Should You Accept the Insurance Company’s Initial Offer?

If you’ve been involved in an accident and the defendant or their insurance company offers you a settlement, deciding whether to accept it can be challenging. While the initial offer may seem tempting, it’s rarely the best or final offer. Understanding what happens if you don’t accept a settlement and how to reject a settlement offer effectively can significantly impact your final compensation.

What is a Settlement Offer?

A settlement offer typically originates from the defendant or their insurance company. Usually, these initial offers significantly undervalue your actual claim. Insurance adjusters at this initial negotiation stage have limited authority, meaning the offer they present is conservative and rarely reflects the full value of your claim.

What Happens if You Don’t Accept a Settlement?

If you reject a settlement offer, several things can happen, including:

  • Your attorney will prepare a formal counteroffer, clearly outlining your damages and the reasons the initial offer was inadequate.
  • The negotiation process will continue, typically becoming more structured and formalized.
  • If necessary, your attorney may initiate litigation, leveraging the court process to compel the insurer to provide a fairer offer.

Common Reasons for Rejecting Settlement Offer

The primary reason for rejecting settlement offers is typically undervaluation. Insurance companies start low, anticipating that many claimants will quickly accept. However, accepting these early offers often results in significantly reduced compensation compared to what you could receive with skilled legal representation.

Rejecting an offer pushes the insurance company to escalate your case to higher-level adjusters or even legal counsel, people with greater authority and discretion to make more substantial settlement offers.

Why Do Insurance Companies Typically Undervalue the Initial Settlement Offer?

Your first offer is not your best offer because without a lawyer, insurers face no pressure. They know that if you hire counsel, depositions will take place, and every detail will come to light. That includes phone records, vehicle data downloads, hot shock tests, and any maintenance logs or driver history that may reveal more liability. The leverage of going to court and leverage of depositions and litigation is precisely what compels carriers to pay more when a lawyer gets involved.

Insurance companies often undervalue claims for a few key reasons:

  • Limited adjuster authority: Your first adjuster probably has a rock bottom number they cannot exceed. If a case is worth one hundred thousand dollars but their adjuster can only approve ten thousand, that initial offer is artificially capped.
  • Incomplete evidence: If key evidence remains undiscovered, insurers will not risk paying more. They assume liability may be weak. For example, no hot shock test, no vehicle data download, no maintenance log review—insurers bank on your inability to prove their driver’s fault.
  • Ongoing medical treatment: If you are still seeing doctors or undergoing therapy, your final medical costs are unknown. Accepting early locks you into a number that may not cover future surgeries, devices like spinal stimulators, or radiofrequency ablations that cost thousands of dollars.
  • Venue considerations: Juries in some Georgia counties tend to award higher damages. If you file suit in a county known for large verdicts, insurers may pay more to avoid trial. Waiting until you choose venue before accepting can dramatically affect your net recovery.

How to Reject a Settlement Offer

Properly rejecting a settlement offer involves formal written communication through a professionally drafted demand letter. Ideally, this will come from a lawyer. Informal rejections via phone calls or casual correspondence typically do not pressure insurers sufficiently. A formal rejection should clearly communicate why the offer is insufficient, supported by documentation of damages and future anticipated costs.

How to Counter an Insurance Settlement Offer

Creating a counteroffer is a crucial step following the rejection of an initial settlement. A well-constructed counteroffer includes:

  • Detailed documentation of medical expenses incurred and future medical costs.
  • Evidence of lost wages and lost earning potential.
  • Statements from medical and financial experts supporting your claims.
  • Clearly outlined arguments demonstrating why the initial settlement is insufficient.

Effective counteroffers typically result in the insurer reassessing your case at higher organizational levels, potentially increasing the settlement offered significantly. It can also be helpful to know about personal injury settlement amounts in Georgia.

The Impact of Litigation on Negotiations

Litigation is a powerful tool following the rejection of settlement offers. Filing a lawsuit compels insurers to participate in the legal discovery process, potentially revealing valuable evidence that strengthens your claim. This is just one of the advantages of hiring a lawyer. See how do lawyers negotiate settlements? Examples of evidence uncovered through litigation include:

  • Commercial vehicle maintenance records and driver histories.
  • Drug or alcohol test results of the involved parties.
  • Accident reconstruction reports and detailed vehicle inspections.
  • Phone records show that a driver was texting while driving.
  • Whether or not a turn signal was being used. How? A hot shock test checks the light bulb filament. If the filament is hot, it was energized at the time of the crash and appears frayed. If it is cold, it shows no sign of recent power. For example, if a driver says their right blinker was on, a hot shock test can help to show if it was or was not energized in the milliseconds before impact.

For instance, litigation revealed cocaine use by a commercial driver in one notable case, dramatically enhancing the claim’s value.

Risks Associated with Rejecting a Settlement Offer

Rejecting a settlement offer carries some risks, although these are typically manageable. Potential risks include:

  • The rare possibility of the insurance company withdrawing the offer entirely.
  • Extended timelines, as taking the insurance company to court (suing the insurance company) typically makes the resolution of your claim take longer.

However, strategic rejection, managed by experienced personal injury attorneys, often significantly increases eventual compensation.

Georgia’s Statute of Limitations and Its Importance

Georgia imposes a two-year statute of limitations on personal injury lawsuits. Missing this critical deadline permanently forfeits your right to pursue a lawsuit. Attorneys often file lawsuits proactively to protect your right to legal action, particularly if settlement negotiations stall near this statutory deadline.

What To Do After Rejecting an Insurance Settlement Offer

After rejecting a settlement offer, your attorney will likely:

  • Draft and submit a thorough counteroffer.
  • Potentially file a lawsuit immediately (if negotiations seem futile).
  • Employ strategies such as the “Offer of Judgment,” placing the insurance company at risk of paying your attorney fees if the court awards significantly exceed initial offers.

Strategic Advantages of Rejecting Quickly vs. Waiting

Timing in rejecting settlement offers can significantly influence your final outcome. Rejecting the offer quickly communicates confidence and can accelerate negotiations. Alternatively, delaying rejection can be strategic if you anticipate new evidence that could enhance your claim.

Can a settlement offer be retracted if you delay rejection?

Theoretically yes, but virtually never in practice. If you delay too long without filing suit and the statute of limitations expires, the insurer might simply walk away, claiming you abandoned the claim. That is why it’s important to monitor deadlines closely. If the two-year window is nearing, it may be adviseable to file suit immediately to protect your rights. Once a lawsuit is pending, the insurer cannot retract a prior number without risking exposure to bad faith claims. If they claim their prior offer is gone, they must present a new number subject to immediate litigation risk.

Common Misconceptions About Settlement Rejections

Many individuals misunderstand the negotiation process, assuming it’s straightforward and similar to bargaining for a product. Unlike informal bargaining, effective negotiation relies on evidence and detailed justification. Misunderstandings also occur regarding the implications of signing early settlement releases, often unknowingly forfeiting rights to future claims and compensation.

Real Examples Illustrating Benefits of Rejecting Settlement Offers

A client was traveling on a two lane road early in the morning when a tow truck made a U-turn under a bridge. The tow truck had aftermarket lights on the bed that were constantly on, not blinking. In misty conditions at dawn, those lights looked like a moving vehicle. The client struck the stationary tow truck at highway speed. The insurance company offered $0. A hot shock test was performed on the tow truck’s rear lights. The test showed the filaments were cold, proving the lights were never blinking. We were able to prove that those red lights were just always on (not blinking hazard lights); they were just always on. The insurer ultimately settled for ~$1 million.

Can an Insurer Simply Refuse to Negotiate Further?

Yes, they can refuse to budge. Once they say, here is our best and final offer, we have two main choices: accept or file a lawsuit. If your case is truly worth more, filing suit is your only way to continue. When depositions and expert reports begin, insurers often realize the risk of paying more in a jury verdict. If they can avoid paying attorney fees and a possibly punitive award, they will sometimes revise their offer.

How Long Do You Have to Respond to an Insurer’s Offer?

In Georgia you have no fixed deadline to respond to a settlement offer. However, once you send a demand letter, the insurer has thirty days to respond or risk a bad faith claim. That thirty-day window is critical. Without a formal demand letter, carriers have no obligation to rush. Using a demand letter can start the clock, applying pressure so they cannot drag negotiations indefinitely.

Can You Negotiate Further Without Filing Suit?

Often you can negotiate further pre-suit, but only to a point. If the insurer claims their number is final, filing a lawsuit gains you leverage. Once in litigation, carriers see the risk of deposition testimony, expert analysis, and potential attorney fees. That risk can compel them to revisit their position. You do not have to file suit immediately after rejecting, but when negotiations reach a stalemate and the statute of limitations approaches, filing is possibly your only option to keep the claim alive.

What About Signing a Settlement Release at Your Door?

Some carriers hire people to visit injury victims at home with a check and a settlement release. If you sign the release in Georgia, you give up all rights to the claim, even if you never cash the check. There is no partial signing in Georgia. Once you sign, your case is done.

What Questions Should You Ask a Lawyer Before Deciding on a Settlement Offer?

When facing a settlement, clients should ask their attorney:

  • Is this offer fair given my medical bills and future care needs?
  • Have all medical providers and health insurers submitted liens or reimbursement demands?
  • What venue are we in for filing suit? Do juries in this county tend to award higher damages?
  • Can we prove liability with evidence such as hot shock test or vehicle data downloads?
  • How much risk do we face at trial? Do we need to serve an offer of judgment to force the insurer to pay attorney fees?
  • What happens if I accept now but need more treatment later? Can I reopen the case? (Answer is no in Georgia.)

What Are Common Negotiation Tactics by Insurers?

Insurance companies try multiple tactics to minimize payouts. Here are some common ones:

  • Lowball opening offer: Their first number is a guess designed to tempt desperate claimants. They hope you will accept before researching or hiring an insurance dispute attorney.
  • Doorstep checks: Hiring people to deliver a check and a release at your home. Signing ends your rights, so be cautious.
  • Blaming pre-existing conditions: Hiring billing experts or defense medical experts to argue your injuries were not caused by the crash. This can be countered with testimony from the treating physician to a reasonable degree of medical certainty that the crash caused or exacerbated injuries.
  • Delaying settlement: Insurers sometimes stall, hoping you face mounting bills and accept a low number out of desperation. It may be important to send cease and desist letters to providers and consider bad faith claims if delays are unreasonable.
  • Venue threats: Suggesting the case will be filed in a county that is known for giving lower settlement judgments.
  • Document demands: Requesting every single medical record and every bill, even those unrelated to the crash, to overwhelm the claimant. An attorney might respond by focusing only on relevant records and presenting them clearly.

How Do Medical Liens Affect Your Decision to Accept a Settlement Offer From a Car Insurance Company?

Your health insurance provider has the right to seek reimbursement for any medical costs they covered that were caused by a third party. Many clients do not realize that when you accept a settlement, your health plan will come after your recovery. For example, if you receive $30,000 in medical treatment and accept $40,000 in settlement from the car insurance company, your health insurer may demand their $30,000 back. That leaves you with only $10,000 (minus attorney fees). That is why it may be beneficial to negotiate those liens before final disbursement. It’s recommended to review each plan’s contract to find possible reductions or caps. Sometimes a hospital must file a lien within a certain period or lose that right. Insurers are aware of those deadlines and factor them into their offers. By rejecting the initial offer and allowing time to negotiate, those liens might be able to be substantially reduced.

What if You Still Face Medical Bills While Litigation Is Ongoing?

Once you file suit, you can send a cease and desist letter to medical providers stating that the case is in litigation and that they should not pursue collections until resolution. Providers often back off and wait. Courts understand that if you are injured and awaiting trial, any attempt to collect can be paused. Meanwhile, we use new evidence and testimony to prove the full value of your claim, ensuring that once settlement arrives, all valid bills get paid.

Health insurance subrogation and medical liens: Many injured victims do not realize their health plan will demand payment from any settlement. If you accept a $15,000 settlement, but medical bills are $30,000, a health plan can claim its full reimbursement, leaving you with nothing. Rejecting allows time to negotiate those liens down.

Why Getting a Personal Injury Lawyer Matters

Having professional legal counsel is vital when rejecting settlement offers. Experienced attorneys understand negotiation strategies, litigation tactics, and detailed evidence management. They adeptly handle complexities such as insurance subrogation, ensuring your settlement adequately covers all damages, both immediate and future.

Final Thoughts on Rejecting Settlement Offers

Rejecting a settlement offer, when managed strategically and supported by skilled legal counsel, frequently results in significantly higher compensation. Understanding the process, including how to reject and counter-offer an insurance settlement effectively, ensures you are positioned strongly in negotiations, ultimately protecting your financial recovery following an accident.