final offer for a settlement. Your attorney will advise you on the merits and possible disadvantages of the offer. At this point, you’ll decide whether to accept the settlement or take the matter to trial.

How Long Does the Process Take?

While there is no set timeline, depending on the severity and complexity of the accident, most insurance negotiations take from several weeks to several months—either until your attorney believes you have a good settlement offer or until he determines litigation would be a better solution for you. And even if you decide to go to trial, the settlement negotiations can continue all the way up to when a verdict is reached.

To learn more about the insurance negotiation process and receive a free case evaluation, call Greathouse Trial Law at (888) 353-1458.