What Happens If You Don’t Accept a Settlement Offer?

Don’t be surprised if the adjuster’s first injury settlement offer is much too low. Here’s what happens if you reject it and what to do next.

If you’re injured in a car accident or suffer another serious personal injury, you don’t want to haggle with an insurance company about an insurance claim.

Insurance companies, however, don’t usually pay reasonable settlements without some effort on your part. If you want to get paid, you will have to negotiate.

Chances are that the first settlement offer you get for a personal injury will be too low to make you whole. Maybe it won’t even pay all your medical bills.

When injured people get offers like this, it puts them in a tough spot. Do they accept a lowball offer just to get the process over with? Or do they reject the settlement offer, not knowing what happens next?

This article will help. Insurance companies negotiate every day and are familiar with the process. You can also prepare and be well-armed with the knowledge of the personal injury claims process.

Below are the most common situations, and what you can do when they happen.

Scenario 1: Reject the Low Offer and Negotiations Continue

Group of business people and lawyers discussing and signing a contract

Though it may seem scary, rejecting a lowball settlement offer usually results in one of a few common outcomes. The most common is that the settlement negotiation continues.

In fact, many insurance adjusters make low settlement offers expecting rejection. They know further negotiation is likely. They just hope that the injured party will accept the low offer.

Rejecting a low first offer can be a smart move. What you do next is important.

You can’t simply demand that the insurance company make a higher offer. Instead, you should prepare a letter responding to the low offer. Part of the letter should be a counter-offer based on the facts of your injury.

For example, let’s say you have $10,000 of medical bills. The insurance company offered a $5,000 settlement. Your rejection letter should detail your medical costs as the basis for your counter-offer. Like a demand letter, the rejection should also detail other related issues, such as time lost from work or ongoing disabilities.

With your medical expenses and lost income, it may be that $20,000 is a more reasonable settlement amount. Your rejection letter should say that. If your adjuster is doing their job properly, they won’t take offense. Instead, they will consider new information and explain if it affects their position.

Negotiating this way is a lot of work, and it may not get you the amount of money you’re looking for. But, unless the insurance company specifically says that they will not negotiate any further, you should press on. Continuing good faith negotiation is a common result of rejecting that first settlement offer. It can also get you the settlement amount you want.

Scenario 2: The Adjuster Refuses to Negotiate in Good Faith

young couple complaining about bad contract terms and arguing with the manager

The insurance adjuster may reject any possibility of a counter-offer. Many find this “take-it-or-leave-it” approach intimidating.

The adjuster’s indifference to the facts of your injury is bad-faith negotiation and can cost you both peace of mind and money.

The chance of this kind of conflict unfortunately leads many injured people to accept a low settlement amount. No one wants an extended, ugly fight with an insurance company.

You are not powerless in this situation, though. You just need to change tactics to get your insurance settlement process back on track.

When an adjuster begins engaging in bad-faith behavior, you need to take lots of notes. Insurance adjusters are advised not to make notes “taking sides” or drawing conclusions about injured claimants. If you catch them doing this, write it down.

Make sure that you have written notes reflecting all interactions, particularly phone calls. You now have records you can reference to show bad behavior by insurance adjusters. You can use those records to take control of the process and demand that it be fairer.

Your notes serve three specific purposes. First, they provide a source of information independent of the insurance adjuster’s file about their behavior.

Second, you can use them to negotiate with someone else at the insurance company. For example, a supervisor or higher-level adjuster will be interested in what happened. That way, you can get another shot at negotiating a fair settlement agreement.

Finally, if all else fails, your notes about bad-faith behavior by an insurance adjuster may support a lawsuit. If you suspect that you may end up suing the insurance company, you need to prepare even more.

Your options for pursuing a bad faith claim against the insurance company will differ depending upon your state’s laws.

Scenario 3: Protect Your Legal Rights by Filing a Lawsuit

woman consulting a lawyer to file a lawsuit

The most dramatic result of a rejected settlement offer is a lawsuit against the party who injured you, the insurance company, or both.

In either case, if it becomes clear that you may have to sue, you must be aware of the time limit, known as a statute of limitations, for filing a lawsuit.

Time limits in a statute of limitations can vary by type of claim (e.g., negligence, assault, product liability) and state.

If your claim negotiations are stalled,  consider talking to an attorney to learn exactly what the time limits are in your state.

In the event that you hire an attorney, the insurance company will no longer deal with you directly.  The adjuster may still want to negotiate, but will go through your lawyer once they know you have legal representation.

Just because you file a lawsuit does not mean that you have to take a claim all the way to trial. In fact, the vast majority of lawsuits settle before, or even during, trial. Your attorney can use the lawsuit to conduct discovery against the party who injured you and the insurance company.

If your attorney can establish that you have a strong legal case and will win at trial, that is a powerful way of getting an insurance company back to the negotiating table. Generally, the closer a claim is to trial and a risk of loss to the insurance company, the easier a fair settlement will be.

Therefore, though lawsuits present large risks compared to a settlement without litigation, they can potentially offer greater rewards in the form of a larger settlement. Whether this might be true in your situation can only be determined after evaluation by a qualified attorney in your state.

Settle Only When It Is Right for You

Insurance companies love to make you feel like you don’t have a choice. Any settlement offer they make is bound to come with incredible pressure for you to take it. Even an unsatisfactory offer can look more attractive when compared to a long negotiation, or even a fight, with an insurance adjuster.

This most relevant consideration, however, is whether the proposed settlement takes care of you and gets you as close to your pre-accident condition as possible. If it doesn’t, then it makes sense to reject the offer and try to do better.

Of course, this is often easier said than done. If you need legal advice, contact a personal injury attorney for a free consultation.

Matthew Carter, Esq. has been a licensed attorney since 2004. He’s admitted to practice law in California and Nevada, where he was awarded the Martindale.com rating of AV – Preeminent. Matthew has successfully handled a variety of personal injury and wrongful death cases, as well as trials, appeals, and evidentiary hearings throughout state and federal... Read More >>