Why Do Insurance Companies Lowball?
Most people trust their insurance companies and believe they will care for them when things go wrong. And it’s no wonder why. You are paying those monthly insurance premiums every month to get something in return, right?
Unfortunately, that’s not always the case.
While the insurance company’s role – theoretically – is to provide you with fair compensation for your injuries and losses, the reality can often be quite different. If you suffered an injury and need your insurance company to cover your medical expenses and other covered losses, you might deal with what is known as lowballing.
This practice is widespread in the insurance claims process, but many people do not know how to counter it. If you think your insurer is trying to lowball you, you might need the assistance of a skilled insurance claims attorney.
What Is Lowballing in the Insurance Claims Process?
Cambridge Dictionary defines the verb lowball as calculating something at an unfairly low price or level. Lowballing occurs when an insurance company offers a settlement amount significantly lower than the claim’s actual value.
This unfair and unethical practice aims to minimize the insurer’s payout, often leaving injured victims without the funds they need to cover their medical expenses, property repairs, and other associated costs.
- Example. John, a 35-year-old software engineer, was involved in a car accident that left him with a fractured leg and a totaled vehicle. Within days, his insurance company offered him a settlement that seemed generous at first glance. However, after consulting a personal injury attorney, John discovered that the offer didn’t cover his upcoming surgeries and physical therapy sessions. He negotiated a settlement with professional guidance that accounted for all his medical needs and lost income.
Reasons Why Insurance Companies Lowball
If you have been paying your insurance company those premiums every month, and now you are dealing with a lowball settlement from the insurer, the only question you may have is, “Why?”
Minimize Payouts and Maximize Profits
At its core, the primary goal of any insurance company is to make a profit. They operate like any other business, where revenues must exceed costs to stay afloat. One of the ways they ensure profitability is by minimizing the amount they pay out in claims.
By offering lowball settlements, insurance companies reduce their expenditures. The less they pay out, the more profit they retain. This strategy is especially prevalent in high-value claims, where even a slight reduction in the payout can result in significant savings for the insurer.
The Settlement is Software-Generated
Many insurance companies utilize sophisticated software programs to calculate settlement offers. These programs analyze various factors, such as medical bills, property damage, and lost income.
While designing these algorithms to be efficient and unbiased, they often fail to fully capture an individual’s suffering and financial loss. The result is a one-size-fits-all approach that doesn’t account for the unique circumstances of your case, leading to lowball offers that don’t reflect the true value of your claim.
They Are Hoping You Will Accept the Low Settlement Offer
Insurance companies know injured victims often face financial strain due to medical bills, lost income, and other expenses. They exploit this vulnerability by presenting quick, lowball offers, hoping you’ll accept out of desperation.
Many people are eager to resolve their claims quickly to alleviate immediate financial pressures, and insurers count on this urgency to settle cases for less than they’re worth. Accepting a low offer may provide short-term relief but often falls short of covering long-term costs and impacts.
They Think You Will Not Retain a Personal Injury Lawyer
Insurance companies know that most claimants lack the legal experience to negotiate a fair settlement effectively. They think (and hope) that you won’t retain an attorney, allowing them to offer and settle for less than your claim’s true value.
Legal representation can change the game.
Experienced personal injury attorneys understand the tactics insurers use and can advocate for a fair settlement that reflects the full scope of your damages. Besides, knowing that you have an attorney can also deter insurers from making lowball offers in the first place.
Once You Accept an Offer, You Lose Your Right to Sue Them
Accepting a settlement offer comes with a catch: Once you accept, you waive your right to sue the insurance company or seek additional compensation. This finality provides a powerful incentive for insurers to settle quickly and cheaply. They want to close the case as soon as possible to avoid the risk of future litigation, which can result in higher payouts.
It’s crucial to thoroughly evaluate any settlement offer and consider future expenses before accepting, as doing so may limit your ability to pursue additional compensation later. While 97 percent of all personal injury cases settle before trial, you should always prepare for the possibility of going to trial.
Signs That the Insurance Company Is Lowballing You
Knowing what lowballing is and why insurance companies use this tactic when handling claims means nothing if you cannot recognize the signs of being lowballed.
When dealing with the insurance company, watch out for the following signs of lowballing:
The Settlement Offer Comes Too Fast
A surprisingly quick settlement offer is one of the first red flags that the insurance company might be lowballing you.
While it might be tempting to accept an offer immediately, especially when dealing with medical bills and other expenses, a fast offer indicates that the insurance company wants to settle the claim before you fully understand the extent of your injuries or the long-term implications.
- What to do? Take your time to evaluate any settlement offers. Consult medical professionals to understand the full scope of your injuries and seek legal advice to ascertain the true value of your claim.
The Insurance Company Pressures You to Accept
Another common tactic is pressuring you to accept their initial offer. This might come in frequent calls, emails, or even deadlines that create a sense of urgency.
Insurance adjusters have the training to settle claims quickly and for the least amount possible.
By creating a sense of urgency, they hope you will make a hasty decision without consulting a personal injury lawyer or understanding the full extent of your damages.
- What to do? Remain calm and resist the pressure to accept any offers right away. Instead, take the time to review the offer thoroughly, consult an attorney, and make an informed decision. You know what they say: “Better be safe than sorry.”
They Ignore or Dismiss the Evidence
If you notice that the insurance company is ignoring or dismissing key pieces of evidence that support your claim, this is another sign that they might be trying to lowball you.
Insurance companies routinely downplay critical evidence to devalue claims and minimize payouts. This can include medical reports, witness statements, or other documentation that substantiates the extent of your injuries and losses.
- What to do? Ensure that all relevant evidence is documented and presented clearly. If the insurance company continues to ignore this evidence, it may be time to consult a personal injury lawyer who can assist in presenting a stronger case. When you have an attorney, they won’t let the insurer take advantage of you.
They Downplay Your Injuries
Another common tactic is downplaying the severity of your injuries. They might argue that your injuries are pre-existing conditions, not as severe as you claim, or unrelated to the incident.
By doing this, the insurer is trying to justify a lower settlement offer. This tactic is particularly common in cases where injuries are not immediately visible or require long-term treatment.
- What to do? Keep thorough medical records and follow all recommended treatments. A detailed medical history will make it harder for the insurance company to downplay your injuries.
They Refuse to Explain the Math
A clear sign that the insurance company might be lowballing you is if they refuse to explain how they arrived at the settlement offer. You need transparency to understand whether the offer is fair and covers all your damages.
The insurance company hopes to prevent you from questioning the offer or seeking a higher amount by withholding details about its calculations. Lack of transparency can indicate that it is not providing a fair settlement.
- What to do? Request a detailed breakdown of how they calculated the settlement amount. If they refuse, consult an attorney who will consider all aspects of your claim.
They Suddenly Stop Communicating
If the insurance company suddenly stops communicating with you, they may want to frustrate you into accepting a lower settlement.
This strategy often aims to wear you down, increasing the likelihood of accepting a low offer out of desperation or frustration. A lack of communication might also indicate that the insurance company is not acting in good faith.
- What to do? Document all attempts to communicate with the insurance company and seek legal advice. A personal injury lawyer can ensure that your claim receives proper attention, that the insurer treats you respectfully, and that you receive the compensation you deserve.
How Can You Avoid Being the Victim of Lowballing?
No one wants to settle their claim for less than they deserve, so do everything it takes to counter the insurance company’s manipulative tactics and avoid receiving an inadequate offer.
Here’s how you can do that:
- Make sure you understand the value of your case. Before you assume an offer is a lowball, take the time to evaluate it. Compare the settlement amount to your documented medical expenses, lost income, and other damages. It’s also helpful to research similar cases to gauge typical settlement ranges. Sometimes, an offer might seem low simply because you haven’t considered all the factors. If the offer doesn’t come close to covering your legitimate expenses, it’s safe to consider it a lowball offer.
- Figure out why the insurance company is lowballing you. Understanding why an insurance company might lowball you can provide insight into how you can better negotiate. Insurers often use tactics like lowball offers to minimize the payout and protect their bottom line. They might also believe that you are not well-informed about the value of your claim or that you are in a hurry to settle.
- Get help from an attorney. One of the most effective ways to avoid receiving an inadequate offer is to hire a personal injury attorney. Lawyers comprehensively understand the legal process and know how to negotiate with insurance companies. Besides, an attorney can also bring credibility to your case. Insurance companies are more likely to take your claim seriously if they know you have legal representation. Moreover, an attorney can advise you to accept a settlement or pursue further legal action.
- Collect the evidence you need to prove your claim. The stronger your evidence, the stronger your claim. Collecting comprehensive documentation related to your injury is crucial. This includes medical records, bills, injury photographs, and other relevant documentation. Eyewitness statements and police reports can also strengthen your case. In addition to these, keeping a journal detailing your recovery process, daily pain levels, and emotional distress can demonstrate the extent of your suffering. The more detailed and organized your evidence, the harder it becomes for insurance companies to dispute your claims or offer a lowball settlement.
- Keep negotiating or file a lawsuit in court. If negotiations stall or the insurance company continues to offer unreasonably low settlements, don’t fear further negotiations or filing a lawsuit. Persistence can pay off, and showing that you are willing to take your case to court can pressure the insurance company to present a fair offer. Filing a lawsuit doesn’t mean you will necessarily end up in court. Often, the mere act of filing can prompt more serious negotiations.
If going to court becomes necessary, your attorney can guide you through the process and advocate for you in front of a judge or jury.
A personal injury lawyer can explain the legal requirements and deadlines for litigation. For example, injured victims in Oklahoma have two years from the date of injury to sue the party that caused their injury. You can lose your right to monetary compensation if you miss this deadline, so act now.
