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Look carefully at settlement offers from insurance companies

In the days after a serious collision, you're likely reeling from the sudden changes in your life. Not only must you arrange for repairs to or a replacement for your vehicle, you also may have serious injuries that require treatment. You might miss several days' of work (or longer) and lose income while you recover. That can create a difficult financial situation.

When you receive an offer from an insurance company for a lump sum settlement, it may seem tempting at first glance. Without income and with more bills coming in all the time, you may feel like that settlement will solve all your problems. However, it's important to realize that first offers are often much lower than the reasonable amount of compensation you deserve for your injuries.

Insurance companies are businesses, not charities

The most important thing to remember is that any insurance company, whether it's your own insurer or the company covering the other driver, is a business. That means they put profit before just about anything else. It won't matter how long you've paid your premiums or how clean your driving record may be. At the end of the day, their primary goal is to limit their financial liabilities, which is what your claim really is to them.

Knowing that you can't work but have mounting bills, an insurance company first makes a low-ball offer. Many people jump at a settlement offer without realizing it won't actually cover all of their expenses. You need to carefully examine the offer before you agree verbally or in writing to accept it.

Look at your current and future expenses

The best way to determine if a settlement offer is reasonable for your situation is to calculate the total losses you're going to incur as a result of the crash. Add up the totals for your current medical bills. Figure out how much work you will miss while you recover. Get an estimate for the cost to repair or replace your vehicle. Finally, ask your doctor about the likely cost of future medical needs, such as physical therapy and surgery.

When you know all of those costs, you can compare the total against the settlement that the insurance company offered. If it doesn't cover the full amount, the offer is clearly too low. Make sure that you respond politely and professionally, but make it clear that you will not accept a settlement that doesn't cover your expenses and losses.

Many times, an insurance company will counter with a second offer that may be more appropriate, given the costs associated with the accident. If they do not, you may have to explore other options to get the compensation you deserve.

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