What to Do if Your Car Insurance Underpaid Your Claim

Recognizing Signs of Underpaid Car Insurance Claims

It’s important to stay alert during the claims process to identify potential underpayment. Insurance adjusters prioritize minimizing payouts for the company, which often leaves claimants without enough coverage for medical bills, vehicle repairs, or other losses. Here are some key red flags to watch out for:

• Delayed responses and prolonged claims: Insurance companies may delay the process, hoping you’ll accept a lower settlement out of frustration. If you notice unreasonable delays, such as unanswered communication or repeated requests for additional documentation, keep a detailed record. This documentation could be crucial if you need to escalate the issue
• Unnecessary documentation requests: Some insurers request excessive or irrelevant paperwork, hoping to discourage claimants from pursuing their full compensation. If this happens, seek advice from an attorney that specializes in bad-faith insurance claims, as they can assess whether these requests are justified
• Minimizing your damages or injuries: Insurers may downplay your injuries or vehicle damage to reduce payouts. Having thorough documentation—medical records, police reports, and photos—will help counter these tactics and ensure your claim reflects the true extent of your losses

What Are the Common Insurance Company Tactics For Underpaying Claims?

Insurance companies often employ subtle yet impactful tactics to minimize claim payouts, which can leave policyholders with less than they need to cover their damages. Understanding these tactics is crucial for protecting your rights and ensuring you receive fair compensation.

Disputing the severity of the car accident

One of the most common methods insurers use to underpay claims is disputing the severity of the accident or injuries involved. They may downplay the damage to your vehicle or the seriousness of your injuries to justify a lower payout. Insurers might argue that the accident didn’t cause the extent of damage you’re claiming or that your injuries were pre-existing.

In such cases, the insurance company may even hire their own medical professionals or independent appraisers to challenge your claims. These individuals often work in the insurer’s interest, which means their assessments may be biased. To counter this, it is essential to gather comprehensive evidence, such as:

• Medical records documenting the injuries sustained in the accident and your treatment
• Police reports that clearly outline the accident details and determine fault
• Photographs and videos from the accident scene, including vehicle damage and any visible injuries
• Witness statements that corroborate your account of the accident

This documentation strengthens your case, making it more difficult for the insurer to dispute the facts or reduce your payout.

Offering quick, lowball settlements

Another tactic insurance companies use is offering quick, lowball settlements shortly after the accident. This is particularly tempting for claimants who are facing immediate medical expenses, car repairs, or lost wages. Insurers know that after an accident, many people are under financial stress and eager to settle, making them more likely to accept a lower offer than what they truly deserve.

However, accepting a low settlement can have long-term consequences. Once you agree to the payout, you typically waive your right to pursue additional compensation. This means that any future medical expenses, ongoing rehabilitation, or unforeseen costs related to the accident will not be covered. Before agreeing to any settlement, it is important to:

• Assess the full extent of your injuries: Will you require ongoing treatment or physical therapy?
• Consider future medical costs: Have all future medical expenses been taken into account?
• Evaluate property damage: Is the settlement sufficient to repair or replace your vehicle?
• Factor in lost wages: Will you need to miss work due to your injuries, and does the settlement cover that loss?

Consulting with a lawyer before accepting any settlement can help ensure you receive fair compensation that covers both immediate and long-term expenses.

Depreciation and policy exclusions

Depreciation is another tactic insurers use to reduce claim payouts. When assessing property damage, insurers may apply depreciation to account for the item’s age and condition, which can significantly lower the amount they offer. For example, the replacement cost of your vehicle might be calculated based on its current market value, rather than what it would cost to fully repair or replace it.

Additionally, insurance policies often contain exclusions and limitations that insurers can invoke to reduce their liability. Some examples include:

• Sublimits for specific types of damage, such as glass repair or replacement
• Exclusions for certain types of damage, such as weather-related incidents (e.g., floods, earthquakes), unless you’ve purchased specific coverage
• Coverage gaps that may not have been obvious when you bought the policy, such as limitations on the types of repairs covered or total loss valuations

These exclusions can leave you without enough coverage to fully recover from the accident. Reviewing your policy carefully and consulting a lawyer can help you determine if these tactics are being applied unfairly.

Steps to Take When You Suspect Underpayment

Recognizing the signs of underpayment is crucial, but knowing how to respond is equally important. Once you’ve identified potential underpayment, following a structured approach can help you navigate the situation effectively and protect your rights.

Review your insurance policy in detail

Your policy outlines the coverage, limits, and exclusions that define what the insurer is obligated to pay. Carefully review the policy’s terms, including coverage limits and any potential exclusions that could impact your claim. Sometimes, exclusions may not be obvious, so it’s crucial to identify whether the insurer is fairly applying them to reduce your payout.

If the settlement doesn’t match your understanding of the policy, raise your concerns directly with the insurance company. By understanding the terms thoroughly, you are in a stronger position to negotiate.

Document all communications with the insurance company

Keep a detailed record of all communications—phone calls, emails, and written correspondence—with the insurer. When communicating, note the date, time, and representative’s name, along with a summary of the conversation. This documentation is critical if you need to escalate the matter later, as it provides a clear trail of evidence to support your case.

Also, be particularly cautious with recorded statements, as insurers may use your words against you to deny or reduce your claim. Before providing any statements, consider consulting an attorney to safeguard your rights.

Seek a second opinion from an independent appraiser

If you believe the insurance company’s assessment of your vehicle’s damage is inaccurate, seeking an independent appraisal can provide an unbiased evaluation. Independent appraisers offer an objective view of the damage, helping you counter a lowball estimate from the insurer. Their detailed report can be a valuable tool in negotiations.

If the independent appraisal differs significantly from the insurer’s, it strengthens your position, making it clear that your claim deserves more compensation. If the insurer still refuses to adjust the payout, this could signal the need for legal action or filing a complaint with your state's insurance department.

Why You Should Consult a Lawyer

If you believe your claim has been underpaid and the steps you’ve taken—such as reviewing your policy, documenting interactions, and seeking an independent appraisal—haven’t yielded a fair settlement, it’s time to consider consulting a lawyer. Insurance companies are businesses with vast resources and legal teams that work to minimize payouts, and they want you to make certain mistakes that justify underpaying or even denying your claims. By seeking legal counsel, you gain an advocate who understands insurance law and can ensure that your rights are protected.

A bad faith insurance attorney will:

• Evaluate the settlement offer: They can assess whether the insurance company’s payout aligns with your policy and the damages you’ve sustained. If it falls short, they will negotiate on your behalf to secure fair compensation
• Provide expert guidance: An experienced attorney will navigate the complexities of insurance law, helping you understand your policy and the insurance company’s obligations
• Handle communication with the insurer: If the insurance company has been delaying your claim or requesting unnecessary documentation, a lawyer can step in and take over negotiations, ensuring that the process moves forward efficiently
• Litigate if necessary: In cases where the insurance company refuses to pay a fair settlement, your attorney can file a lawsuit and represent you in court

By consulting an attorney early in the process, you can avoid many of the pitfalls that insurance companies use to underpay claims. A lawyer can ensure that your evidence is well-organized, your rights are upheld, and the insurer complies with all legal requirements, maximizing your chances of a successful outcome.

Securing Your Rights & Compensation with Expert Help

Navigating the complexities of underpaid car insurance claims can be frustrating, but with the right approach, you can secure the compensation you deserve. Whether it’s reviewing your policy, documenting every communication, or seeking independent appraisals, these steps will ensure you’re prepared to challenge any unfair settlements. But you don’t have to handle this alone.

At YourAccident.com, we simplify the process of finding the right personal injury or accident lawyer for your case. Our network of attorneys is well-versed in handling insurance disputes and negotiating with insurers who may attempt to minimize your payout. By connecting you with a dedicated legal expert, we help protect your rights and maximize your compensation, so you can focus on what truly matters—your recovery.

Take the first step toward securing your financial recovery by reaching out today for a free consultation. Our experienced attorneys are ready to guide you through every stage of the claims process, ensuring your legal needs are met from start to finish. And don't hesitate to take advantage of the many resources we have here, including our help guides and many educational articles.