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Negotiating with Insurance Companies in Personal Injury Litigation

Once the insurance company has finally made you a settlement offer, be prepared to say no. It is very rare for the first offer to be their best offer. When you go to purchase a car, you do not accept the first offer from the dealership. Similarly, the insurance company does not expect you to take their first offer, and that is why you can expect to initially receive a low ball offer. Unfortunately, you do not have the same bargaining power that you have when purchasing a car. When you begin to walk out of the auto dealership, things magically happen. The dealer knows you can buy the car elsewhere. Suddenly, the price drops and other extras are thrown in.

It is not so simple in negotiating the settlement of a personal injury case. You are stuck with the insurance company that is defending your case. You cannot shop around. Especially these days, it is very difficult to get full value out of insurance companies for personal injury cases. Whereas in the 70’s and 80’s, you could expect a substantial settlement within a few weeks after forwarding the settlement demand letter, in the latter part of the 90’s and into the 21″ century, casualty insurance companies around the country have gotten much tougher in settling cases.

Insurance companies invest a great deal more money in exhaustively investigating personal injury claims these days. Their investigations frequently turn up information they use against plaintiffs at trial. They may discover through the issuance of subpoenas that a claimant has been in several other accidents or that the claimant has criminal convictions for perjury or other crimes that negatively affect his or her credibility. (See form 14, p.263 for a sample subpoena.) Any of these factors can limit or even prevent a settlement offer.

If the firm refuses to make or raise their offer to a legitimate level, a lawsuit has to be filed. Once it is filed, the insurance company realizes that you are serious and that it will have to start paying its attorneys if it wants to continue to defend the case. This presents the second opportunity for settlement negotiations. It is common for the company to make a reasonable settlement offer immediately after your attorney files the lawsuit.


Insurance companies know that jury verdicts, even for legitimate and substantial accident injury claims, are often much lower than they used to be. Thus, the insurance companies almost never offer full value until you have proven to them that they really have no other choice. That means having many aspects of your seemingly private life explored by means of subpoenaed documents.

It may also mean submitting yourself to a deposition under oath during which an insurance defense lawyer will ask you all about the accident, your injuries, and many other things that seem to be unrelated to your claim. If the case is not settled at this point, it will probably be several more months before further negotiations take place.

At the deposition, the insurance company’s lawyer questions you under oath about the accident and your injuries. This is the first chance for the insurance company to evaluate you in person. How you present yourself at your deposition dramatically affects the settlement negotiations. If you have been properly prepared for the deposition by your attorney, it is very likely that the company will extend an increased settlement offer shortly afterwards.

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