How to Negotiate a Bodily Injury Settlement

Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states.
After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health in…

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Rachael Brennan

Licensed Insurance Agent

Benjamin Carr was a licensed insurance agent in Georgia and has two years’ experience in life, health, property and casualty coverage. He has worked with State Farm and other risk management firms. He is also a strategic writer and editor with a background in branding, marketing, and quality assurance. He has been in military newsrooms — literally on the frontline of journalism.

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Benji Carr

Former Licensed Life Insurance Agent

UPDATED: Mar 30, 2022

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Quick Facts

Keeping records of your injuries and treatments is essential to estimating what settlement you should accept
Remember to consider any lost wages or future lost earning potential
A personal injury attorney can likely help you reach a better settlement than you could reach on your own

You ought to recover compensation whenever you experience personal injury due to reckless or negligent acts of another person. Unfortunately, the insurance company may sometimes provide a low offer as compensation because most injured individuals may not know how to evaluate damages and get a fair settlement.

The goal of insurance adjusters, after all, is to pay out as little as possible to make money for the company they work for. The first settlement offer is reached after reviewing evidence, relevant documentation, and different opinions arising from the claim.

Before the negotiation begins, the injured party undergoes a medical examination to determine the severity of the injuries sustained and their future medical needs.

Tips to Negotiate a Bodily Injury Settlement

The negotiation process begins after filing a claim, receiving a reservation of rights letter, and an initial offer from the insurance adjuster.

Filing a Claim

Filing a personal injury claim involves sending a letter to the adjuster informing them about your injury claim. The letter should indicate the severity of the injuries experienced, the party liable, and any other costs associated with the injury. It will allow the adjuster to confirm if the accident or incident is covered under the insurance policy and set a value for the case.

Initial Offer

Sometimes the insurance company will send an initial offer to the injured party before receiving the demand letter to try and settle the matter. However, it is crucial to get an accurate valuation of your injury claim before signing the settlement document since it might not include fair compensation for all the harms suffered.

Reservation of Rights Letter

This is a letter sent from the insurance company to confirm receipt of the claim filed by the injured party. It acts as a binder while the investigation of the claim is underway. It describes what the policy covers and notifies the injured party that it has the right to make no compensation if it rejects the claim.

Demand Letter

If you’re having trouble reaching the insurance company that you believe is responsible through other means, a demand letter is often an effective way to reach out. A personal injury attorney will usually send such a letter as a first step, even before the company’s adjuster has made an offer. 

A demand letter should include all known damages and an estimate of future harms resulting from the injury. It should be short and professional and include a demand for a specific dollar amount.

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When to Negotiate

Sometimes, the initial offer from the insurance adjuster will be deemed more than adequate for the costs associated with your injury. In other instances, the demand letter will result in payment in full. Obviously, there’s no reason to negotiate if both sides agree.

It’s when you’re offered a settlement amount that does not match your expectations that it’s time to negotiate.

Responding to the Counteroffer

A good rule of thumb towards bodily injury compensation is to respond with a reasonable counteroffer since it is expected that the adjuster will respond with an initial low offer as compensation. As soon as your lawyer receives an offer from the adjuster, they should seek clarity by requesting them to give specific reasons for making a low offer for the case.

Handling a low Counteroffer

Getting reasons for receiving a low offer will allow you to provide detailed explanations to the adjuster with support from relevant documents in your demand letter.

If you are yet to reach your maximum medical improvement, it will be prudent to send the adjuster periodic medical updates like diagnostic tests during the medical process. Regular medical updates will allow the adjuster to consider raising the amounts for compensation.

Your lawyer will structure the demand letter within the insurer’s policy limits to guarantee approval of your request by making it reasonable for consideration while aiming to recover the maximum amount possible.

What to Include in the Counteroffer

If you haven’t already consulted an attorney, it might be a good time after you receive the initial offer to settle and it’s too low. Negotiating a better settlement from insurance companies is essentially the whole job for a personal injury attorney.

Future Complications From an Injury

Depending on the type of personal injury, there are a number of different types of compensation you can argue for. Typical bodily injury cases arise from car accidents, animal bites, burns, and spinal cord injuries — for instance, a car accident on the highway or a slip and fall accident on a premise may lead to severe internal injuries like broken bones or fractures.

However, an injury to soft tissue or to the spine can result in mobility issues and complications that can persist for years. An injury to the brain can result in lifelong complications as well. In order to argue for additional compensation for such conditions, however, you’ll want to have some evidence of these conditions that you can provide when you make a counteroffer.

Proof of Out-of-Pocket Expenses

It would be beneficial to provide the adjuster with proof of out-of-pocket expenses that resulted from the injury. Whether these are co-pays for medical treatment, over-the-counter medicines, or costs associated with the incident like renting a car; you should be fully repaid for these out-of-pocket costs which may not have been included in the initial offer.

Loss of Quality of Life

After being injured, you may have experienced some loss of enjoyment or even the ability to do things you enjoyed prior to the accident. These losses are difficult to quantify — how do you determine the value in not being able to go jogging or for a scar that makes you dress differently? — and may justify consulting with an attorney even if you’ve been handling things by yourself up to this point.

Lost Wages

You could give proof of lost wages by highlighting all the days on the calendar when you were unfit to resume work due to the injuries. For this reason, your doctor will also write you a note indicating all the days you couldn’t perform your duties.

Your lawyer should also engage an economics expert to conduct an economic damage analysis to determine the extent your injuries will have on your income and earning ability going forward.

What to Avoid When Negotiating

Sometimes your adjuster will request you to issue a recorded statement explaining how the incident happened together with costs and other losses resulting from the incident.

Generally, it is better to give a written statement rather than a recorded statement. If the adjuster insists on an interview or a recorded statement, it’s a good idea to have an attorney present to ensure that you don’t create problems for your claim by answering a question the wrong way or saying too much.

Settling the Case

Eventually, both sides will agree on an amount. Often, you and the adjuster will be considering not only the value of the settlement but also the value of not going to court. 

If you can’t accept the offer being made, your next step will be to file suit against the person who caused your injuries (and the insurance company will be required to defend that person). Even if you’ve been representing yourself through the process of negotiation up to this point, now is a good time to talk to an experienced attorney. There are additional expenses and non-financial costs associated with a lawsuit that should be considered.

Ultimately, it may be in your interest to accept less and avoid going to court. Remember, though, that you should not make any decisions about your settlement offer before you’ve had a chance to recover from the shock and injury that have you seeking a settlement in the first place.