What approach will show the adjuster that you mean business? Well, for starters, we suggest that, if possible, you avoid making the first offer. You can ask the adjuster to contact you when he or she is ready to settle the case. However, try not to put a number on the table until you get one from the insurance company.
The first number from the adjuster will be a low-ball offer. The adjuster will expect you to counteroffer. If the offer is made on the telephone, don’t respond immediately with a rejection or a counteroffer. Thank the adjuster for the offer and let him or her know you will be back in touch.
Send the Demand Package
The demand package with all of your evidence and your cover letter can be sent to the adjuster after you receive an offer. And for once, it’s okay to be demanding. The more demanding you are, the better.
When you prepared for the settlement negotiations, you researched dollar values for cases like yours and you developed a goal and a bottom line. In your demand letter, two options to consider are specifying a settlement amount or asking for the policy limits. These are not the only options but they are the only options that can be reasonably explained in an article.
If you’re not able or ready to put forward a number, consider asking for the policy limits. In Ontario, the minimum policy limits are $200,000. However, it would be very unusual for an Ontario driver to have such a small amount of insurance. Most Ontario drivers have $1 million and many have $2 million.
The strategy behind the offer for the limits of the policy is that it puts some pressure on the insurance company to settle with you. If you offer the policy limits, and your case actually beats the policy limits, the insurance company could potentially be on the hook for more than the value of the policy.
Ask for More than You Want
If you do specify a settlement amount in your demand package, make sure it’s significantly higher than your goal.
Every negotiation is different, but think about the natural negotiating instinct to meet in the middle. For example, if the adjuster offered you $30,000 and your goal is $60,000, consider starting at $90,000 or even $100,000.
You want to leave some room for the adjuster to negotiate you down. Some people find this process nerve wracking, others find it exciting. Either way it is an unavoidable part of the process. Like all human beings, the adjuster will want to feel like they have negotiated you down. They will likely have to report on the progress of the negotiation to one of their superiors. Giving them a chance to knock down your offer makes this process easier.
It is also possible that you will settle for more than your goal. This does happen from time to time and is a great result when it does.
Don’t be Afraid to Ask Questions
The adjuster will have the settlement he offers broken down into categories. With some variation, the adjuster will give you a breakdown as follows:
General Damages (Pain and Suffering) , less deductible of $30,000 = $ Economic Loss = $ Prejudgment Interest 5% times 1.5 years = $
You should ask very specific questions about how the adjuster arrived at each of the numbers. For the general damages, ask him or her which factors were considered and what cases were relied on.
It’s even more important to get to the bottom of the economic loss numbers. You should understand how much of the offer is for past loss of income, future loss of income, past care costs, future care costs, future housekeeping and home maintenance as well as the out-of-pocket expenses you have claimed.
Make very careful notes of everything that is said on every point so that you understand the negotiating points even after you are off the telephone. If you get an answer you do not understand, ask for clarification. You want to be able to challenge the adjuster in future negotiations if there is a change of position on a given point.
You also want to increase your education. The more you understand about the process, the better equipped you will be for any future round of negotiations.
Control your Give-and-Take
There’s a universal rule that, if abided by, can assist you in getting what you want in life. Whether it’s trying to get your husband to take out the recycling, or negotiating with an insurance adjuster, you really have to give a little to get a little.
It might be a little easier to decode the factors that motivate your husband, but insurance adjusters can be tricky. We’ve found the best strategy is to make small concessions when negotiating.
While large concessions can be seen as a “cut to the chase” maneuver, they can also create an impression that you have a lot of room to move. If you make smaller reductions, you increase the likelihood that you will exceed your goal.
Think about it. To negotiate well, the other party has to feel as if they’re getting something too. If you provide yourself with room to make numerous concessions, you will be able to maintain goodwill by continuing to move on your offer. Cutting too much at once reduces your flexibility and may bring you to an impasse more quickly.
Consider making your concessions smaller each time to give them impression that you are getting closer to your goal.
Patience, Patience, Patience
Small concessions made over time send a message to the adjuster that you are not in a hurry or desperate. Most serious car accident victims are in fact desperate for money, a fact that is used by the adjuster as bargaining leverage. Along these lines, it is important not to tell the adjuster that you need the money with any urgency if at all possible.
Telling the adjuster you need money to make mortgage payments or that you have promised your family a trip will negatively impact your bargaining power.
If the final offer by the adjuster does not meet your goal or even your bottom line, do not accept. In your preparation for the negotiation, you mulled over the options you would consider if your goals were not met. Now is the time to consider those options.
Stay Cool, Calm and Collected
There is nothing to be gained by getting upset or angry if the negotiation does not result in the settlement you require. The adjuster has the upper hand in this area because the settlement result does not affect him personally.
Nothing says “desperate” like a claimant that is yelling or upset because of a failure of a negotiation. As we noted above, desperation gets you less in the long run, not more.
We have taken over settlement negotiations more than once where the adjuster has been relieved to be dealing with a lawyer rather than the client, simply because the exchanges were emotional and therefore not productive.
Keep your Cards Close to your Chest
It is almost as important to contain your emotions when the negotiations are going well. As soon as the adjuster sees or hears in your voice that glimmer of satisfaction, you are basically at the ceiling.
Practice telling the adjuster that you are “still disappointed with the number for general damages” or that you hope he or she has come to you “with more authority to settle than that”. Thank the adjuster for the offer, but communicate calmly that you do not think that it will do.
Leave Yourself an Out
Lawyers have a natural advantage over lay people when negotiating because we can always tell the adjuster that we “have to get instructions from our client” before accepting or rejecting an offer. This slows down the negotiations, which is a good thing, as discussed.
You can set up this same dynamic by letting the adjuster know upfront that you are not making any decisions without speaking to your spouse, your parent, a friend who is a lawyer or some other trusted adviser.
In addition to slowing down the process, this dynamic also tells the adjuster that you have support behind you and that you are not likely to be pressured or tricked into an improvident settlement.
Can You do This? Many people do.
Assuming you are able to prepare properly and come up with an appropriate settlement number, the real advantage a lawyer has when negotiating is that the adjuster has to assume that your lawyer is prepared to go to trial if a viable settlement is not reached.
Because you have come this far without a lawyer, the adjuster is betting that you will not take that step. However, if you keep that door open throughout the negotiations, and follow the rest of the suggestions in this book, you may well reach an acceptable settlement. Good luck!