How should I deal with a car insurance settlement?

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Here's what you need to know...
  • If you’re offered a settlement and it’s not as high as you believe it should be, do not cash or deposit the check
  • Send a letter back to the insurance company outlining what you think the settlement should be and why
  • Check with the Department of Insurance in your state for any ongoing problems with the insurance company you’re dealing with
  • If it is your own insurance company that is refusing to pay what you believe you deserve, make sure you change companies


To deal with a car insurance settlement, you must decide on whether or not to accept the terms and know what your other options are.

Often times, after an auto accident, you will be offered a certain amount of money from the insurance company to cover the cost of injuries and damages.

This is called an auto insurance settlement and the way to deal with it is to either accept it or request a higher amount; this depends on how much the insurance company offered you and whether you think that the amount offered is actually fair.

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What to Do when Accepting a Settlement

This is pretty simple, in most cases, you won’t receive a letter with an offer; in most cases, the insurance company will simply send you the amount that they are offering in the form of the check.

With the check is a statement that if you cash the check you are accepting the terms of the settlement and cannot ask for more.

What this means is that if you cash or deposit the check, you are done, you won’t have to communicate with the insurance company any further because you accept the amount that they have to offer.

Before you accept the offer, however, you need to ensure that it is in the price range that you expected; if it isn’t enough to cover the damages in your vehicle, you don’t have to accept the settlement. If you don’t like the offer, don’t cash the check!

The insurance company will probably start with the lowest possible offer in hopes that you will accept the offer. This isn’t because they are trying to be unethical; it is simply in the best interest of the company that they pay out as little in claims as possible.

This is why so many auto insurance companies offer incentives to their customers when they don’t make claims.

What to do when the Settlement Amount is Too Low

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If the settlement offer is too low, either because it won’t cover the damages, or you think you are entitled to more because of loss of work or other reasons, your first course of action will be to return the check with a letter explaining:

  • The amount that you want from the insurance company
  • The reasons why
  • A copy of receipts from your list of expenses

Unfortunately, this is a process that could take a while. The insurance company may feel that your number is too high and come back again with another amount.

You can continue to negotiate for the amount that you want, but there is a chance that they will never meet your number. They may even tell you in a response letter that your number too high and that they will never meet the amount.

In this case, you will want to speak with someone that has more authority than the insurance adjuster handling your case.

The insurance adjuster is told by his or her boss just how much they are allowed to offer you, a conversation with someone higher up may end up getting the results that you need.

If not, you can hire an attorney to write a letter for you demanding the amount that you want. This is not a case of actually hiring a lawyer, you can pay one to write a letter of demand and hope that the insurance company will comply.

Often they will, simply to avoid a costly court case, but this depends on how far apart you are in their top settlement amount and your actual number.

During this time, you need to document every conversation, save every letter—both the letters that you send to them and the ones you receive. You do this because if you take the next step, you are going to need this information.

The next step will be to hire a lawyer to continue negotiations on your behalf. You can do this at any time in the process, especially if you don’t feel comfortable with the negotiation process.

However, at a certain point, you will want to consider this option if you aren’t getting anywhere. In addition, a lawyer can help you determine whether you can ever expect to get the amount that you demand from the insurance company.

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Now, here is the tricky part; if you are negotiating with an insurance company of the at-fault driver, meaning that you weren’t at fault and it isn’t your insurance company you are trying to get to pay, your next course of action will be to sue the driver that caused the accident, not the insurance company.

Many people think that they will be suing the insurance company, but that isn’t the case. It is the driver that is inevitably responsible for the costs caused by the accident.

The driver will probably contact his or her insurance company to get them to pay, but they may or may not be successful.

Unfortunately, many people don’t have the financial resources to pay you for losses from an accident, especially in these tough economic times. In the end, you may end up with the satisfaction of being right but without any additional money to show for it.

If, however, it is your insurance company that is refusing to pay, you can sue them for the money. This situation might occur if the driver that causes the accident is underinsured or uninsured and you carry uninsured/underinsured insurance coverage.

Your insurance company should pay you for whatever damages were incurred from that accident because you purchased the necessary coverage.

Something else to consider is reporting the insurance company to the Department of Insurance in your state. They investigate any complaints made against the insurance company and request an explanation of the choices the insurance company makes.

While the Department of Insurance isn’t necessarily working on your behalf, this could work out well for you because if the Department of Insurance believes they are in the wrong, they could heavily fine them.

An investigation may lead to your getting paid simply to avoid large fines from the state.

Car Insurance Settlements: When All Else Fails

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Unfortunately, when all else fails, you have little recourse; once you lose a court case, it is done and you have to move on.

You will still get a check from the insurance company, but it will be less the fees they incurred when you took them to court. If you win a court case then they pay the court fees.

If, however, it is your own insurance company that refused to pay and you lose your case (or even if you win it), you are going to want to find a new insurance company.

You don’t want to stay with an insurance company that refused to pay a claim, especially if you had documentation backing up your claim. You aren’t obligated to stay with the insurance company, even if you have five months left on your current policy. You can leave at any time.

Always choose a company that is known for paying their claims. You can use the Better Business Bureau, the Department of Insurance and the Internet to find out what companies have the best reputation.

You can also use our free quote tool to get your auto insurance quotes. In addition to choosing the best company, you want to make sure that it is affordable as well and that is where a quote tool comes in.

After filling out a short questionnaire, you will receive quotes from several reputable companies based on the information that you provided. You can then select a company that meets your budget and your reputation requirements, all in one place.

Enter your zip code in the rate tool below and find the best insurer for your needs.

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