Insurance companies are often seen as companies that have the best interests of their policyholders at heart, promising peace of mind and financial protection in times of need. However, when settling claims, the reality can be starkly different.
One of the most common tactics insurance companies employ — regardless of their size or reputation — is making lowball offers to accident victims. Understanding why and when these offers are made and how to effectively respond is crucial to ensuring you receive the compensation you deserve.
When you’re injured and need to make an insurance claim, do not wait to consult a Tampa personal injury attorney. A lawyer can handle the claims process, respond to lowball offers, and secure proper financial recovery.
What is a Lowball Offer?
A lowball offer refers to an initial settlement offer made by an insurance company that is far lower than what the victim is actually entitled to or what their claim is worth. The goal behind a lowball offer is to settle the claim quickly and cheaply without the need for lengthy negotiations or litigation.
Insurance companies often rely on this tactic to minimize their financial exposure, hoping that claimants, desperate for financial relief, will accept the low offer out of impatience or a lack of understanding of the full value of their case.
Lowball offers are not always the insurer's first and final offer, but they set the tone for how the negotiation process will unfold. Typically, an insurance company will try to gauge how much the claimant is willing to accept, and they will often start with an amount significantly lower than the potential value of the claim in the hope that the claimant will want to settle quickly.
When Do Insurance Companies Make Lowball Offers?
Insurance companies usually make lowball offers early in the claims process. This is because they are counting on the claimant's lack of experience handling insurance claims to get away with offering less than the claim is worth. Some of the key stages in which an insurance company may present a lowball offer include:
After the Initial Report
After gathering preliminary details — such as accident reports, medical records, and witness statements — the insurer might offer a low settlement before all of the damages have been fully assessed. This is a tactic to close the case rapidly and avoid further costs.
Before the Full Scope of Injuries is Known
In personal injury cases, especially with serious or long-term injuries, the full scope of damages may not be immediately apparent. Injuries that initially seem less severe can develop into more serious conditions over time.
An insurance company might make a low offer early on, before the victim has completed their treatment, in the hope that they can settle before the total cost of the victim’s medical treatment is fully known.
Before Liability is Fully Established
In some cases, the liability for the accident may be in dispute. Insurance companies might make a low offer to a claimant to close the case quickly, especially if they feel they might lose or be responsible for a larger amount in court.
When They Think the Victim is Desperate to Settle
In the aftermath of an accident, especially if medical bills are piling up or if the victim is out of work, the insurance company may offer a quick but inadequate settlement, hoping the victim will be financially desperate and accept it out of urgency.
Before a Victim Has Legal Representation
Insurance companies might aim to take advantage of unrepresented claimants who likely do not realize the full value of their losses. Without a personal injury lawyer, you probably do not know the future or non-economic damages you deserve, so insurers might make lowball offers discounting these losses hoping you accept before you consult a personal injury attorney.
Why Do Even the Good Insurance Companies Make Lowball Offers?
Insurance companies are businesses; like any business, their primary goal is maximizing profit. One of the most effective ways they do this is by reducing the amount they pay in claims. Here are some of the several reasons why insurers routinely make lowball offers:
To Settle Quickly and Save Money
Insurance companies are incentivized to pay out as little as possible and close claims expeditiously. The longer a claim stays open, the more expensive it becomes for the insurer. By offering a lowball settlement early on, they hope to resolve the matter before the full financial impact of the claim is known, including potential future medical expenses and lost earnings.
To Take Advantage of the Claimant's Lack of Knowledge
Many accident victims are unfamiliar with the intricacies of insurance claims, the value of their case, and the compensation they are entitled to. Insurers know this and will often take advantage of the fact that the claimant may not have the knowledge or experience to assess the full scope of their damages. This is why insurers frequently present low offers, banking on the fact that the victim will accept the offer out of lack of understanding or desperation.
To Avoid Legal Costs
Litigation is costly, and insurance companies generally want to avoid going to court. By settling a claim early on, they can avoid paying attorney’s fees, court costs, and other expenses that may arise from a legal battle. Settling quickly, even for a smaller amount, is often seen as a more financially sound option for the insurer.
To Minimize Payouts in High-Volume Claims
Insurance companies deal with large volumes of claims on a daily basis. To streamline the process, they may adopt a strategy of offering lowball settlements to claimants in the hope that many will accept the offer, therefore reducing the overall amount paid out across multiple claims.
To Test the Claimant’s Resolve
Insurance companies are aware that some claimants will accept the first offer they are given, even if it’s not a fair amount. By starting with a lowball offer, insurers are testing whether the victim is willing to settle or if they are prepared to fight for a fairer outcome.
To Take Advantage of the Statute of Limitations
Each state has a time limit for filing a personal injury lawsuit in civil court. Insurance companies often make lowball offers assuming that many claimants will either accept the offer out of impatience or miss the deadline for filing a lawsuit. This gives the insurer an added advantage, as it can further limit their exposure and protect them from a potentially larger payout.
The Dangers of Accepting a Lowball Settlement Offer
While tempting in some cases, accepting a lowball settlement offer from an insurance company can be risky and detrimental for several reasons, including:
- Releasing your rights: Most settlement offers come with a clause that requires you to release the insurance company from any future liability. This means once you accept the settlement, you cannot go back and ask for additional money, even if your situation changes or your condition worsens.
- Hidden costs: The insurance company may offer a settlement that doesn’t fully cover the extent of your expenses and losses. If you accept too quickly, you can end up paying for future medical treatments or other long-term costs completely out-of-pocket.
- Financial stress: Accepting an insufficient settlement might temporarily relieve immediate financial pressure but can cause long-term financial distress if you run out of funds for medical treatments, therapy, or personal expenses later on.
The risk of accepting a lowball offer outweighs the benefits. If the insurance company makes you a settlement offer, no matter where you are in the claims process, do not hesitate to seek legal guidance. Failing to make certain considerations and negotiate can end up costing you in the future.
What To Do if You Receive a Lowball Offer
If you receive a lowball offer from an insurance company, it’s important not to accept it immediately. While it may seem tempting to settle your claim swiftly, doing so can mean leaving money on the table, especially if your injuries and damages are more extensive than initially thought.
Consider the following instead:
Don’t Rush to Accept the Offer
Take your time before responding to any offer. Insurance companies often pressure claimants to make quick decisions. Resist the temptation to settle too soon — especially if you haven’t fully assessed the extent of your damages or received all necessary medical treatment.
Consult a Personal Injury Attorney
One of the best things you can do when facing a lowball offer is to consult an experienced attorney. A personal injury lawyer can assess the full value of your claim, including damages that the insurance company may not have taken into account.
Request a Breakdown of the Offer
Your lawyer can ask the insurance company for a detailed explanation of how they arrived at the settlement offer. This can identify why they are undervaluing any particular aspect of your claim. For example, they may have underestimated your medical bills or ignored the potential for ongoing treatment. This gives your attorney a good idea of what evidence and arguments they need to present with a counteroffer.
Document Your Damages
Make sure you have comprehensive documentation of all the damages associated with your injury. This includes medical bills, receipts for out-of-pocket expenses, lost earnings, and any other relevant costs. The more evidence you have, the stronger your negotiating position will be.
Consider Making Counteroffers
If the insurance company’s offer is far below what you believe your claim is worth, your personal injury lawyer can submit a counteroffer with supporting documentation. This will show the insurer that you are prepared to negotiate and not willing to settle for less than just compensation.
How a Personal Injury Attorney Can Help
Hiring a personal injury attorney can be invaluable when dealing with lowball offers from insurance companies. Of the many benefits a lawyer can offer you, some of the most significant include:
Knowledge of Claim Valuation
Personal injury attorneys have experience evaluating a claim's true value, including immediate and future damages. They can determine a reasonable settlement amount considering all relevant factors. You cannot rely on insurance adjusters to do this.
Negotiation Skills
Attorneys are skilled negotiators who know how to handle insurance adjusters and fight for a better settlement. They will not only advocate for a higher offer but can also advise on when it may be best to file a lawsuit rather than accept a lowball settlement.
Investigative Resources
Personal injury lawyers have access to expert witnesses, investigators, and medical professionals who can strengthen your case and provide testimony or evidence to support the value of your claim.
Protection Against Bad Faith Practices
If the insurance company is acting in bad faith (deliberately trying to underpay or delay a claim), an attorney can hold them accountable. They can file complaints or take legal action if necessary.
Relieving the Burden
Finally, having a lawyer on your side means you don’t have to deal with the stress of managing negotiations and paperwork while you are recovering from an injury. This allows you to focus on your health and well-being while your attorney focuses on getting you the compensation you deserve.
If You Receive a Lowball Offer from the Insurance Company, Let a Personal Injury Attorney Negotiate on Your Behalf
Lowball offers are a common tactic insurance companies use to minimize payouts and settle claims rapidly. However, these offers often fail to reflect the true value of a victim’s damages. If you receive a lowball offer, it’s important to carefully assess the situation, gather all necessary documentation, and discuss your situation with a personal injury attorney who can fight for a fair settlement on your behalf.
An experienced personal injury lawyer can address all legal issues of your claim, ensure you receive proper compensation for both immediate and future damages, and provide the legal support necessary to counter lowball offers and secure a better outcome. Don’t let an insurer’s attempt to settle cheaply cost you what you deserve — seek professional legal assistance to protect your rights and ensure the most beneficial claim result.
James Wayne Holliday
James Wayne Holliday has been practicing law since 1995. He has been named as a “Best Attorney” Lifetime Charter Member in Florida, an honor awarded to less than one percent of the nation’s lawyers.
Mr. Holliday has earned a reputation as a relentless trial lawyer because of his outstanding work ethic and thorough preparation of his cases for trial.
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