Is It Legal for Insurance Companies to Lowball You?

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You make an insurance claim. You know your damages, and you eagerly await a settlement from the insurance company.

The offer arrives, and you read it. Suddenly, you’re shocked and disappointed. The offer is way too low.

Lowballing in Insurance Offers

Insurance companies make their profits when they take in maximum premiums while minimizing the amount that they pay in claims. Unfortunately, one of the tactics they use to raise their profits is lowballing.

What is lowballing? How can you fight back if it happens to you? Our bad faith insurance lawyers explain.

What is lowballing an insurance claim?

Lowballing an insurance claim is making a settlement offer that is lower than the amount that the policy should cover. It is purposefully offering an unreasonably low amount in hopes of avoiding the legal obligation to fairly pay the claim.

Why do insurance companies offer low settlements?

Insurance companies offer low settlements in hopes of paying less in claims. They are betting on the insured party either not knowing the actual value of their claim or simply giving up and accepting the lower amount. Ultimately, an insurance company exists to make a profit. Sadly, they may think it is necessary or advantageous to lowball a claim to pad their bottom line.

Signs the Insurance Company is Lowballing You

Here are some signs that the insurance company is lowballing you:

  • The settlement offer arrives right away. Did they take enough time to process your claim?

  • An adjuster glosses over information that you want to present. They may be more interested in resolving another claim and closing the file than truly understanding what losses you have.

  • Communication stops or slows. If it seems they’re avoiding you, it may be a sign that they don’t want to discuss the basis for their settlement offer.

  • Someone suggests that you’re to blame. Telling you that it’s your fault is a way to put you on the defensive. It’s just a tactic to distract you from insisting on receiving the compensation amount you truly deserve.

  • They won’t explain themselves. When the insurance company representative isn’t willing to explain the reason for the offer or show their math, they may be hoping you’ll accept the claim for too little.

  • Pressure to accept. If an offer is fair, the insurance company should have no problem giving you time to talk to a lawyer. When they pressure you to accept an offer immediately, it’s a sign that they don’t want you to truly understand a fair settlement amount.

  • Answers are evasive. Are you getting the impression that something isn’t right? If the answers you’re getting don’t seem quite right, or it seems like they’re evading your questions, it may be a sign that something is amiss.

Am I being lowballed by the insurance company?

Don’t wonder if you’re being lowballed in an insurance claim. Get a free consultation from a team of experienced insurance lawyers. At Haun Mena, we help people get fair compensation from insurance companies. Contact us today to talk about your case.

Is Lowballing Legal in Insurance Claims?

No. Lowballing is not legal in insurance claims. The insurance company is legally required to honor a policy in good faith. They must pay what the claim is worth – the first time – once the claim is complete and they have all the necessary documentation.

There is a term for making lowball offers in insurance claims – it is called acting in bad faith. It is illegal for an insurance company to act in bad faith.

If the insurance company acts in bad faith, you may have the right to claim a penalty, damages, and attorney fees in addition to your claim amount.

Laws against lowballing insurance claims in Texas

Chapter 541 of the Texas Insurance Code discusses deceptive, unfair, and prohibited practices by insurance companies. § 541.060 prohibits an insurance company from engaging in unfair or deceptive acts. Among the prohibitions is failing to attempt in good faith to reach an equitable settlement if liability is clear. The insurance company has a reasonable amount of time to affirm or deny coverage and explain their offer.

When an insurance company intentionally pays too little, they are lowballing the claimant. It is not legal for them to do so.

Sometimes, insurance companies use software programs to help adjusters arrive at settlement amounts. However, this isn’t always effective because it can result in one-size-fits-all offers. It’s important to remember that you deserve compensation for the damages that are covered by the policy. Even if someone else’s damages are different, you deserve fair compensation for your losses.

How do you respond to a lowball offer from an insurance company?

If you suspect that the offer from the insurance company is a lowball, don’t give up! There are things that you can do.

  • Understand what your claim is truly worth. Knowing if you’ve been lowballed begins with understanding what the offer should be. That means understanding the types of compensation that you may receive and how much your losses are in each category. Many people assume that their case is worth far too little, especially in car accident claims when lost wages, future medical bills, and pain and suffering should be accounted for.

  • Challenge the insurance company through internal appeals. You can appeal directly to the insurance company. While it may seem like a waste of time, it gets the claim in front of a different person. It shows the insurance company you’re serious about getting a fair payment for your claim. Be sure to identify any reasons they give for the amount offered and provide additional information, if necessary.

  • Make sure your case is filed before the statute of limitations. There is a time limit to filing a legal claim challenging an insurance company. Be sure you understand the statute of limitations and ensure your case is filed before time runs out, even if negotiations with the insurance company are still ongoing.

  • Talk to an experienced attorney. The insurance company is betting on the fact that you don’t have a level playing field. When you have help from an experienced attorney at Haun Mena, you have a team of professionals that know how to respond to the insurance company. We can evaluate to see if you’ve been lowballed, negotiate with the insurance company and challenge them to fight for the compensation you deserve.

Get legal help when the insurance company lowballs you

Don’t settle for a lowball offer from the insurance company. Get help from our experienced legal team. Call now for your free consultation.

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