What Is an Insurance Settlement Offer?
After filing a legal compensation claim, the opposing insurance company will take a look at the case and weigh its options. They may offer you a settlement payment, which is a lump sum of money to cover the damages upfront. However, taking this settlement means you give up your right to pursue any further legal actions.
Why would an insurance company try to offer a settlement? At the end of the day, they’re a business, and they want to avoid the financial investment and hassle of dealing with a lawsuit or legal claim. If you take the settlement, they give you one payment upfront and can then wipe their hands clean of the situation. Settlement offers often happen after a car accident claim, medical malpractice case, or workplace injury claim.
Why Are Settlement Offers Often Low?
As we mentioned earlier, insurance companies are businesses in the market of making money. They want to make a profit, and they want to lose as little money as possible due to legal claims and settlements. These companies will often lowball their settlement offer to try and minimize their payout. They can try to justify their low offer by downplaying your injuries or trying to push fault onto somebody else.
Not only that, but they’re also trying to test your limits and see how far you’ll go to get your payout. Insurance companies will try to use psychological tactics to pressure you into settling quickly with a low offer.
Reasons to Reject an Insurance Settlement Offer
If you’re not happy with the settlement offer you receive from the insurance company, you don’t have to take it. You have every legal right to say no and negotiate a different amount. Your reason for saying no can vary, but never feel like you’re forced to say yes. Common reasons to reject an insurance settlement offer include:
- You haven’t reached Maximum Medical Improvement (MMI).
- The offer doesn’t cover future expenses, lost wages, and medical bills.
- The offer doesn’t account for noneconomic damages like pain and suffering.
- You feel pressured by the insurance adjuster.
What Happens After You Reject a Settlement Offer?
Saying no to the initial settlement offer opens the door to negotiations, which can have a few possible outcomes. To start, the insurer may provide a counteroffer after the initial rejection, and you and your legal team can respond with a demand letter detailing what you want out of the settlement.
From there, the insurance company may want additional evidence to factor into their decision. Negotiations can have 1 of 3 potential outcomes:
- The insurer comes back with a higher settlement offer.
- Negotiations come to a standstill.
- The case is escalated to further legal action.
How to Respond to a Low Insurance Settlement Offer
Getting a lowball settlement offer isn’t the end of the world. You don’t have to accept it, and there are things you can do to craft a strong response to keep negotiations moving productively.
Step 1: Evaluate the Offer
Take a closer look at the offer with your legal team. Compare the payout amount to your insurance policy coverage and the actual damages sustained from the incident. The idea of a settlement offer is that it matches your policy coverage while also paying for any damages.
This includes economic and non-economic damages. If the offer doesn’t match the damages, you can move on to the next step.
Step 2: Gather Evidence
If you don’t believe the settlement is where it needs to be, you need to have a solid paper trail of evidence to prove your stance. Collect your medical records, records of lost wages, and any documentation related to your pain and suffering damages.
All of this paperwork will go towards your counteroffer and help justify why you’re asking for the amount you want. You can’t just demand more money, you need to be able to prove why you need that money.
Step 3: Submit a Counteroffer
Once you have all of your paperwork organized and on hand, your attorney can start to compile your counteroffer. They will draft a demand letter that goes into detail about what settlement amount you want, why you think you need it, and a breakdown of your damages to support your claim. The letter will also explain why the first offer was inadequate and why it’s not enough to cover the damages.
Step 4: Prepare for Extended Negotiations
Unfortunately, insurance companies are going to push back at every opportunity they get. They want to lose as little money as possible, so be prepared for an extended period of negotiations. You may get more counteroffers, or they may try and simply wait you out until you get fed up and accept the original offer.
Be patient, take a breath, and know that this process is going to take a while. However, all of this work will be worth it in the end.
Legal Options After Rejecting a Settlement Offer
Many cases can be settled outside of the court system without any further legal action. Insurance companies don’t want to deal with a costly lawsuit or legal process, so many will try to settle quickly to get it over with. However, if things aren’t progressing how you would like them to, you have a few legal routes you can take to improve your odds of a positive outcome.
If negotiations have come to a standstill and there doesn’t seem to be any progress, you can consider mediation or other third-party intervention. Sometimes, tensions and frustrations get high and can lead to unproductive discussions, and bringing in an unbiased mediator can help things move along. They can provide additional insight into the negotiations and help keep things moving smoothly.
Filing a Lawsuit
In some instances, a mediator isn’t enough to get things moving again. When things truly come to a screeching halt with no signs of moving forward, you can try to encourage the other party to cooperate.
Filing a lawsuit is the first step in taking your case to trial, and sometimes, that’s all it takes to get things going. As we’ve said, insurance companies don’t want a lawsuit on their hands, so filing might light a fire under them and get them motivated to agree on a settlement outside of court.
Going to Trial
Whether it’s stubbornness or something else, desperate times call for desperate measures. Going to trial should be a last resort in the negotiation process, as it comes with a whole new level of challenges. While you can potentially earn more money than you can in a settlement, you will also need to deal with the legal system and additional legal fees over a prolonged period.
While a settlement happens outside of court, a trial will take you into the courtroom in front of a judge and a potential panel of jury members. If you decide to go this route, be prepared for a long and difficult fight.
Common Mistakes to Avoid When Rejecting a Settlement Offer
Before you accept a settlement offer, ALWAYS consult with your attorney. If they offer you a partial payment, don’t accept it without understanding the full scope of what that means. You may not be able to pursue further compensation or legal action.
Document every interaction you have with the other party, as well as any and all counteroffers you receive. In addition, keep all deadlines in mind and make sure you stick to them strictly to avoid potential penalties.
When Should You Accept a Settlement Offer?
It can be tough to know when to keep fighting and when to take the offer you’re given. Before you accept a settlement offer, consider:
- Your current financial circumstances
- The likelihood of a better offer
- The value of your case if it goes to trial
- The emotional toll of continued negotiations
- The costs of continued negotiations
- The costs of taking your case to trial
Make sure the settlement covers all of your future medical costs and the damages accrued from the incident. This includes both economic and non-economic damages.
The Role of a Personal Injury Lawyer in Maximizing Your Compensation
Negotiating with an insurance company can feel like talking to a brick wall, and that can get frustrating quickly. Luckily for you, a personal injury attorney does this for a living. They know all of the tips and tricks to keep negotiations productive and ensure you get better settlement terms at the end of the day.
A good lawyer knows the legal system inside and out, and they can use that expertise to fight for the compensation you deserve. They may also be able to catch small things you would’ve missed and strengthen your case for better earnings.
Speak with a Personal Injury Attorney to Maximize Your Settlement
Getting a settlement offer can feel like a victory at the end of a long battle, but it may not all be as it seems. You may take a closer look and find that they’ve lowballed you or tried to pressure you into settling quickly, but you don’t have to accept it. You’re within your rights to reject the offer and provide a counteroffer that you find to be more fair. Be sure you have considered every detail so you can make an informed decision on what’s best for you and your case.
If you need help negotiating a settlement offer with a stubborn insurance company, Compass Law Group, LLP, is ready to help. Our team of experienced and licensed attorneys knows the legal system inside and out, and we’ll fight for the compensation you deserve after a catastrophe. Get in touch with our team today and see how we can help you get the settlement offer you’re entitled to.
