For years, insurance companies had two reasons for trying to settle: (1)A jury might make them pay more than they wanted to, and (2) The cost of paying for their own lawyer.
Attorney fees are less important now. There are more attorneys than insurance clients; so there is more competition among attorneys for insurance clients.
Law firms bid against each other for insurance defense work. And – still not satisfied with the savings they achieved by putting their work out for bid – insurance companies now hire attorneys to work for them full time, to try cases as salaried employees.
People debate whether these things are good or bad for lawyers, or for the court system, but the bottom line is that – depending on its relationship with its lawyer – the insurance company may not save that much money in attorney fees any more by settling your case. The cost of the attorney still has some effect, but most companies can go to trial much more cheaply than before.
One advantage is that there is frequently incentive for the insurance attorney to under-prepare – he may be getting a “flat rate” for his work on this particular case, or he may have more cases than he can handle because the insurance company is trying to save money by overloading him, or he may have other clients who will pay him more than the insurance company on your case.
Insurance companies still worry about a high verdict; often they will make a reasonable offer to avoid a trial. Sometimes, they are afraid that a lawsuit will “get worse” as it gets older– that between the time of the demand, and the time of trial, you will develop new injuries, or new complications of old injuries, that can be traced to the accident.
Sometimes, the policy limits of the person who hit you can come into play. The insurance policy requires the company to both defend the person it insures (that is, the person who caused the accident) and to pay any judgment against that person up to the policy limts.
But suppose that a jury awards more than the policy limits? Suppose the jury awards $30,000.00, and the policy limits are only $12,500? If the insurance company failed to offer the $12,500 before trial, it may be subject to a lawsuit by its own insured for bad faith. So often, the insurance company offers the policy limits, even if it thinks the case is not worth that much, just so it knows it won’t be sued by its own policyholder.
Insurance companies like “certain” results – ones that they know will not change. A case that they think is worth $20,000 to $40,000 may come in at $10,000 or it may come in at $100,000 – so the chance to settle at $25,000, or even $40,000, may look like a good deal to the adjuster.
Insurance employees are paid to process and dispose of files. Attorney fees are not the only continuing expense of an open file; open files take adjusters’ time, and require payment of court costs for depositions and hiring experts. They are paid to get rid of files, and if they don’t do this they are not doing their job.
I have been a lawyer over 30 years. I am always thinking about the best and fastest way to get my clients their money. If you want to talk about what you can do to settle your case, speak with an experienced Cincinnati Accident Lawyer – call me, William Strubbe, at 513-621-4775 in Cincinnati.
Because all situations are different, and because there may be other facts pertaining to your case that I don’t know about, you should not rely on this answer for legal advice. I am not your attorney, and no lawyer client relationship has been formed.