Insurance safeguards us from unexpected events. What happens if you reject your insurance company’s settlement offer? The National Association of Insurance Commissioners (NAIC) reported that U.S. insurers paid $533.2 billion in claims in 2020, up 2.6% from 2019. Rejecting an insurance settlement offer has serious financial consequences. This article discusses what happens when you reject an insurance settlement offer and what you should consider before doing so.
What happens when you reject an insurance settlement offer
When you reject an insurance settlement offer, it doesn’t necessarily mean that you are no longer eligible to claim compensation. Rejecting an offer is a common part of the negotiation process and may lead to ongoing negotiations with the insurance company.
Insurance adjusters often make low settlement offers, expecting rejection and negotiations to continue. Typically, initial settlement offers from insurance companies are lower than the value of the claim, so most claims adjusters expect people only to accept the first offer if the company offers to pay the full insurance policy limits for the claim.
Decline Right Away:
When you receive an offer, it’s recommended that you wait to accept or decline immediately. Instead, take some time to evaluate the offer, even if it seems like a fantastic offer or a huge insult, and then respond. Sometimes hiring an attorney to help negotiate the settlement on your behalf is beneficial.
Rejection is difficult but mighty effective:
If the insurer rejects your settlement demand as excessive, that’s usually a good sign. You can counter with a different offer and continue the negotiation process. However, be prepared that the insurance company’s starting offer will likely be low, so be ready to counter
Counter offers you reject an insurance settlement offer:
The insurer may counteroffer or negotiate after you reject a settlement offer. This may require more proof or legal advice. Insurance companies want to make money. Therefore, they may need to offer more to cover your losses. In such cases, filing a claim with the insurer may be necessary.
Good compensation from the court after rejecting an insurance settlement offer:
Rejecting an insurance settlement offer can be helpful. Reject low offers and keep negotiating. The court may be expensive and time-consuming but yield a better result. Your payment may increase if a judge or jury rules in your favor.
Rejecting an insurance settlement offer might be unpleasant, but it may be the right choice. If you reject the offer, be tough and ready to negotiate or sue. You want a settlement that covers your losses.
The insurance company usually gives you a deadline by which they expect you to accept or reject their settlement offer. The company will revoke the offer if you have not decided within this timeframe. It’s common for companies to leave off deadlines, and I hope you will accept the offer without considering your options.
What happens when you reject an insurance settlement offer & Why do insurers make lowball offers?
Insurance companies usually preserve their profits. They protect themselves because high claims reduce company profits. There are valid reasons for a low initial offer.
Low Settlement offer if You are at fault for an accident:
At-fault and no-fault states handle car accidents. In a no-fault state, the insurance company can deny PIP coverage if you were drunk, purposefully caused an accident, or engaged in unlawful activities like drag racing. At-fault states can assign percentages of guilt, so they may award less if they think you were partially to blame.
Low Settlement offer if Insurance under calculated your losses:
Insurance adjusters often value claims using formulae or algorithms without procedures working. You can get a better deal by explaining your losses or proving a mistake.
Low Settlement offer by Bad-faith insurance companies:
Bad faith does not justify a lowball offer. Bad faith insurance companies lowball bids regardless of the facts. If you think an insurance company is lying, hire a lawyer.
What not to do if the insurance company gives lowball offers?
Don’t give up while fighting insurance providers. They triumph when you give up, leaving you with unjustified expenses!
Don’t Accept half payment:
Most insurance companies don’t offer partial payment. Before paying out, insurance companies require you to sign a release, which waives your right to sue for extra money. You may be concerned about paying medical fees if you still receive treatment. Instead of worrying and accepting less than your claim is worth, consider your health insurance or Medicare and Medicaid.
Never give up:
Negotiating with insurance companies can be frustrating, especially after an injury. However, it’s better to fight for compensation. An experienced personal injury lawyer can handle negotiations while you recover.
How to reject an Initial Settlement Offer from an Insurance Company?
To be clear, the initial settlement offer is an offer. If you turn down the insurance provider’s initial settlement offer, you may still have a case for financial compensation. Saying “no” to the insurance company is standard procedure during discussions. Having an experienced attorney help you create a letter explaining why you reject a settlement offer is best.
The bargaining process can be difficult, so you must hire a personal injury lawyer to represent your interests.
Why Reject the Insurance Company’s First Settlement Offer?
The first settlement offer from an insurance company after an accident is usually not the best. Reasons to reject the insurance company’s first settlement offer:
The first offers are starting points for negotiations:
Insurance companies usually provide less than the claimant deserves. Therefore, the first offer is a starting point for talks. Rejecting the offer and replying with a larger amount may yield a better settlement.
The first offer is not the best:
The first settlement offer may need to be higher. Insurance firms may provide low amounts to save money and enhance profits. Rejecting the first offer may provide a better settlement.
Additional damage and money may be found:
Re-inspections may reveal additional damage, increasing the settlement price. It’s crucial to alert insurance adjusters to business operation losses rather than physical damage. Goodwill or “sweetening the pot” money may also be provided.
Possible higher settlement:
Counteroffers and justifications for greater settlement amounts may improve offers. Document accident-related medical expenses, lost wages, and pain and suffering.
Accepting the first offer may pose legal risks:
When accepting a settlement, some insurers require a release or waiver. This can hinder future compensation. Rejecting the first offer and negotiating a better settlement may avoid this legal risk.
When should you reject a settlement offer from an insurance company?
When dealing with a settlement offer from an insurance company, it is essential to understand your rights and options. Here are some situations in which you may want to reject a settlement offer from an insurance company:
The settlement offer is too low:
Most initial settlement offers from insurance companies are lower than the claim’s value. If the offer does not cover your expenses, lost wages, and other damages, you should consider rejecting it and making a counteroffer.
You have not completed medical treatment:
It is crucial to wait until you have completed all medical treatment before accepting any settlement offer from an insurance company. If you accept an offer before your medical treatment is complete, you may need more compensation to cover all your medical bills and other expenses.
Liability is unclear at the time of the settlement offer:
The insurance company may offer a lower settlement if it is unclear who was at fault. In such a case, you should reject the offer and seek legal advice to determine your options.
The insurance company is acting in bad faith:
If you suspect the insurance company is acting in bad faith, you may want to reject the settlement offer and consult an attorney. Examples of bad faith include:
- Failing to investigate your claim properly.
- Denying your claim without a valid reason.
- Delaying payment unreasonably.