May 24, 2022

Adjusters — How “Sticky” Are Your Settlement Agreements?

My wife and I just went through the experience of selling a house.  This was not fun, but after the home being on the market for about ten days, we had an offer.  Hurray!  The appraisal came in at the number needed.  The home inspection found a few minor issues which we addressed.  The termite inspector gave the property a thumbs-up.  We were all ready to go to settlement and closing and then ….. the buyer backed out.

I won’t go into the factors at play, but it reinforced the fact that buyer’s remorse can come into play – not just in real estate, but in claims too.  In both realms, it is unwelcome.  In the realm of claims, what the adjuster sells is the release.  Maybe at one time, claims could be settled on the basis of a handshake.  This is unlikely to occur nowadays.  After entering into a verbal agreement, people can have a change of heart, whether on a bodily injury claim or on a first-party auto collision loss.

You may think you have an agreement buttoned down.  Until you have the signature on a Release or Proof of Loss, however, lots can happen to unravel such a “settlement”.  None of us welcomes these scenarios.  As claims people, though, we have to be aware of them and guard against them.  Here are some examples.

  • The claimant or insured decides that they really should be paid more.  Maybe they feel that you were so quick to agree, that they “left money on the table” by not demanding more.
  • Uncle Mort or some other well-meaning person tells them that they sold themselves short and should press for more money.
  • They may want to run the situation by an attorney just to see that they got a good deal.  The attorney tells them that they could shortchanged themselves recover much more . . . if they only hired an attorney, of course.
  • They receive a new medical or repair bill that they had not factored in before and believe that this merits re-opening settlement discussions.

These are just a few examples of Murphy’s Law as applied to claim settlements.  As a result,

1.  Be ready on the spot to close.  Have the Release form or Proof of Loss available to get a signature on the spot when you resolve a claim.  It helps as well to have the settlement check there.

2.  Have the money ready soon!  If for some reason you cannot have the settlement check available on the spot, minimize the time it takes.  Expedite the check.

3.  Stay in touch.  If you must wait for a check to arrive from another office, keep in close tabs with the insured and claimant, letting them know the status of payment, giving them a progress update and assuring them that their patience is appreciated.  Claim control factors do NOT dissolve once you have a verbal agreement on a settlement figure!  Strive to over-communicate.

Every claims person hates situations where apparent settlements unravel or fall apart.  It’s a hassle to re-open files.  Handle these situations with care to avoid “premature closure.”  Heed the words of Yogi Berra, “It ain’t over till it’s over.”

Oh, and that house-buying situation I mentioned, it had a happy ending.  After the first buyer’s developed cold feet, we put hurriedly put the house back on the market on a Friday afternoon.  By Sunday night, we had a new offer  that was higher than the original bid.  Sometimes these situations turn out fine but, in the world of claims, don’t bet on it.  Compress the time between verbal agreement and consummation of the settlement to avoid the risk of the claimant or insured backing out.


Have you ever had a claim that you thought was settled and “nailed down” that unraveled?  If so, what would you have done differently?  Share your comment and experience here!


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