Should I Accept the Insurance Company’s First Car Accident Settlement Offer?

A car accident is stressful for all parties involved. If you are the victim, you are likely to face mounting medical bills at the same time as losing wages. If you caused the accident, you likely fear losing a lawsuit.

These reasons mean both parties can be tempted to settle car accident claims before they go to court.

If you suffer injuries as a result of an auto accident, you should always think carefully before accepting the initial settlement offer from an insurance claims adjuster.

What’s In This Guide:

    Estimating The Value of Your Injuries

    To determine whether a settlement offer is too low, you first need a sense of the value of your injuries.

    Some injuries are easy to calculate, such as:

    • Medical bills
    • Rehab costs
    • Vehicle repair or replacement
    • Lost wages

    All of these damages are classified as economic damages. Total the dollar amount of all these expenses rather than relying on the claims adjuster’s math.

    While you are also legally entitled to compensation for non-economic damages, these are tougher to calculate. Non-economic damages include:

    • Emotional distress
    • Pain and suffering
    • Lost future earning capacity
    • Lost companionship or consortium

    Although these losses are intangible with no intrinsic dollar amount to calculate, claims adjusters use other methods to calculate a dollar value for non-economic damages.

    Some insurers used the multiplier method. This involves assigning a rating of 1 to 5 to your injuries, and then multiplying this by the total of your lost earnings and medical bills. In many cases, the multiplier method does not account for the full extent of the pain and suffering caused by an accident, so never rely on an insurance company’s assessment of your damages.

    Working with an accident attorney will help you to achieve a settlement that fairly compensates you for the severe disruption in your life triggered by a car accident.

    Rejecting the Initial Offer

    You should reject any initial offer made by an insurance company. There is always room for negotiation.

    When making a counteroffer, start at the high end of your range, or you will have no leeway. That is, if you estimate the value of your injuries at between $30,000 and $60,000 and the insurer offers you $20,000, don’t send a demand letter for $30,000. Counter at the upper end of your range and then expect the insurance company to negotiate that amount downward.

    If negotiations between your attorney and the claims adjuster fail to generate a fair and reasonable settlement, you are under no obligation to accept a lowball offer. Instead, consult with your lawyer about filing a lawsuit to recoup your damages.

    [LEARN MORE]: How Do Insurance Companies Determine Car Settlement Amounts?

    The Drawbacks of Settling Too Soon

    Settling a claim before it goes to trial typically leads to you receiving compensation sooner, but there are several drawbacks to premature settlements.

    Your injuries have not healed

    If you suffered severe injuries in a car wreck – a traumatic brain injury, for instance – it may take time to calculate the full scope of your injuries. It can also be more challenging to estimate future medical costs. Waiting allows you the breathing space to ensure your claim includes all relevant costs, present and future.

    You cannot sue once you settle

    If you sign a settlement agreement, you will not be legally entitled to sue for the injuries you sustained in the accident. Before accepting a settlement offer, be sure it provides you with full compensation for your injuries, as well as your pain and suffering. Once you sign the agreement, it’s too late to change your mind.

    Settlement Negotiations are Ongoing after You File a Lawsuit

    If you are wary of filing a lawsuit, remember that negotiations with the insurer will be ongoing in the leadup to trial. Many car accident settlements do not end up going to trial, so be prepared to accept a settlement at any stage before the jury arrives at a decision.


    The discovery phase of litigation involves the parties involved exchanging evidence. This streamlines negotiations and improves transparency.

    If the insurance company sees you have strong supporting evidence for your case, they will be more motivated to settle without following the litigation process to trial by jury.

    Avoiding Trial

    Preparing a case for court is time-consuming. Settlement saves everyone resources and is a powerful motivator for an insurance company to avoid cases going to trial if possible. If you are represented by an experienced trial lawyer, you’ll have a better chance of a favorable outcome before the case reaches court.

    Settling on Your Terms

    If you fail to arrive at a pre-court settlement, the jury will hear all the arguments and evidence, per trial procedures. After this, your fate is entirely in the hands of a random group of civilians with minimal knowledge of the legal system.

    Sometimes, juries can award more than expected for pain and suffering or for punitive damages, while other juries find the defendant not liable before ruling against you. By the time the jury delivers its verdict, there’s no going back.

    The unpredictability of trial means it is usually in the interest of all concerned parties to arrive at settlement outside the courtroom.

    You will find that most claims adjusters are prepared to settle at any point throughout the litigation process, unless they hold the following beliefs:

    • The defendant was not the at-fault party
    • The plaintiff’s injuries are not as serious as claimed
    • Settlement demands are unreasonable

    Even after filing a lawsuit, there is still no guarantee the case will settle,

    Ensure you retain an attorney who does not push you to accept a lowball settlement to avoid trial. Instead, seek an advocate who will fight every step of the way to get you the compensation you deserve for the injuries you suffered in a car accident.

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