What Happens If I Turn Down the Car Insurance Company's First Settlement Offer?

The car insurance company's first settlement offer is often just that—a first offer. So what are your options as far as a response?

Updated by , J.D.
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  • We've heard a number of variations on this question from car accident claimants. Many wonder whether they can turn down their lawyer's first settlement offer. So first, let's explain that a car accident settlement offer is not actually coming from your lawyer. The driver who was at fault for the accident (assuming that's not you) is going to be responsible for your damages—that means the cost of your medical treatment, lost income from time missed at work, your vehicle repairs, and any other losses tied to the accident. (It's a different story in the dozen or so no-fault car insurance states.)

    So, assuming the at-fault driver has car insurance, the settlement offer is going to come from the insurance company, and if you have a lawyer, he or she will be the intermediary. But it's the insurance company that is making the offer.

    Now that we've got that part settled, what are your options once you've received a settlement offer?

    The First Offer (Probably) Won't Be the Last

    The first thing to know is that after any car accident, the insurance company's first settlement offer is just that—the first of perhaps many. And it's almost always going to be a low offer.

    The second thing to know is that you are absolutely free to reject the offer—and in most cases you probably should reject it, but your lawyer will have advice that's tailored to your situation. Think of the insurance company's first offer as the kick-off to settlement negotiations. The complexity and duration of car accident settlement negotiations will depend on a number of factors, including the seriousness of your injuries and whether or not fault for the accident is clearly-established.

    Third, if you and your lawyer have not done so already, now would be a good time to draft and send a detailed demand letter to the at-fault driver's car insurance carrier (send it to the attention of the insurance adjuster who made you the first settlement offer).

    A demand letter is your chance to methodically present your side of the story—how the accident happened, who was at fault, what medical treatment you've received so far, the prognosis for your recovery, and any other information that helps your case. The letter will include details on all of these aspects of the case, and will also include a dollar figure that you would be willing to accept in order to settle the case. Get more tips on writing a winning demand letter.

    Making a Counter-Offer, and What Comes Next

    After the insurance adjuster's first offer in your car accident case, you have every right to respond with your own counter-offer. Again, you may get the best results by putting your counter-offer and your supporting arguments into a detailed car accident demand letter.

    While every case is different, here is the course that a typical car accident settlement might follow:

    1) The insurance company makes an initial offer that is almost always less than what your claim is probably worth.

    2) You (and your attorney if you have one) respond with a detailed car accident injury demand letter that asks for more (sometimes much more) than what the insurer offered.

    3) You and the insurance adjuster (or your attorney and the insurance adjuster) exchange a few more letters and participate in a few more phone calls where you try to keep the settlement figure in the higher range, and the adjuster tries to bring the figure down.

    4) You and the adjuster arrive at a final settlement figure that is satisfactory to both sides. You sign a release of liability and the insurance company cuts a check.

    Your claim may not go through this much back-and-forth, especially if you've suffered only minor injuries (or no injuries) and the insurer's liability is limited mostly to vehicle damage.

    In more significant car accident cases—where you've got serious injuries and your full medical recovery is expected to take some time, for example—it might be worth your while to discuss your case with an experienced car accident attorney.

    Get more tips on settling a car insurance claim.

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