How to Reject and Respond to a Low Insurance Settlement Offer

Last Updated: November 29, 2016

If you are negotiating a personal injury claim with an insurance company, there are a few things you should understand about how to respond to a low initial settlement offer and the proper way to make a counteroffer.

There is no specific time frame for receiving a settlement offer from a claims adjuster – some personal injury claimants receive a settlement offer very early on in the settlement negotiation process, and others must wait several weeks.

You cannot reject a settlement offer until one is made, so the timing for your rejection and counteroffer depends entirely on how long the insurance company takes to evaluate your personal injury claim.

how to respond to low settlement offer
In between opening an investigation into your personal injury claim and making an initial settlement offer, the claims adjuster may have interviewed witnesses, studied police reports, reviewed your medical records, and read your demand letter.

In some cases, he or she may have visited the scene of your accident. Once the claims adjuster has finished investigating your claim, he or she will make an initial settlement offer.

Typically, the claims adjuster will call you to let you know how much the insurance company thinks your claim is worth. The claims adjuster will also send you an offer letter in the mail. The claims adjuster will only make a settlement offer after he or she is confident about who is liable for your injuries and the amount of damages the insurance company thinks you should receive.

The “Authority” of a Claims Adjuster

When making an initial settlement offer, the claims adjuster will tell you the dollar amount he or she thinks your personal injury claim is worth. During settlement negotiations, you may hear a reference to a second dollar amount known as the “authority” of the claims adjuster. This number represents the highest dollar amount for which the claims adjuster’s supervisors will allow your personal injury claim to settle.
Most claims adjusters will never tell you how much his or her “authority” actually is. If you hear a claims adjuster refer to his or her “authority” during settlement negotiations, he or she is probably trying to convince you that this is the best offer you can possibly get. You can be almost certain that this is not the real amount, and that the claims adjuster is bluffing. Floating an “authority” amount is a tactic used by some claims adjusters to get you to settle for less than your claim is worth.

Don’t Let Your Personal Injury Claim Stall

Many personal injury claimants make the mistake of allowing settlement negotiations to stall. By holding on to your settlement money, the insurance company is essentially earning interest on the compensation to which you are entitled. You need to take a proactive role in bringing your claim to a close and securing a favorable settlement offer.

Even though you cannot make a counteroffer until you receive an initial settlement offer from the claims adjuster, you should call the claims adjuster regularly until he or she makes an offer. If you receive a verbal settlement offer over the phone, be sure to ask the claims adjuster to put the offer in writing and send it to you via certified mail. You need to know exactly how the claims adjuster has arrived at his or her initial settlement figure, so that you can address each point in your counteroffer.

The Initial Settlement Offer

Do not be surprised if the initial settlement offer is a low figure. There are many reasons why you might receive a “lowball” offer. The claims adjuster may have concluded that you are partially at fault for your injuries, or that your injuries were not serious enough to justify the amount of damages you included in your demand letter. She may also have concerns about your pain and suffering demand.

Consider this a test from the claims adjuster. The insurance company has nothing to lose and everything to gain by making you a lowball settlement offers. Many people are struggling financially after an accident and are desperate to jump at the first settlement offer that comes their way. Even though it may be difficult to pass up a settlement offer, you should not accept the initial offer unless it is fair. How to evaluate and deal with a fair settlement offer is discussed at the conclusion of this article.
Do not panic over a low settlement offer. Remember, the insurance company is running a business and must maintain its profits. The claims adjuster does not expect you to accept the first offer, but rather hopes that you will. Naive personal injury claimants accept lowball offers all the time.

As soon as you receive the initial settlement offer in writing, carefully evaluate the stated reasons for the low settlement amount. You should respond to each of the points made by the claims adjuster in a written letter that includes a counteroffer. In this letter, you will reassert your position (this is the same position you carefully described in your demand letter). Focus on the extreme pain and suffering you endured. Never personally attack the claims adjuster. Be professional yet firm in explaining why you deserve more money for your injuries and other losses.

Rejecting a Settlement Offer and Making a Counteroffer

In order to reject the initial settlement from the insurance company, you should send a letter to the claims adjuster that:

  • States you do not find the initial settlement offer acceptable;
  • Lists the reasons why you deserve a higher settlement offer; and
  • Includes a demand for a higher settlement offer.

By doing so, you will have rejected the insurance company’s initial settlement offer and made a counteroffer. The amount of your counteroffer should be slightly lower than the one you included in your demand letter. That way, the insurance company will know you are willing to reach a compromise. Be careful not to reduce your settlement demand by too much. If you do, the claims adjuster may immediately accept your settlement offer and refuse to negotiate further.

The following sample letter serves as a template for a letter rejecting an initial settlement offer and making a counteroffer. You should include your personal information where applicable. Remember, this is only a template. You may need to refute specific points that the claims adjuster makes in his or her written settlement offer. If you have any questions about making a counteroffer, you should contact an experienced personal injury lawyer right away.

Sample Counteroffer to an Insurance Company

Download Word Doc
Date of letter
Your full name
Your mailing address
Your phone number
Your email address

Name of claims adjuster
Name of insurance company
Address for insurance company

Re: Claim number
Name of insured
Date of your injury/accident

Dear Mr. or Ms. [name of claims adjuster],

I received your letter dated [date of written settlement offer]. I have reviewed your letter very carefully, including your settlement offer. Unfortunately, I cannot accept your offer for the reasons discussed below.

I politely request that you revisit the facts of the [traffic, dangerous premises, or workplace] accident that occurred on [date of accident] and caused me to suffer serious injuries. The [police report, incident report, or other evidence] clearly indicates that your insured was at fault for the accident. In addition, the [police report or incident report] clearly reflects the [police officer’s or store manager’s] determination that your insured was at fault for the accident. Your insured was issued a citation for [speeding, failure to yield, etc.]. At all times, I was [driving or walking] safely when your insured [collided with my car, caused me to slip on standing water, etc.].

As a direct and proximate cause of the [traffic, dangerous premises, or workplace] accident, I was severely injured. As a result of my injuries, I required medical attention and treatment, as is clearly and accurately detailed in my medical records. I sent a copy of my medical records to you on [date of your demand letter], and they are in your possession. I have suffered extreme pain as a result of your insured’s negligence. Because of my pain, I have not been able to engage in basic daily activities, including spending time with my family. My recovery has significantly interfered with my relationships with my [husband or wife, children, etc.], and these relationships mean more to me than anything.

As I discussed in detail in my letter to you dated [date of demand letter], my injuries and damages were real. My initial demand amount was fair and accurate based on the severity of my injuries and the associated losses, including lost wages, that I incurred. You have presented no evidence that refutes the evidence I submitted with my [date of demand letter] letter.

In an effort to amicably settle this matter, I am willing to reduce my settlement demand to $ [dollar amount]. I would prefer not to litigate this claim, and it would be much better for us to settle this matter fairly and promptly.

If you have any questions about my personal injury claim or if any of the above is not clear, please do not hesitate to contact me. My contact information is listed at the top of this letter. I look forward to hearing from you, and anticipate a response within 14 days.


Your signature
Your name, printed

Fair Settlement Offers

Although it is very rare, insurance companies occasionally make initial settlement offers that are fair. As such, you should never blindly reject an initial settlement offer. You must measure the insurance company’s initial offer against the facts of your claim and the total amount of your damages, and evaluate whether or not the claims adjuster has made you a fair offer. If you are unsure about whether the insurance company’s initial settlement offer is fair, a personal injury lawyer can help you evaluate the offer.

If you do not accept a fair offer and demand more money in your counteroffer, you may suffer serious legal and financial consequences if your case winds up in court. If your personal injury case goes to trial and the jury awards you an amount equal to or below the insurance company’s original settlement offer, courts in some states will require you to pay the defendant’s attorney’s fees and court costs. You should be realistic about the insurance company’s initial offer, and accept the offer if you determine that it is fair.

Bad Faith Insurance Practices

Sometimes, an insurance company’s refusal to settle a personal injury claim for a fair amount constitutes bad faith insurance practices. If this is the case, you may have a cause of action against the insurance company. You should contact a lawyer with experience litigating bad faith insurance claims right away. To learn more about bad faith insurance tactics click here.

Next: How Many Counter-Offers Should I Make?

Disclaimer: Information provided on this site is NOT formal legal advice. It is generic legal information. Under no circumstances should the information on this site be relied upon when deciding the proper course of a legal action. Always get a formal case evaluation from a licensed attorney if you think you might have a personal injury lawsuit.