As mentioned in our prior article, "How Car Insurance Providers Segment Personal Injury Claims", the frequency of injury claims has trended downward over the past twenty years. This is the result of auto insurance companies' reliance on a new system of dividing the claims so that they can reduce the claims payments they must make. One such category of claim that auto insurers use to minimize claims payments is first call settlements.
What is a first call settlement? When a collision occurs, the insurer for the at-fault driver wants to minimize the amount of liability they are responsible for at that time or at any point in the future. To accomplish this goal, they may attempt to convince the injured party to accept money for all losses, including those which may be unknown at the time. For the injured party, this means that they are foregoing the opportunity to recover losses in the future should their injuries worsen, or new injuries appear. This initial offering is known as a first call settlement.
How might this affect the injured party? Aside from limiting the ability to recover in the future, accepting an early first call settlement might mean that an injured person is recovering too little. First call settlements are known to be small amounts (as low as $200) and, depending on the extent of the total damages and injuries, the injured party may be entitled to more than what they were initially offered. Therefore, it is important for the injured party to consider all their options and make an informed decision when accepting settlement.
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