Kajko, Weisman & Colasanti, LLP

Why insurers may lowball first offers

When you have auto repair or medical bills on the table, you do not want your insurer to play games while processing your claim. Unfortunately, many Massachusetts policy holders find the first settlement offer they receive is too low to adequately pay their coverage. So why do insurance companies engage in such tactics even if policy holders have made a convincing case for their claim? Sometimes insurers are purposely looking to see what their policy holders know.

Chron.com explains that following an insurance claim, it is actually probable that your insurer is going to send you a purposely low settlement offer despite the strength of your case. In many instances, insurance companies want to see if their policy holders understand what their cases are actually worth. If a policy holder accepts the offer, the holder likely did not know the true value of his or her claim. But by doing so, the policy holder ends up losing out on proper compensation.

Upon receiving a low settlement offer, consider countering with an amount you think is fair. Take care not to put forth a price that is too extravagant. An insurer may stonewall you if the company believes you are not being fair to them. Showing some flexibility can induce the insurer to negotiate up your price. At the same time, you should not shortchange yourself. You have a right to hold your insurer to the terms they have set in your policy.

If you are unsure about how to proceed, FindLaw recommends that you review your response with an attorney first. You could accidentally do damage to your claim if you make reckless statements in your response to your insurance company. Reviewing the details of your claim may also shed some light on your insurer's reluctance to spend more on your coverage and help make a better case for yourself.

Additionally, your insurer might lowball your settlement for other reasons. Some insurers feel that their policy holders share a good portion of the blame for their losses and think they can prevail in court if challenged. However, a low settlement offer might just be due to the insurer not possessing all the details of how you have suffered or other facts about your property losses. In such instances, you may need to clarify some details of your claim to receive a higher offer.

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