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What Happens When You Reject an Insurance Settlement Offer?

Dealing with insurance claims and settlements after an accident, injury, or loss can be a frustrating and confusing process. You expect your insurance company to make you whole, but often the initial settlement offer seems inadequate and unacceptable. Rejecting that lowball offer may feel like the right thing to do, but it can also lead to unexpected outcomes if you aren’t prepared.

This article will walk through the insurance settlement and negotiation process step-by-step. We’ll look at what happens when you say no to a settlement offer, your options going forward, and how to protect your rights. Read on to make informed decisions about responding to a settlement proposal from an insurer.

The Significance of Insurance Settlements

After an incident like a car accident, work injury, property damage, or medical issue, insurance settlements provide compensation to make up for your losses. Settlements may cover:

●      Medical expenses

●      Lost wages from missed work

●      Repairs or replacement costs

●      Disability or disfigurement

●      Pain and suffering

Settlements aim to make the policyholder whole again and resolve the insurance claim fully. In exchange for the payment, the policyholder agrees to drop any further claims related to the incident.

The Roles in the Claims Process

Several key players are involved on both sides of an insurance claim. Understanding their roles helps decipher the settlement process.

The policyholder files the claim and provides evidence of damages. The attorney represents the policyholder’s interests.

The insurance adjuster evaluates the claim, determines fault and owed damages, and extends settlement offers. The claims manager oversees the adjuster and settlement negotiations.

How Settlement Offers Get Calculated

Insurers calculate settlement amounts based on:

●      Medical records, bills, and expenses

●      Documentation of property damage

●      Police reports establishing liability

●      Policy limits and coverage details

●      Applicable laws and case precedents

They make an initial offer hoping to settle cheaply and quickly. Policyholders must review the offer carefully to ensure it covers all damages.

Timeline for Receiving Settlement Offers

For minor claims, a settlement offer may come within weeks of filing the claim. More complex cases with extensive damages can take months to calculate.

The insurance company must investigate the claim thoroughly before making an offer. Medical treatment and recovery time also factor in.

Patience is key. Hasty offers usually underpay. Wait for a full and fair offer based on complete evidence.

Evaluating Settlement Offer Adequacy

Consider these factors when assessing if a settlement offer suffices:

●      Medical costs: Current and future treatment expenses

●      Lost income: Full impact on wages and benefits

●      Property damage: Repair or replacement costs

●      Pain and suffering: Ongoing physical, emotional, and mental impacts

●      Out-of-pocket costs: Transportation, childcare, help around the home

●      Future complications: Long-term health consequences

Compare the offer to the complete short and long-term costs. Is it a fraction of your losses or full and fair compensation?

Negotiating With Insurance Adjusters

If the initial settlement offer seems insufficient, remember that the first offer is generally the lowest. Insurers expect you to negotiate.

Your attorney can negotiate effectively on your behalf. Negotiation strategies include:

●      Organizing documentation to demonstrate all costs and losses.

●      Making a counteroffer with a detailed justification of the requested amount.

●      Establishing urgency to motivate higher offers. A looming trial date can inspire action.

●      Securing testimony from experts like accident reconstructionists or physicians.

●      Discussing litigation if the insurer won’t provide a fair offer.

Sometimes negotiations stall. If you’ve provided all evidence and made reasonable counteroffers, litigation may be your only recourse.

Rejecting the Offer – Then What?

When an insurer won’t budge from an unreasonably low offer, rejecting it is the only option. Some steps to take:

Hire an Attorney

A skilled attorney is vital once negotiations fail. They’ll manage correspondence, file a lawsuit before deadlines pass, and represent you in court if necessary.

Send Written Rejection

Formally reject the offer in writing while leaving the door open to further discussion. Politely insist any new offers must adequately compensate your full losses.

Evaluate Your Legal Options

Your attorney will determine if your case merits a lawsuit. Can sufficient evidence be gathered to prove liability and losses? Are there legal precedents favoring your claim?

Move Quickly Before Time Runs Out

Critical deadlines apply. In most states, you have only 1-3 years from the incident date to file a lawsuit. Miss the deadline and your claim will be barred forever.

Be Prepared to Litigate

●      If a reasonable settlement can’t be reached, litigation may be unavoidable. Your attorney will advise if this route is advisable or if Settlement

offers are rejected due to being too land or must be followed up through negotiations or legal action. Otherwise, you risk receiving nothing.

Know the Risks Before Rejecting an Offer

Refusing a settlement has risks. Talk with your attorney about:

●      Legal fees: Lawsuits cost money upfront for lawyers, filings, evidence, etc. Only pursue litigation if the potential award exceeds the costs.

●      Time commitment: Cases can drag on for years. Be prepared for a lengthy battle.

●      No guarantee: There’s no certainty a trial will end in your favor. The judgment could be less than the settlement or even zero.

●      Emotional toll: Lawsuits require repeatedly reliving a traumatic event. Ensure you have emotional support.

Carefully weigh the offer amount against potential gains and risks before rejecting it.

Overview of the Litigation Process

If negotiations utterly fail after rejecting a settlement offer, the case proceeds to a trial. Here are the general litigation phases:

Filing of Lawsuit and Response

The suit describing your allegations is filed. The insurer responds, denying liability and damages.

Discovery Phase

Your attorney and the insurer’s counsel exchange relevant documents, interview witnesses, take depositions, and issue subpoenas requesting evidence.


You must prove your case. Your attorney presents evidence and questioning establishes your losses resulted from the insurer’s policyholder’s actions or inactions. Insurer counsel seeks to refute your evidence and your monetary demands.


The judge or jury decides in your or the insurer’s favor. If you win, the amount of damage awarded is also determined.

Lawsuimean nothing is guaranteed except legal fees. But valid claims deserve fair compensation. Discuss your options thoroughly with counsel.

Key Takeaways on Rejecting Settlement Offers

●      Never accept an inadequate offer just to quickly close the matter. You deserve full compensation.

●      Hiring an attorney for guidance on negotiations and litigation options is highly recommended.

●      Meticulously document communication, medical costs, lost wages, and all damages to support negotiations.

●      Be reasonable but firm in counteroffers. Justify the requested amount with evidence.

●      Litigation is time-consuming, expensive, and uncertain but can be the only recourse when lowballed.


Rejecting an insurance settlement offer shouldn’t be done lightly. But with an attorney’s counsel, it can be the right choice when the insurer won’t negotiate fairly and adequately. Just be aware of the risks and be fully prepared for the battle ahead. With persistence and a strong case, your losses can ultimately be covered.

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