Have you ever wondered how settlement negotiations work in a personal injury case? Even if you’re sitting at the table, the process can still be confusing. There’s a lot of back and forth going on between your attorney and the insurance company. Sometimes, you can feel like you’re getting whiplash trying to follow the conversation. 

Even though your attorney is familiar with settlement negotiations, you should still have an idea of what’s going on. Here’s a breakdown of what goes on during the pre-litigation settlement process so you have a better idea of what’s going on with your claim.

A Look at What Your Attorney Considers in Settlement Negotiations

Before your attorney sets up a meeting with the insurance company, they take a look at a few things. These considerations can make a difference in the value of your claim and whether the insurance company is willing to make a counteroffer.

Determining Liability

Florida is one of a handful of states following modified comparative negligence laws. What is modified comparative negligence? The rule allows for more than one party to be at fault for an accident. A judge or jury typically assigns blame and as long as you’re not more than 51% responsible for the accident, you can file a claim for your damages.

Your percentage of assigned blame does affect the value of your claim. The value is reduced by the same percentage as your blame. For example, if you’re assigned 25% of the blame, your claim is also reduced by 25%. So, if the total of your economic and non-economic damages is $100,000 and your percentage of blame is 25%, your claim’s value is $75,000. This is the starting point for the negotiations.

Determining liability before starting negotiations typically helps the process move along a little more smoothly. Instead of spending time arguing about fault, your attorney can move on to negotiating an acceptable settlement.

Calculating Damages

If you don’t know the total amount of your damages, it’s hard to negotiate a settlement. The insurance company can toss out any number without being aware of your damages. Calculating the damages is your responsibility, not the insurance company.

You can typically seek financial compensation for economic and non-economic damages. Most insurance adjusters aren’t going to negotiate too heavily over economic damages. You have medical records, bills, receipts, and property damage estimates to support your claim. The documentation is often enough to get the insurance company to agree to these damages.

Calculating non-economic damages can be a little tricky. This also applies to getting an insurance company to see things your way. Non-economic damages are intangible, meaning you can’t back them up with bills and receipts. 

Examples of non-economic damages include pain, suffering, mental anguish, and even loss of life enjoyment. Even though it’s tough to place a price tag on your mental anguish, there are a couple of methods you can use to calculate these damages.

You can use the multiplier method, and this can be the best one to use during settlement negotiations. The other method is per diem, and insurance companies tend to shudder when they see this total. Using the multiplier method, you choose a number between 1.5 and 5. The higher the number, the greater your pain and suffering. Take the total of your economic damages and multiply it by the number you select.

The per diem method also uses the total of your economic damages but multiplies it by the number of days you’re in mental agony. If your economic damages are $100,000 and your pain persists for 45 days, you can see how the total can make insurance adjusters shutdown negotiations. 

This doesn’t mean you shouldn’t use the per diem method, just have another acceptable, lower number ready to toss on the table. Sometimes, simply showing the insurance company you’re willing to bend a little is enough to get them to consider offering a more acceptable settlement number.

Another reason to be flexible when it comes to non-economic damages is some states have a cap on the amount you can be awarded. Currently, this doesn’t apply to most economic damages in Florida, but non-economic losses are capped at $500,000.

Adjusting for Policy Limits

Some insurance companies set caps on damage amounts. Yes, this is perfectly legal even if the state doesn’t cap settlement amounts. This is something your attorney considers during the negotiation process. After all, there’s no reason to file a claim knowing it’s over the insurance company’s preset limits.

Even if this means reducing your settlement total, you’re not completely out of luck. Even after accepting a settlement from the insurance company, you can still file a lawsuit against the policyholder. In this instance, you’re filing a lawsuit against the at-fault party.

Something to remember is that even if you win your lawsuit, there’s no guarantee you’ll ever receive a payment from the defendant. Sometimes, the individual simply can’t pay the judgment. Most civil courts also aren’t going to order a defendant to sell off their belongings to pay your claim.

Negotiating with the Insurance Company

After going over all of the considerations, it’s time to start negotiating with the at-fault party’s insurance company. Don’t expect the settlement to be resolved after the first round, it usually takes some back and forth. Your attorney tosses out a number and the insurance company responds with a lower counteroffer.

Chances are, the counteroffer isn’t enough to cover all of your damages, so the process starts again. Sometimes, it can take months of negotiations before an agreement is reached. What happens if you can’t reach an agreement? There’s a good chance your injury claim ends up going to civil court. Yes, this can draw out the process even longer but sometimes it’s necessary.

Don’t Go Through the Pre Litigation Settlement Process Alone

You may feel like you can handle the negotiations without legal representation, but this is usually a mistake. The insurance adjuster is probably a skilled negotiator and this means you may find yourself talked into accepting a low settlement. You need someone with negotiating skills on your side, and this usually means working with an experienced Florida personal injury attorney.