How to Handle a Lowball Initial Insurance Settlement Offer

Keep copies of all your insurance policies and related materials.

Keep copies of all your insurance policies and related materials.

A totaled car or storm-damaged house can be financial and personal blows, and you will understandably want to get everything resolved as quickly as possible. Just don't feel you have to take the first settlement offer the insurance adjuster brings you. His job is to settle your claim quickly and for the least amount possible, so he will typically start at the low end of his company's approved settlement range. Many hope your sense of urgency to get your life back on track, along with any financial pressures you are experiencing as a result of the incident, will lead you to accept his first offer. You can protect yourself against this approach and negotiate a better offer by taking a few simple measures.

Document the car accident or home damage that is the basis of your insurance claim. Take pictures, keep records of all expenses related to previous repairs or upgrades, and get copies of current appraisals of your property.

Refrain from immediately responding to an initial offer you believe is too low. Do not sign any paperwork or sign and deposit the check because the insurance company might take that as acceptance of its first offer. The claims representative likely will push you to accept the offer right away, and might even suggest that you have to take it or risk losing any settlement opportunity. This is not the case and you should take sufficient time to review the situation.

Obtain repair estimates from three reputable companies in the immediate area. Ask them for a written evaluation of the damage to your car or home, along with a detailed and comprehensive estimate of all costs associated with the needed repairs. Factor in peripheral expenses, such as the cost of staying in a hotel if your home is inhabitable or rental car costs if your car is too damaged to drive. Some insurance policies also cover personal property in the damaged home or vehicle, so include the replacement costs for those items as well.

Talk to neighbors in the area who have comparable claims. In the event of storm damage, for example, find out the extent of the damage to the homes immediately adjacent to yours. If possible, ask the homeowners what type of settlements they have been offered. You might be able to bolster your claim based on their information.

Present the information you have gathered to the adjuster. Tell him you are not satisfied with the initial offer and you want him to reconsider it in light of the additional documentation you're providing. If he insists he can do nothing further, pursue your case with his manager or supervisor.

Continue negotiating with the insurance company until you believe you have reached a viable settlement offer. If the company refuses to move beyond the initial offer, consider retaining an attorney who specializes in insurance cases to advocate on your behalf. For small amounts, you might be able to get a settlement in your local small claims court. You can also file a complaint against the company with your state's insurance commissioner (see Resources).


About the Author

As a national security analyst for the U.S. government, Molly Thompson wrote extensively for classified USG publications. Thompson established and runs a strategic analysis company, is a professional genealogist and participates in numerous community organizations.Thompson holds degrees from Wellesley and Georgetown in psychology, political science and international relations.

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