Posted by Chip Evans on 11/05/2018

When (and How) to Refuse an Insurance Company's Offer

Many people don’t realize that they aren’t obligated to accept an insurance company’s offer. They can refuse an offer it doesn’t meet their needs. An experienced insurance attorney can be very helpful when dealing with insurance companies.

The claims process starts when you report your injury and begin a claim with the at-fault party's insurance company. The process continues until you decide to accept or reject the final settlement offer from the insurance company's claims adjuster.

Understand that the settlement process is just that: a process. There may be many steps along the way, involving a lot of back-and-forth negotiations with an insurance adjuster. Be patient, but be persistent.

Remember that at every step in the process, the claims adjuster's job is to pay you as little as possible, so it's important for you to advocate on your own behalf for the highest compensation possible.

Determine Your Losses

As soon as you can after your vehicle accident, you should begin gathering information--witness statements, police reports, estimates to repair damages, medical costs, and lost salary. Total all these amounts up and increase the total by 20 to 25 percent. This will give you a baseline which you can include in your initial demand letter to the at-fault party's insurer.

The First Offer

Almost certainly, the adjuster will attempt to respond to your initial demand with a low-ball first offer. The adjuster may argue that you were partially at fault or that the amount of medical care you received was unnecessary. He may apply pressure, saying that it's a "one-time offer" or that anything higher would exceed his "authority"--the maximum amount his superiors at the insurance company will allow for the settlement.

With an initial settlement offer, the adjuster is usually testing you to see if you are impatient enough to accept the first offer, or if you understand the settlement process enough to continue negotiations. An uninformed claimant is the insurance company's best friend.

Declining the Offer

The next step is to officially decline the at-fault insurance company's offer with a formal letter. The letter should state that you do not accept the initial settlement offer, list the reasons why you deserve a higher settlement, and include a specific amount of your higher offer.

State the facts clearly, especially any that show that the other party was clearly at fault. Explain the extent of your injuries and the effect they had on you, and assert that any medical treatment you received was absolutely necessary. Include copies of supporting documents, such as police reports and medical records.

The amount you demand now should be a little lower than your initial demand. This shows that you are willing to compromise and keep the claim moving forward. It is important to keep the momentum going—the insurance company is highly motivated to hold on to its money as long as possible. The longer the claims process takes, the more interest the insurance company can earn on the money that would otherwise be in your pocket.

The Negotiations Begin

Declining the at-fault insurance company’s initial offer will signal to the adjuster that it’s time to truly begin negotiations.

In most cases, negotiations will take place over a few phone calls. Expect the insurance company to make a counteroffer lower than your latest offer. If this offer seems reasonable, based on your original calculations of what you feel is owed to you, then you can accept the offer, thus closing the negotiations. Or you can reply with another counteroffer, one that is higher than the insurance company’s latest offer but lower than your most recent offer. Negotiations may continue in this manner for a few rounds.

At every step, however, you should back up your claims with the facts you gathered in the first stage—your quantifiable damages, medical expenses, lost work, etc.

Even if you are carrying out this stage of negotiations over the phone, be sure to get any final offer in writing before you accept it.

If Negotiations Fail

If you can’t come to some reasonable settlement agreement with the at-fault insurance company, your only recourse is to take them to court. You may need to consider filing a personal injury lawsuit. This is a step you definitely should not take without the advice of an experienced attorney—although many claimants can benefit from an attorney’s advice at any stage during the settlement process.

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