What should I do if I’m offered a settlement for my personal injury by an insurance company?

So, the question is, what should you do if you’re offered a settlement by an insurance company? That’s actually happening more and more. In some ways, it can be a good thing, right?

The insurance company’s purpose in doing that very early on in a claim is usually to try to control their costs. Maybe if they give you some money now, you decide it’s worth it to end everything. You don’t get an attorney. They don’t have to respond to an attorney. It doesn’t drive up their processing cost of the claim. Usually, what they’re offering you is a little lower than what the attorney would have demanded, so they save some money on that.

It can be good if it’s a fair offer and it prevents you from having to pay attorney’s fees because a contingency fee is usually around a third, up to 40%, depending on where you go. So, even if their offer is, say, 25% lower than what they would have given me, you might save money. I like that that’s happening because usually, where they make a fair offer is on lower claims where the person is going to have a harder time finding a good attorney anyway because the contingency fee is worth less in absolute dollars.

What I don’t like is when they make these offers and they are not taking into account the likelihood of future treatment that’s been recommended. Sometimes the adjusters will even tell you that they haven’t looked at your medical records. If they dangle $5,000 or $10,000 in front of you, and it’s a lot of money that would really make your life easier right now, it becomes very tempting to take that money.

But what if that surgery the doctor briefly mentioned does happen? It costs $20,000, and you’re between insurances. You wind up having to pay a big chunk of that. You can run through $5,000 to $10,000 really quickly when it comes to medical bills. If, in that example, the surgery causes you to lose time from work and you don’t have any type of disability insurance, you can see how your costs balloon. Unfortunately, once you sign on that line to get the money, it doesn’t matter what happens next—your claim is over.

What frustrates me about the process, and the other side of the coin, is that all too often, the adjuster is offering way less money than they should be offering. When people take it and later call me, saying, “This turns out not to have been fair at all,” I say, “You’re right, but you made that call.”

So how do we deal with that? Usually, what we try to do is this: if someone—say, with State Farm as an insurance company—that adjuster offers you $5,000, and you say, “Gosh, I don’t know if this is fair or not. I’d like to talk to a lawyer.” When someone calls our office and lets us know that happened, you do still have to sign a contingency fee contract. But we will add into the contract that we won’t take a fee on the first $5,000.

That way, it’s more risk-free to you. You can get involved with us, have an attorney looking things over, making recommendations, and dealing with the insurance company, their algorithm, and their adjusters. But that first $5,000 they dangled in front of you—push comes to shove—if that’s all the case is worth, you’re not paying us a fee. If we only get you, say, another $1,000 and it’s $6,000 total, you’re only paying a fee on the extra $1,000.

That gives people the incentive to call us, use our office, allow us to work the case, get them some more money, and earn a fee for ourselves, but still protects that initial amount the insurance company gave them before they contacted an attorney.