You already have secured the fair market value of your vehicle, now prepare yourself for auto insurance negotiating competition. As in all competitions those who are better trained and more prepared have a higher probability to win. If you cannot present your case and respond to counter claims effectively and professionally, you will not raise your car insurance settlement offer.
There are many books and articles written about effective negotiating and negotiating tactics, however we are going to focus on the uniqueness of negotiating with insurance company representatives.
Understanding the unique negotiating differences, insurance claim representative present’s, helps with your insurance negotiating tactics. The below statements create a vision of what challenges your up against.
To prepare for your challenge, the insurance negotiating game plan is to familiarize yourself with the below topics. The topics are designed to be brief for easy reading but insightful information you will use. Let’s get started.
Since you will never know anything about your insurance claim representative you need to understand the culture and demands placed on their services. Basically you are going to become your adversary. We will discuss the following:
Insurance is sharing any risk with many people thereby reducing any one person’s outlay when a claim arises. If we did not have property and health insurance, problems or total losses would devastate the individual or corporation. Insurance helps business defray the risks associated with the benefits. A commercial fishing boat can be destroyed in a storm or damaged by ocean garbage. Without assurances the owner can be re-reimbursed for a total boat loss he/she may not try commercial fishing, insurance gives him/her the ability to fish, which we all benefit from.
Spreading risk has its rewards, an insurance company as a business model appears sustainable. However the premiums collected do not cover the outlays of money generated by claims. The insurance business model has one trump card to make its business work.
Time gives the insurance business model economic viability. Insurance companies can put the premium revenue in other investments (until needed for claims) and generate a large return on their investments. Normally gains from investments exceed the claim outlays.
Insurance companies are expected to increase their profits every year by a certain percentage to be considered a healthy company. Insurance companies can increase policyholders rates, drop high risk policyholders, reduce claim outlays or a combination of all three. They can also try to increase their investment revenue.
There are three dynamics working against the insurance company, premium revenue, claim outlays, and return on investments. The survival of an insurance company is based on maximizing premiums revenue and return on investment while minimizing money claim outlays.
The United States economic climate of reduced corporate employment and low interest rates is a disaster for insurance companies As corporations reduce staff, insurance premium revenue drops. As the federal reserve keeps interest rates low, return on investment is lower. When the economy is down fraud increases.
The cost of fraud impacts the insurance business model tremendously. Insurance rates cannot factor in correctly the amount of fraud an insurance company is going to sustain in a year. It is known that fraud does increase in bad economic times but insurance companies cannot immediately increase their rates to reflect the additional costs, thereby adding additional strains on insurance premium revenue and investment revenue to exceed claim outlay’s.
However claims money outlays are increasing. This is not a good business formula for insurance companies. They cannot easily control reduced premium revenue. They cannot control the Federal Reserve interest rates, however they can control claim outlays and fraud. Insurance Company negotiating methods are born from business survival challenges and their auto negotiating tactics fluctuate with the economy.
An insurance company sells piece of mind. When a policy holder or person files a vehicle accident claim the expectation is their property will be restored to where they were before the accident.
An insurance claim representative is challenged with keeping the policy holder or person filing a claim happy, while minimizing any claim outlays. They have to inform the claimant what the insurance company is willing to pay. They walk a tight rope trying to please both sides.
Unfortunately your insurance settlement group does not care if you are not that happy, they will not interact with you again or in the near future, so their focus is on minimizing settlement outlays. They know reducing settlement outlays is beneficial to the company. Making you happy will not keep their job. However, having excessive cash outlays could jeopardize their job.
Your insurance settlement group receives statistics on their performance. They are in an industry where some customer service performance is measured by cash outlays, it is easy to judge performance. You can be compared to the average settlement amount within a dollar range. If you are above the average you are doing great. If you are below the average then you are doing badly. No one wants to do badly, especially if it’s your livelihood.
If you don’t gain a higher insurance settlement amount it is a minor setback in your life. If your auto insurance claim representative performance is below the company average they can lose their jobs, which is a major setback in their life. I would say they have a higher degree of stress from their situation and are more motivated then you to win. Winning is giving you the lowest possible insurance settlement offer you will accept. They have no concern to restore your property to where you were before the auto accident.
In addition, you are educating yourself on auto insurance settlement tactics. When your insurance claim representative has a conversation with you they are even more stressed because they cannot easily finalize a settlement offer amount.
In order to negotiate effectively you need to stick to the facts. Using only the facts has a dual purpose. It keeps you calm, during negotiations and helps the insurance claim representative understand agreeing to your terms will not affect their job.
The business model overview describes the challenges facing an insurance company. These challenges are met with aggressive negotiating tactics. You should not feel a personal attack against your character but rather a corporate industry culture that needs to protect itself. You represent someone who is asking for claim money with the possibility of fraud. The response from the auto insurance claim representative will reflect their values and culture.
Important points to remember:
Each state has their own regulations for automobile insurance claim settlements. You need to understand the rights in your state. There are some things that are common to all states. There is a time limit to settle your claim. There is also regulations on how they are supposed to calculate fair market value. Again, you need to familiarize yourself with your state regulations.
Some regulations can assist you in negotiations, as an example a time constraint. If your state has a 30 day time limit then your insurance claim representative has to complete the settlement process within a month. The more you delay the less control they will have. Remember they are being judged by minimizing claim disbursements and how fast they can finalize your claim.
Understanding your state rights is not so you can dictate to your insurance claim representative what they can do or not do, it is so you know how to negotiate. Point to remember, state rights can give you insurance negotiation strength. When you understand the responsibilities of your insurance claim representative and state regulations it gives you negotiating tactics that otherwise would go unnoticed.
Insurance claims representatives are highly trained in negotiations. They practice everyday and over time perfect the art of insurance negotiation. They have many tactical advantages but the most important are ignorance and intimidation. If you can remove both of those obstacles from your insurance negotiation encounters, then you have a great chance on increasing your settlement offer amount.
Do not be intimidated. You are talking to a person who is doing a job, not a Supreme Court Justice. They cannot hurt you or take anything away from you. Ignorance can be overcome by knowledge so here are some common tactics used by auto insurance claim representatives and their group.
Whenever possible an auto insurance claim representative will use time as a weapon against you. To get agreement to their settlement offer they use a tactic of no longer paying storage fees for your vehicle after two days of you receiving their settlement document. They inform you it will be your responsibility to pay the storage charges until you agree to our terms. They will cite your unreasonableness in negotiating with them.
Time is also used another way with insurance companies. They will not get back to you quickly so there is less time for you to make a decision. Since most states control the amount of time an insurance company must settle an auto claim you can copy their time tactic. Whenever you give them a settlement amount get off the phone quickly telling them you will call them tomorrow for their answer. Then call in two days asking for an answer.
Whenever you respond it should always be based on facts, never on feelings or sentimental value. Insurance negotiation strength is based on belief in your research . You populated your vehicle fair market value worksheet and unless the auto insurance claim representative can explain why their numbers are so different from yours, why would you agree to their terms.
The auto insurance claim representative may mention the term industry standard, you are not in our industry this is what’s acceptable and the courts support our process.
Industry Standard is just that, standard operation procedures insurance companies follow. It doesn’t mean they operate in the best interest of consumers. It just means how they operate to maximize insurance company profits for their stockholders.
You don’t agree with their standard operation procedure nor do you agree the courts support their auto insurance standard operating procedures. This eliminates any notion that you’re intimidated by the insurance claim representatives demeanor. Again mention the facts and nothing more.
The insurance claim representative may mention the system used to ascertain fair market value is approved by state regulations.
When in fact the system is averaging out all vehicles entered and making adjustments. It is not approved by state regulators it is mandated that they calculate the fair market value of your vehicle based on state laws. The government is not endorsing their product instead it’s the insurance company complying with state regulation.
That is a great example of trying to use your ignorance and intimidation to believe in something that is not true. Your Car Claim Relief Fair Market Value Worksheet used an average of auto’s entered which is also complying with state regulation. However it doesn’t mean the state endorsed the Car Claim Relief Fair Market Value Worksheet. This example also exemplifies twisted logic, typical sophistry thinking.
The final auto insurance negotiation hurdle is presenting your case, which will be the most frustrating part of the settlement process. It is easy to believe packed with facts and loads of information the auto insurance claim representative will agree to your terms. However you now understand their mindset and know this is not going to happen. You are going to have to convince them your vehicle fair market value is real and backed by facts.
You will always get a counter offer to your offer because the insurance claim tactic is to start low and raise it a bit to convince you they conceded to your requests. The amount they counter offer is what you are focusing on. As mentioned time is a big factor, disagree with their offer and send them your worksheet including your bottom line number. Ask for more than you want so you can bring it down later if necessary and hang up the phone.
Do not keep talking, stick to the facts and hang up. If you keep talking it is a sign of weakness. You don’t believe in yourself so you keep on verbally rambling. Hoping the auto insurance claim representative will give you another offer. They will not. What they will do is give you a price then hang up the phone. You need to hang up first. Why, because then they have to respond to you. If they hang up first they you have to respond to them.
Again as we mentioned time works on your side. If you do not fold first you become a problem case. There is a certain percentages of cases that will be problems to resolve. Those cases draw the attention of supervisors. If you stick to the facts in a calm demeanor then you increase your chances of getting a reasonable offer.
The auto insurance claim representative can’t settle every claim in their favor, they know this, you just have to establish that your claim fits into that category. Read more topics on auto insurance negotiating in our settlement blog, we spend more time focusing on presenting your case.