1. Why Challenge a Claim?
2. How Much Is a Nuisance Fee Settlement?
3. Prompting a Nuisance Fee Settlement

A nuisance fee settlement, or nuisance value settlement, is a sum of money paid by an insurance company to settle a case. Insurance companies will often offer a nuisance fee settlement if the benefit of settling for a small amount outweighs the cost of fighting the claim in the courts.

Why Challenge a Claim?

There are a number of reasons why an insurance adjuster might challenge an insurance claim. Some of these include

  • The claimant cannot prove the insured party is at fault.
  • The fault actually was with the claimant or someone else.
  • The injuries sustained by the claimant were not a result of the accident.
  • The claimant was not really injured, or the adjuster has reason to doubt the claimant's injuries.

In such cases, the adjuster will consider the claim a “nuisance claim.” At first, the adjuster will likely deny compensation to the claimant. However, the claimant might be able to persuade the adjuster to pay a “nuisance fee settlement.”

How Much Is a Nuisance Fee Settlement?

Just as with any other type of accident settlement, there is no fixed amount. If the medical bills are less than a thousand dollars, the insurance adjuster will usually offer an amount that covers at least half of the total cost. This sum will not include:

  • Loss of income
  • Damages
  • Pain and suffering
  • Out-of-pocket expenses

An adjuster will normally offer a nuisance fee of $500 or $750 in cases where there are no real injuries to report. Perhaps the medical bills were minimal, or a doctor could not make a diagnosis. That nuisance fee settlement might increase up to $3,000 if the medical bills exceed $1,000, or if there is a diagnosis of serious injury.

Settlement offers are negotiable, even nuisance fee settlements. If the best the claimant can do after an accident is settle for a nuisance fee, the claimant is not obliged to accept the first offer. It is unlikely the amount will change much through negotiation, but if a few phone calls with the adjuster results in an increase of a hundred dollars or more, it will be worth the effort.

Prompting a Nuisance Fee Settlement

You can often prompt a nuisance fee settlement by

  • Daily contact with the adjuster
  • Offering new evidence
  • Threatening litigation against the insured
  • Reminding the adjuster of the expense of litigation

If the insurance adjuster seems unwilling to settle your injury claim, try calling the adjuster daily about your case. Leave messages with the adjuster. Explain why you disagree with the adjuster's assessment. Ask to speak to the adjuster's manager or supervisor. As long as you have credible evidence of a claim, such good-faith contact is not considered harassment. The adjuster may be willing to pay you a nuisance fee just to get you to stop calling.

Rehashing the same arguments with the adjuster using the same evidence may not get you anywhere. Go back over photographs, statements, and anything else you have pertaining to the accident. Any additional evidence you find that supports your claim, especially if it points to the insured party's liability for your injuries, could lead to a nuisance fee settlement.

An insurance adjuster might also respond to the threat of litigation against their client. We expect our insurance companies to act on our behalf regarding claims, either to pay them or fight them. The last thing we want is for a sheriff to turn up on our doorstep, or at work, serving us with a lawsuit. But only threaten a lawsuit based on good evidence. Courts and bar associations will reprimand attorneys for threatening lawsuits they have no intention of filing. If the adjuster believes you will get the sympathy of a court, the threat is appropriate.

Make yourself aware of how much goes into preparing a defense against an insurance claim. Insurance companies hire defense attorneys as independent contractors paid by the hour. Once you file a lawsuit, they need to respond with the appropriate legal documentation and take depositions. All this legal work is paid for by the insurance company. This may be enough to persuade the adjuster to offer a nuisance fee settlement.

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