Why do insurance companies offer insultingly low settlement?

[Screenager]

Surely they know it’s too low and you’re unlikely to accept

Because some people settle.

I’ve only had fair offers from insurers but I don’t use the cheap ones.

It’s the other side’s insurer. They were at fault

Because many people put in fraudulent or wildly exaggerated claims. So one tiny dent ends up being a total refurb and a hire car for 2 weeks. They overspend on over the top claims - we pay with higher premiums.