What to do if your insurance claim settlement offer is too low

Receiving an insurance claim settlement offer that falls short of what you need can be disheartening, especially when recovering from property damage.

But a shortfall doesn’t mean a dead end.

Offering a lower settlement is often just a business decision made by the insurance company. They have a lot of claims to process and if they don’t immediately see the justification for what you’re asking, they may offer less.

Here are some practical steps to help you navigate this situation.

1. Assess the Offer to Understand the Shortfall

Your first step is to understand the discrepancy between your needs and the offer. This critical assessment helps you identify areas where adjustments may be warranted to adequately address your losses.

Scrutinize the insurance company’s assessment, valuation methods, and the specifics outlined in your policy. How do these compare to your needs?

A settlement offer might be lower than expected or needed for several reasons. Understanding these reasons can be crucial for negotiating a correct settlement.

Some common reasons include:

1. Underestimation of Damages

Insurance adjusters might underestimate the extent of the damage, resulting in a lower valuation. They may also underestimate the cost of repairs or replacements because they are based on generic estimates rather than localized, specific costs.

2. Policy Misinterpretation

There might be discrepancies or misunderstandings regarding the policy terms, coverage limits, and exclusions, leading to a lower offer.

Incorrect application or misunderstanding of the deductible can also impact the settlement amount.

3. Incomplete Documentation

A lack of comprehensive documentation, such as photos, receipts, and estimates, can hinder the accurate assessment of losses.

Incomplete or missing information in the claim form might lead to an undervaluation of the claim.

4. Depreciation and Actual Cash Value

The adjuster might apply depreciation more aggressively, citing “wear and tear” or age as a reason to reduce the actual cash value of the damaged items.

There might be disagreements or misunderstandings regarding replacement cost versus actual cash value.

5. Internal Insurance Company Pressures

Insurance companies, like any other business, aim to minimize expenses, which might sometimes result in lower initial settlement offers.

High volumes of claims, especially after a large-scale disaster, might lead to rushed assessments and subsequently lower offers.

6. Communication Breakdowns

A breakdown in communication between the claimant and the insurance adjuster can lead to misunderstandings and misinterpretations.

Without a knowledgeable advocate, like a public insurance claims adjuster, claimants might struggle to communicate the extent of their losses effectively.

7. Disputes over Liability

If there are disputes or uncertainties regarding liability, the insurance company might reduce the settlement amount.

In some cases, the insurance company might argue that the policyholder shares some responsibility for the damages.

Addressing these issues effectively requires a thorough understanding of insurance policies, accurate damage assessment, and strong negotiation skills.

This is where getting assistance from a knowledgeable professional like a public insurance claims adjuster can be helpful.

If your settlement offer came in low for any of these reasons, a public adjuster can look after all the communication, paperwork, and details for you – including the next step of crafting a counteroffer.

2. Craft a Counteroffer

Just because the insurance company made you an offer, it doesn’t mean you have to accept it!

Your next step in working towards a correct settlement is to craft a compelling counteroffer. These are the steps we follow at Capital Claims.

Compile Supporting Documentation

Assemble comprehensive evidence and documentation to support your counteroffer. This could include additional appraisals, repair estimates, and any relevant information that strengthens your case.

Develop a Persuasive Proposal

Develop a well-structured and persuasive counter proposal. Clearly articulate the reasons behind the discrepancies, reference your policy terms, and present your supporting documentation to make a compelling case for a revised settlement.

Stay Informed and Engaged

Engage actively in the negotiation process, adhering to any procedural requirements and keeping abreast of developments. Be open to discussions and maintain a collaborative approach to reach a resolution that aligns with your needs.

3. Consider Getting Assistance from a Public Adjuster

When faced with a settlement offer that falls short, informed guidance and strategic action can steer you towards a resolution that fully compensates you.

Our goal is to help negotiate the correct settlement – an amount that covers the damages and makes you whole again – not just what the insurance company deems to be “fair.”

We maintain harmonious relationships with insurance companies, focusing on mutual resolution and advocating for your rightful settlement.

If you choose to engage us, you pay no money up front – we don’t get paid until you get paid.

Your first step is to book a free consultation and policy review. You can book online here: contact Capital Claims or call us at 954-874-3563. We pick up the phone!