The need for money is immediate after a car crash. It costs hundreds of dollars to take an ambulance to the hospital or to tow your car to a repair shop. You’ll miss several days of work if you have to have surgery or if you have a broken bone and work a physical job.
The bills will just keep piling up at a time when you may not have any income. Insurance companies are well aware of the financial distress that often accompanies car crashes, and sometimes they take advantage of how vulnerable claimants are in the days after a collision.
Receiving a settlement offer can seem like a major relief because you know that there will be funds to cover certain costs. Unfortunately, insurance companies benefit when you take that first settlement offer.
What’s the risk you take when accepting a lump-sum settlement?
The insurance company will only pay a certain amount based on the coverage carried by the driver who caused the crash. Of course, it is in its financial interests to settle the claim for less than the total cost of the collision or the maximum amount that the company might pay given the policy limits.
The first settlement offer you receive may seem acceptable, but it is likely far lower than the costs you will need to cover. If you sign the settlement offer or cash a settlement check provided by an insurance company, you no longer have the right to ask for additional compensation.
Even if it turns out you can never go back to work or you require another, very expensive surgery, the insurance company will not cover those costs. Their liability to compensate you ends as soon as you accept the settlement in writing or cash the check.
Negotiations are often necessary for your own protection
Insurance settlements are not an all-or-nothing prospect. You don’t have to accept the first offer or refuse it outright.
You can also counter the offer and then enter into negotiations with the insurance company. To do so successfully, you need to have an understanding of how to negotiate and also a realistic understanding of what the crash will ultimately cost you.
Understanding the risks that may come from an insurance settlement offer following a car crash will help you better respond to the offer he received.