Objective Criteria in Settlement Negotiations
What is greatly emphasized in effective negotiation is the importance of objective criteria. Just what is ‘objective criteria’ and why is it helpful?
Objective criteria are independent facts or information from experts that can be applied to your situation. It is information that can give validity to your request, and provide a reality check for all parties involved. The following is an example of how this has worked.
The Story of Lisa’s car
Several years ago, Lisa’s car was totaled in a car accident, that was the other driver’s fault. After consideration of the facts, the insurance company was supposed to pay for the damages. In legal terms, it is stated as something like ‘setting you back to where you were before the accident’. To Lisa, this meant that the insurance company should pay for the loss of her car, in effect paying off the outstanding car loan.
The insurance company representatives were very reasonable when Lisa talked with them on the phone, and she decided to handle this issue without involving a lawyer.
When Lisa received the claim settlement letter from the insurance company, she found that they were offering just over half of the amount that was still owed on her car loan. Enclosed was a list of recently sold cars, on which they had based their estimate. And they claimed that the condition of Lisa’s car was worse than those on their list. Lisa knew that this was not true. And she knew what she needed in order to pay off the loan, which was a lot more than the insurance company offered. How could she convince them to pay her what she asked?
Objective criteria
Upon studying the list that the insurance company had sent her, Lisa decided that she needed information that would back up the amount of her claim. She needed objective criteria. Researching statistics on cars sold and going through the information item by item, Lisa created charts listing all necessary information side by side: make and model, year, mileage, price, condition, accessories, and so on. After she analyzed all of the information, Lisa found that her car had been in better condition than most of the others. Now, with the necessary facts in front of her, she wrote a letter to the insurance company, responding to their offer. She repeated her original request for payment and included her findings to back it up.
After that, Lisa received a phone call. The insurance company’s representative was ready to negotiate, and asked what she based her estimate on and where she had found the information. Realizing that Lisa’s request was based on valid facts, after a few more discussions, the representative asked her to come down to the insurance company office, and a settlement was reached.
The outcome
The insurance company awarded Lisa roughly 85 percent of what she had originally asked for, which was 30 percent more than what they had offered in the beginning. And even though Lisa did not get 100 percent, this was acceptable to her. With the help of objective criteria, the end result was better than it would have been without it.
