What Happens if You Reject a Settlement Offer?

Legally reviewed by Garrett D. Lee, Trial Attorney at Morgan & Morgan, on June 10, 2024.

It’s common for insurance companies to lowball their initial settlement offers. Unfortunately, these offers often don’t cover your medical bills and other out-of-pocket expenses, let alone any pain and suffering you’ve endured due to someone else’s negligence. So, what should you do if you receive an unsatisfactory offer?

Why You Should Think Twice Before Accepting a Low Settlement Offer

Rejecting the insurance company’s first offer is your right, but it’s crucial to seek legal advice before doing so. An experienced personal injury lawyer can review the facts of your claim, examine the insurance policies, and compare the offer to similar cases. They can guide you on what happens if you reject a settlement offer and help you negotiate for a more reasonable amount.

Why Do Insurance Companies Lowball Offers?

Insurance companies are in the business of making profits, and paying out large claims cuts into their bottom line. Here are some reasons why you might receive a low initial offer:

Determination of Fault

In “at-fault” and “no-fault” states, insurance companies might lowball offers if they believe you were partially or fully to blame for the accident. In at-fault states, your compensation might be reduced by your percentage of fault.

Underestimating Your Losses

Insurance adjusters often use formulas or software to value claims, which can result in legitimate mistakes or underestimations. Providing additional details and evidence can sometimes lead to a higher offer.

Bad Faith Practices

Sometimes, insurance companies act in bad faith, intentionally offering low settlements regardless of the facts. If you suspect this, it’s essential to have a lawyer represent you. With a firm like Morgan & Morgan, known for taking on and winning against insurance companies, you’re in strong hands.

What Not to Do When Faced with a Low Offer

Don’t Settle for Less

Avoid accepting partial payments or signing anything with the hope of receiving more later. Insurance companies usually require you to sign a release, forfeiting your right to sue for additional compensation. Instead, consider alternatives like health insurance or public services if medical bills are piling up.

Don’t Give Up

Negotiating with insurance companies can be frustrating, especially when recovering from an injury. Stand your ground to get the compensation you deserve. An expert personal injury lawyer can handle negotiations, allowing you to focus on healing.

How to Respond to a Low Settlement Offer

Reject and Negotiate

If you reject an offer, it’s permanently off the table. The next step is to negotiate a counteroffer, ideally with the help of a lawyer who can ensure it’s reasonable and backed by evidence such as medical bills, property damage, lost income, and expert statements.

Counter “Take it or Leave it” Tactics

Insurance companies may use coercive tactics to pressure you into accepting low offers. Maintain meticulous notes of all communications and consider having a lawyer handle this for you. Bad faith tactics can result in significant punitive damages in a lawsuit.

File a Lawsuit

If negotiations fail, filing a lawsuit may be necessary. Courts expect parties to attempt out-of-court settlements first. A solid case showing the insurance company’s likely loss in court can bring them back to the negotiation table.

How Long Do You Have to Accept a Settlement Offer?

Settlement offers usually come with an expiration date, but insurance companies can also revoke them at their discretion. The timeline depends on the number of offers and counteroffers exchanged. It’s crucial to act within your state’s statute of limitations to preserve your right to compensation.

Insurance Companies Aren’t Always on Your Side

Despite their friendly advertisements, insurance companies prioritize profits over payouts. Many use tactics to delay, deny, or confuse claimants. Here are a few egregious examples:

• A 60-year-old woman with a $2 million policy was denied coverage because the at-fault driver’s road rage was deemed not an “accident.”
• Conseco used administrative tactics to delay a 77-year-old woman’s long-term care benefits.
• A police lieutenant’s homeowner’s claim was denied due to ambiguous policy language after Hurricane Katrina.

Why Hire Morgan & Morgan?

Don’t fight insurance companies alone. Morgan & Morgan’s personal injury lawyers are here to help you get the best possible settlement. With over 1,000 trial-ready lawyers and thousands of support staff, we’re prepared to take on even the largest insurance companies. We work on a contingency fee basis, so you don’t pay unless we win.

What Happens After You Accept a Settlement Offer?

Receiving your settlement check can take weeks. Your lawyer will deposit it in a trust fund until it clears. They will then deduct their fees and assist in paying any outstanding medical bills or liens related to your injuries.