Insurance companies help to take the risk out of driving by providing funds for major crash expenses. In Michigan, most drivers have to carry not just liability coverage but also no-fault personal injury protection (PIP) coverage. In theory, the extra coverage required by Michigan state law helps protect people from financial devastation after a crash. They don’t rely on the other driver for basic coverage but can use their own policies to pay for their medical expenses.
The combination of robust insurance requirements and insurance branding efforts makes people believe they have support available if they end up hurt in a crash. Their insurance company may offer a settlement when they initiate a post-collision claim. Drivers in Michigan often need to be skeptical of first settlement offers because companies offer them for their benefit, not the protection of drivers.
Michigan insurers have more to lose
No-fault PIP coverage means that drivers use their own policies for basic medical coverage after a crash. Recent no-fault reform efforts have reduced how much coverage people have to carry. Unlimited PIP coverage is no longer mandatory, but many drivers still carry an unlimited policy. Quite a few others carry $500,000 worth of PIP coverage.
When insurance companies stand to lose six figures or more because of catastrophic injuries, they want to limit what they pay on a claim. A settlement is an easy way to achieve that goal. By convincing someone to settle their claim, the insurance company ends its financial responsibility.
Even if the policyholder has significant new expenses after the settlement, they are unlikely to receive anything else from the insurance company in the future. Settlements typically absolve the insurance provider of liability, which means that policyholders need to be skeptical of any settlement that is below their policy limits.
Reviewing a settlement offer at length with a skilled legal team can help people identify inadequate compensation. They may then be able to counter the offer or negotiate with the help of an attorney. Drivers who understand that insurance companies may not necessarily act in good faith after a car crash with injuries can better protect themselves from a scenario wherein they unintentionally limit their own financial recovery. Settlements can be efficient, but they can also lead to inadequate compensation for an injured party.