After a car crash, the bills will keep rolling in. There’s the ambulance bill hand and the tow truck bill from when you left the scene of the crash. There are your medical bills for your injury, and the repair estimate from the auto shop. If you have serious injuries, you could be out of work for weeks or even longer.
If the other driver’s insurance company offers you a lump-sum settlement, you might jump at that opportunity. However, insurance companies like to offer settlements because they often benefit the company more than the person filing the claim.
A settlement ends your right to compensation
The biggest concern with accepting a settlement is that you cannot claim future losses from the insurance company in most cases. You release the insurance company of their obligations to you in return for the settlement payment.
In other words, the amount that you negotiate for has to cover not just your current losses but your likely future losses as well. You need to think about everything from the impact on your future income to the diminished value of your vehicle when you resell it. Otherwise, it benefits the insurance company far more than you.
The first offer is probably too low
No insurance company intending to keep its costs low is going to offer you the maximum amount of compensation for a crash right away. They will only pay, at most, the maximum value of the policy purchased, and even that could fall far below the limit they want to pay, so they will make a low offer that gives them room to move upward when they negotiate.
Understanding the drawbacks of a lump-sum settlement can help you have a better deal with the insurance company after a car crash.