Pretend you are sitting at a red light in your beautiful 64 Impala, Alpine blarin. Suddenly, some dude talking on a cell phone rear ends you. You know he was talking on the phone because during the impact it flew out of his window, and broke your side mirror. Hello auto insurance claim.
The back end of your car is crushed, and you suffer 1 week of pain and soreness, miss 3 days of work. Your estimate for repair of your vehicle is $5000, and you want payment for your injury.
“Dude”, the other driver does have valid auto insurance, so you expect to be paid.
You consider hiring an attorney and talk to a couple of those personal injury types. They all tell you that you probably have a small claims case. “Do it yourself” is the best free advice you get.
So you make your best effort at establishing your claim with Dude’s insurance company, and you send them everything they ask for. They give you a “claim number” and refer to you as “Claimant”.
Finally, 1 year later after the accident, you get a letter from Dude’s auto insurance company. Turns out that the insurance company is actually a greedy lizard who needs glasses.
The letter says they have determined you are 50% liable for the collision, because, as they put it, YOU were talking on the phone! And, they say, you had a broken mirror that prevented you from seeing Dude.
Craziness! You were stopped when Dude hit you!
Happens all the time.
The letter from the insurance company continues:
“Based upon our liability determination, and our review of your claimed damages, we value your claim at $1800, and enclose herein a check and release of all claims for your signature.”
$1800???? “That’s Bull**it!” – you scream into the mailbox.
“That’s Bull . . .bull . . .sh . . .bull . .it!” echos back out at you from the blackness of the mailbox. What to do now? Sadness and despair fill the air.
All is not lost. A person with an auto insurance claim can reject and negotiate a settlement offer on their own if they wish.
1. An Insurance Company’s Determination of Fault is Not Binding on Anyone.
The first step to properly rejecting an insurance company’s settlement offer is to understand that you can. Can an insurance company force you to accept their decision on a claim’s value? No.
When an insurance company or adjuster sends a liability determination to a claimant, that determination has zero legal authority. An insurance company’s determination of fault cannot be plainly enforced in court, and in most civil cases, it cannot even be evidence in court. It is just a made up number or theory from a company who: 1) was not at the accident; and 2) has a financial interest in the outcome of the claim.
Because of these characteristics of insurance company determinations, they are not enforceable. An auto insurance company cannot take a claimant to court and force them to accept a settlement offer or liability determination.
The drivers involved in a car accident can sue each other, and an insurance company may be forced to pay someone. But insurance companies are not proper parties in auto accident cases.
2. If A Claimant Rejects an Auto Insurance Settlement Offer, The Claim Does Not End.
If a negligent driver like Dude hits your vehicle and causes you damages, you can recover payment for those damages from Dude. Dude is ultimately responsible for paying those damages, not the insurance company.
If his insurance company wants to pay those damages, that’s great. But it’s really no concern of the claimant who pays – Dude is legally responsible for his negligent regardless of the insurnace company’s idea of what happened. If Dude does not pay, and auto insurance company does not pay, the claimant has a right to use the courts to force Dude to pay. Win a judgement, garnish his wages if needed. Suspend his drivers license.
If Dude is forced to pay by the court, and he had auto insurance coverage that should have paid, it is up to Dude to sue his own insurance company to get the money back. The failure of the auto insurance company to pay does not change the fact that Dude must pay for claimant’s damages as ordered by a court’s judgement.
This means that if a claimant rejects a settlement offer from an auto insurance company, the claimant has the right to sue Dude in court – Small Claims or big boy Civil Court depending on the amount of damages. So long as the claimant files a case in the right small claims or civil court before the statute of limitations expires, the claim lives on after a rejection of a settlement offer.
How long is the statute of limitations? We don’t know. You have to look that up on your own.
In California, as of the date of this article, the statute of limitations for “Personal injury to or death of individual caused by wrongful act or neglect” is listed in Code of Civil Procedure 335.1.
For the statute of limitations on “Personal Property, injury to”, look to California Code of Civil Procedure 338(c).
3. Reject a Settlement Offer in Writing With Documentation of the Claim and Notice of Intent to Sue.
The best way to reject an auto insurance company’s offer or determination of liability is to send them, and the other driver (Dude in this fact pattern) a written notice of rejection. This notice should be a letter that lists the facts of the incident as you expect they would be presented in court, and documentation of your damages. Even if you have sent this info before, it is important to write a new letter to reject an offer and present your claim again together.
When an Attorney sends a rejection notice to an auto insurance company, it will typically also include notice to the other driver that they will be sued personally in court unless full payment is received from either the insurance company or other driver.
Perhaps there are also other defendant who might get sued? Owner(s) of the vehicle that caused the damages are often legitimate defendants in court. Maybe you want to tell them you are going to sue as well.
It is legal to tell give someone notice that you have suffered damages from their negligence and that you intend to sue them in civil court if you must. It happens every day. Sometimes a notice of this sort will cause an insurance company’s customer to get very mad at their insurance company for putting them and their family at risk of a court judgement. This in turn, may “grease the wheels” of settlement so to speak.
A well written rejection letter to an auto insurance company will also usually include a counter offer with a deadline for response.
4. Understand the Insurance Company is Trying to Buy a “Release of All Claims”.
When an auto insurance company receives a claim from someone who says their insured negligently caused damages, the insurance company needs to get 1 thing: a signed document that ends the claim forever. This document is usually called a “Release of All Claims” and is designed to stop any court action on the claim. When an auto insurance company makes a settlement offer, what they are really trying to do is buy that “Release of All Claims” document from you.
You have to sell it to them.
Because of this, a rejection letter to an auto insurance company should include a statement that you are willing to give them this document if they meet your terms. How does an attorney do this? Here is an example:
“I am willing to sign and deliver to you a ‘Release of All Claims’ for all potential defendants immediately upon our agreement to end this claim. We can end this claim today.”
Ultimately, that is exactly what the insurance company employees need – closure and protection from court action against their insured. Tease them with it.
5. Follow Up Your Counter Offer By Telephone and In Writing.
Personal injury attorneys frequently settle cases via telephone with insurance claims adjusters. It is a common occurrence. It often happens a few days after a counter offer is sent off to the insurance company.
The reason why it works is simple. Once an insurance adjuster gets a rejection letter and counter offer, that document is reviewed, usually, by several insurance company employees who decide on how to respond to the document. They cannot simple ignore a counter offer, because if they do, the insurance company risks a “bad faith” law suit from their customer who gets pounded with a court judgement.
When the insurance company employees decide how to respond to the letter, they often will increase the settlement authority of the adjuster. This increase in settlement authority is then left to the discretion of the adjuster who can use it to end the claim if possible. It is the job of the claimant (or attorney) to drag this extra settlement authority out of the adjuster.
A telephone conference with an adjuster a few days after a counter offer therefore is a good time to work on it. How would an attorney do it? Here is an example:
“Hello Ms. Adjuster! I’m glad we can finally talk. I want to end this claim today if we can. Let’s get this file off your desk. Can you pay my counter offer and fax me a release now?”
Adjuster: “No. I do not have that authority.”
Attorney: “That sucks. Now I have to sue everyone.”
Adjuster: “I guess so”.
Attorney: “Does your insured know I am going to sue him for more money, probably tomorrow?”
Adjuster: “We will have to tell him when he gets served”.
Attorney: “Ha! That’s going to be a bad day. For you.”
Attorney: “How close can you get?”
Adjuster: “I do have authority to raise our settlement offer by $2000.”
Attorney: “Well, that is not going to work. But I will check with client and get back to you today.”
Then in a subsequent phone call:
Attorney: “Good news! Client will accept your new offer if we can do it now. Can you fax or email a release before he changes his mind?”
OK – this is only an example of how it might work. Think about it with your own brain, and come up with a plan that works for you.
6. If You Cannot Settle the Claim File a Law Suit Prior to the Statute of Limitations Deadline.
Once a court case if filed, whether in small claims court or civil court, it can be settled at any time without penalty. Even with a lawsuit, the matter can be settled by telephone, by letter or in person. The case can end at any time if Dude or his insurance company pays acceptable damages.
Because of this, there is no problem with starting a law suit and continuing to try to settle the claim before the trial date on the case. And in fact, most courts will force auto accident litigants into mediation and settlement conferences to try to end the case without court resources.
Frequently, the courts will require insurance adjusters involved in the claim to appear personally at these mediation or settlement conferences so that there is a person with “Settlement Funds Authority” present to really try to end the case.
In this manner, the act of filing a lawsuit can facilitate settlement.
What about auto insurance company attorneys? Well, in small claims court you do not have to worry about attorney. In small claims court, insurance company attorneys are not allowed to participate.
Final tips? Sometimes it helps to prepare the lawsuit “complaint” forms, and fax them to the auto insurance adjuster before filing to give them notice it’s coming, and one last shot at all their settlement authority.
How do you know when you have maxed out an auto insurance company’s offer? That is an art we cannot teach.
How do you know what you might win in court? We have no answers to that question in this article.
Final warnings? Yes. If you reject an insurance company’s settlement offer, you may lose in court and get nothing. No one can be certain how a court case is going to turn out when the evidence is finally presented. If you miss the statute of limitations deadline to file a claim with a court, you will lose your claim forever.
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