Experienced motor vehicle accident attorneys know that it is not at all unusual for an insurance company to make a settlement offer that is significantly below the true value of the claim. Sometimes this happens because the insurance adjuster truly believes that the claim has a value commensurate with the offer. Other times, however, the underlying reason is that insurance adjusters know they can resolve many cases for much less than the likely recovery if the case goes to trial. The justification for this depends on which of two situations the case falls into.
The first situation involves victim's injuries that are not severe or permanent and the case valuation by the insurance adjuster is for a modest sum. Under these circumstances the insurance adjuster knows that accident victims will sometimes settle the case for less because it is simply not worth the effort to take the case all the way to trial. From the victim's perspective waiting may not result in very little difference in the amount he or she sees. The victim will likely consider that there are liens in the case for medical expenses and that a percentage of the recovery will go towards legal expenses and legal fees.
If continuing with the claim will result in only a few thousand dollars of additional recovery but from that amount will be subtracted hundreds of dollars (or more) for such costs as depositions, medical opinions, and lost time from work for trial as well as a percentage for attorneys fees, the victim simply may not see the benefit of passing up the offer. For the insurance company saving a few hundred or a few thousand dollars per case for
thousands and thousands of cases can result in a savings of hundreds of thousands or even millions of dollars each year.
The second situation arises when there is a more serious injury to the victim. Insurance adjusters understand that accident victims often find themselves in a difficult financial situation especially when the injury is serious. The victim will certainly have incurred medical expenses for treatment. Even if the victim has health insurance there may be large deductibles or co-payments for which the victim is responsible. In addition, the victim may have lost time from work. If the injury is long-term or permanent the victim may be out of work indefinitely. Without adequate long-term disability insurance the victim will quickly feel a financial strain and may be willing to take a smaller settlement now over a larger recovery later.
This is hardball and it is a way that insurance companies can save millions of dollars each year. Insurance companies are not in the business of making sure that accident victims have the funds necessary to cover their losses or to help keep a humane standard of living. Insurance companies are in the business of making a profit. And that they do very well.
By playing to the victim's desire to resolve the claim quickly and put the matter behind them and the victim's need for an immediate cash flow insurance companies can settle many cases for less than they would need to pay if the case went all the way to trial or arbitration. A skilled and experienced motor vehicle accident attorney must be willing to take cases to trial and to help his or her client see past a low offer.
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