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How to file an insurance claim

how to file an insurance claim


Jan 15th, 2010 @ 12:30 am › Alden

Continuing my thoughts on how to negotiate your own personal injury claim, in this post I will provide some practical tips and tricks (actually, more like advice than tricks, but I went with alliteration) in handling and negotiating your own personal injury claim.  Much of what I say here will also be applicable to all insurance claims, but PI claims, as I’ve explained elsewhere, have the large, unknown, General Damages element and so deserve some specific attention.  First, a few points to consider during the pre-negotiation phase of your claim:

  • Begin with a reasonable expectation . Assuming that you don’t believe that an insurance claim is a “get rich quick” scheme, the best thing you can do is to have a reasonable expectation.  If you total your Toyota, the insurance company won’t replace it with a Rolls Royce. Likewise, if your claim is for a stiff neck, you probably won’t settle for anything close to $1 million.

The claims person is legally, contractually and ethically obligated not to overpay your claim.  Overpaying a claim cheats the company and its stockholders, the insurance agent who sold the policy, and the insured.  General Damages are not “profit”; they are meant to be of equal value to your injuries.  Besides, exaggerating a claim is fraud .  Most companies have departments to deal with fraudulent or suspicious claims, and you don’t want your claim to be transferred into that department.

  • Lay your groundwork. It is not the claims person’s job to prove your claim.  Gather enough evidence (receipts, reports, etc.) to prove your claim. Make periodic notes on how your injuries feel and how they are impacting your life.  Remember, your job is to make the claims person’s job easier; that is, make it easy for he or she to agree to an appropriate settlement.
  • Understand the process . While there are certain payments that an insurance company can make throughout the life of the claim, typically you will not receive any money until you can settle your complete PI claim and agree to a release of any further claims.  You may need to work out some arrangement with doctors in the meantime, but understand that you are primarily responsible for your bills.
  • You may owe some of your settlement to others . If, for example, your health insurance has paid your medical bills, they have a right to be reimbursed for that amount if you collect from another source.  Make sure you know who else wants to be paid.
  • There are other factors that could impact the amount you will recover . The most common factor is comparative or contributory liability.  In some states, if you are determined to have been 50% at fault, you can only recover 50% of your bills and general damages.  In other states, if you are determined to be 50% responsible, you will receive nothing .  For a discussion of the four different types of negligence laws in the United States, go here .
  • Another potential limitation to what you can recover is the applicable policy limits . If, for example, a person only has $15,000 of liability coverage, that is the maximum amount available from the insurance company.  You have the right to seek reimbursement from the policyholder, but he or she may not have any means to pay your claim.  Also keep in mind that if you settle with an insurance carrier and sign a release, you have no further right to seek money from the policyholder .  If policy limits are an issue, you may wish to seek the advice of an attorney.
  • If there is no coverage for the claim, the insurance company owes you nothing. The policyholder may, however, still owe your claim, and it may be necessary to file a lawsuit or seek to mediate your claim directly with that person. If there is no coverage, the insurance company will cease to be involved. Depending on the nature of your claim, denial of coverage is a situation in which you may wish to consult an attorney.
  • In some states, the insurance company cannot reveal the details of the policy to you . They should have to tell you if the applicable policy limits are not sufficient to cover your claim, but otherwise an insurance policy is a private contract between the Company and the policyholder.  Typically the insurance company doesn’t have to tell you why they may have denied coverage to their Insured, just that they did. (These laws vary from state to state.)
  • The insurance company may also conclude their policyholder did not cause your injuries, and deny your claim on that basis. The Insurer is not bound by a police report or your own insurance company’s analysis. However, should they deny liability, it is within your rights to file suit against the policyholder directly (although most likely you will continue to deal with the insurance company). In the event the court agrees with you, the insurance company is bound by that determination. (The Insuring Agreement typically says something to the effect of “We will pay those sums that the insured becomes legally obligated to pay as damages because of “bodily injury” or “property damage” to which this insurance applies.”)
  • Collaborate first, negotiate second. Remember my concept of the Shared Goal; both you and the adjuster want to resolve the claim, with as little hassle as possible.  You can even approach the adjuster with, “I know that your goal is the same as mine …,” which will let the adjuster step into a collaborative role.

The Negotiation Process

Once you have submitted all of your claim documents and have given the adjuster a reasonable period in which to review and evaluate them (at minimum, 7-10 working days), you are ready to begin negotiations (even in a collaborative setting you will have differences of opinion, and some negotiation is to be expected).  Following are some tips in how to negotiate your claim:

  1. As you are the claimant, it is appropriate for you to give the claims person your Settlement Demand. However, the claims person is more experienced at evaluating claims, so it is also appropriate for you to ask the claims person to first make you a Settlement Offer .  If they have evaluated your claim, they will be prepared to make an offer.
  2. Recall that a claims person will have a settlement range within which to negotiate. The offer is most likely at the bottom of that range (however, it should not be below that range, what is often called a “low-ball” offer).   It is appropriate for you to ask for some time to consider that offer. Don’t ever feel pressured to respond right away.
  3. In considering how to respond to the offer, consider where you’d like to eventually settle – your target number – then pick a demand sufficiently above this to allow for some room to negotiate.  Don’t pick an unreasonably high number, unless you feel that the adjuster’s offer is unreasonably low.  For example, if the offer is $15,000 and you’d like to settle at $20,000, a counter-demand of $25,000 is reasonable, and will probably signal to

    the adjust your target number.

  4. Countering too high – with something like $50,000 – will signal that you are unreasonable, and you’ll probably get a counter-offer from the adjuster of something like $15,100, and you’ll just slow down the process.
  5. However, if your own honest evaluation is in the $50,000 range, then by all means make that demand. Don’t let the adjuster’s offers control your demands.   If an adjuster’s evaluation is very close to yours, you can expect to settle at some point mid-range for both of you.  At times, the adjuster will be low, and you might be high; in this case, expect that you both will have to re-evaluate, and settle outside of both of your original ranges.
  6. It is completely appropriate to ask that an adjuster explain the reasoning for the offer being made; this can be of great assistance in crafting your response, as you may be able to put some aspect of your claim in new light. You may also ask that they put their analysis in writing.
  7. If you believe your claim is worth in excess of the available policy limits, you may either make a Policy Limit Demand – simply asking for all of the available limits to settle your claim – or make a demand above the policy limits.  If the latter, the insurance company will have to either negotiate the claim down, or seek contribution from their insured.
  8. If the company offers you the Policy Limits, accepting it will mean releasing the policyholder from any further liability.
  9. Don’t focus on trying to get the maximum settlement from the company. Focus instead on getting what you think is fair. You’ll never know if the insurer would have paid more, but that’s not the point. If you decided prior to the negotiation that you’d be happy with $20,000, then be happy with $20,000.
  10. Keep in mind that making a counter-demand is also a rejection of the latest offer . However, “one time only” offers are extremely rare, and are almost never seen in the early days of a claims negotiation.  Typically the “one time only” offers you will see are what is called a “cost of defense” offer, in which the carrier is willing to pay a premium today rather than spend that money retaining an attorney to defend a lawsuit tomorrow.  Theoretically, once litigation begins, that money is “off the table.”
  11. Don’t be put off if the adjuster tells you they have to talk to the manager for “more authority.”  This is not a “no” – it could be a tactic, or it could be true. Either way, it’s better than “no,” and signals that negotiations may continue.
  12. “No” seldom means “no;”  however, you may find that you have rejected the company’s “final offer,” which is then technically “off the table.”  At this point negotiation may need to be refocused or jump-started; if you feel negotiations are stagnating or have stalled, you can always request mediation. As long as you maintain a willingness to negotiate, there is no benefit in the Company refusing to participate. However, if you find you’ve “hit a wall,” retaining counsel is always an option.
  13. Beware the Statute of Limitations. often from 1 to 3 years from the date of the accident, depending on the state, the statute of limitations tells you how long you have to settle your claim without filing a lawsuit.  If you haven’t settled or filed suit within that time, your claim is dead (as is your right to sue the responsible party directly).
  14. If negotiations stall, mediation, arbitration and litigation are all options to consider.

Things Insurance Companies Don’t Want You To Know

Following are a few additional tips to assist in handling your claim, should you find that you are dealing with a claims adjuster who is unusually difficult.  Always start with the presumption that your claim will go smoothly.  However, if not, here are a few things that might help:

  1. The Department of Insurance is your friend.  If you believe the claims person is not acting in good faith, you may report the claim to your State Department of Insurance.  If there are any violations, the Company may be fined.  Typically, the involvement of the DOI involves managers and upper-level executives, so a DOI report is the last thing an adjuster wants to see happen.
  2. Document each conversation, including date, time, and specifics of what you talked about.  It is also not a bad idea to follow up a conversation with a letter (e-mail works as well) to the claims person documenting the call and what was discussed.  Be specific, such as, “This will confirm our conversation of this date, in which you extended an offer of $5,000. I have indicated that I need a few days to consider the offer.” But, always be honest, direct and respectful.  Remember, you catch more flies with honey than vinegar.
  3. In some States, you are allowed to sue the other person’s insurance company for failing to appropriately investigate and settle your claim.  If you can document that the Company has violated your state’s Insurance Code, you can contact an attorney who specialized in “Insurance Bad Faith” law for advice.
  4. The Adjuster’s most valuable resource is time .  The more of their time you use, the more they want to close (settle) your claim.   You should not only help them give you money, you should help them want to give you money.
  5. The Adjuster should return phone calls within a reasonable time.  If they are not returning your calls, ask to speak with that person’s manager or the Claims Manager.  Their time is also valuable.  However, remember again to always be pleasant and respectful. Try not to “lose your cool.” You can be persistent without being obnoxious or abusive.  If you want the Claims Manager or DOI on your side, you want to come off as more professional and above board than the Adjuster.

Collaborate First, Negotiate Second

Bottom line, if you are reasonable, cooperative and direct, chances are you will not have many problems negotiating most insurance claims. If you can take a collaborative approach – work to overcome the shared goal – resolving your claim may be a rather pleasant experience, and you will not feel at risk. Many claims adjusters are just good people, who see their job as helping people.

However, there are often bumps in the road, and sometimes there’s no option but old-fashioned negotiation.  If you are uncomfortable negotiating your own claim, you can always retain an attorney. However, the more combative the process, the greater the risk to both sides.  By preparing your claim carefully and paying attention to the process, you can minimize – but perhaps never totally eliminate – the risks.  That’s life.

Next: Tips on mediating your insurance claim.

  1. If you believe your claim is worth in excess of the available policy limits, you may either make a Policy Limit Demand – simply asking for all of the available limits to settle your claim – or make a demand above the policy limits.  If the latter, the insurance company will have to either negotiate the claim down, or seek contribution from their insured.
  2. If the company offers you the Policy Limits, accepting it will mean releasing the policyholder from any further liability.

Category: Insurance

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