How to respond to a low settlement offer

5 tips for negotiating with an insurance company

If you've been injured in an accident - whether it's a car accident, truck accident or work injury - and are due compensation, more than likely you will have to speak with an insurance adjuster.

But what happens if the insurance company wants to give you less money than you feel you deserve, or less than what you need to cover your medical bills?

In this instance, you'll need to negotiate. While we strongly recommend contacting an experienced insurance dispute attorney near you as soon as possible to ensure the best possible settlement, there are some steps of the insurance negotiation process that can help you right now.

As you're negotiating your claim with the adjuster, there are certain aspects of the process that you should be aware of so that you can obtain a fair settlement.

Tip #1: Determine a minimum settlement number

In the early stages of your negotiations, you'll likely need to write and send a demand letter. During the process of putting this letter together, you'll need to determine a minimum figure that you are willing to accept. You should keep this number to yourself, that way it won't be set in stone. You can always increase or decrease this figure accordingly throughout the course of the negotiations.

Note: Keep in mind that determining the true value of your case is extremely complicated. No matter what type of case it is, there are very specific laws that discuss how the compensation you are entitled to is calculated. Any person acting without the advice of legal counsel is at a significant risk of undervaluing or overvaluing their claim simply because they don't know how to determine the value.

Tip #2: Don't jump at the first offer

In many cases, the first offer you will receive will be low on purpose. This lowball settlement is offered by the insurance company for a couple possible reasons:

  1. to see if you have any knowledge of negotiations; and

  2. to get negotiations rolling.

In the case of the second scenario, you can go ahead and counteroffer, but set your counteroffer amount somewhere between their initial offer and your demand letter. This will show the insurer that you are willing to compromise and they may be more likely to work with you.

Tip #3: If the adjuster's offer is low, have them justify it

Sometimes adjusters will give you an obviously low offer as a tactic, which they use to see if you understand the value of your claim. If this happens, don’t immediately respond with a counteroffer lower than your demand letter. Rather, ask why the adjuster has provided this extremely low figure.

You should then write a formal letter of response in which you state that you don’t find the initial low settlement offer acceptable, listing the reasons why and concluding with a demand for a higher settlement offer.

You can write your own response from scratch, or feel free to download and fill in this free reply letter template to counteroffer a lowball settlement offer:

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.

Firstly,…[insert argument for counteroffer]

Secondly, ...[insert argument for counteroffer]

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

Tip #4: Don't do or say anything rash

Being quoted a low settlement offer can be frustrating, especially if your injury requires extensive medical care leading to a pile of bills. Before you blow your lid and spout angry words at the adjuster, take a step back and calm down. Acting rashly or saying something harsh will do nothing for you or your claim. After you've taken the time to cool down, write a brief letter responding to each of the factors the adjuster mentioned.

Tip #5: Get everything in writing

When you discuss financial matters in any way - whether it is the bills you have received or the counteroffers you send - get everything in writing and store it somewhere safe. Not only does putting this type of information in writing appear more professional, but it also provides you with a physical copy of the information you've provided the insurance company. Having this information can be proof if something goes awry in your case.

Along with providing your information in writing, you should request any offers from your adjuster in writing too. This is especially true of your final offer. Once you have received the final offer from your adjuster, and you are satisfied with the amount, write the insurance company a letter stating that you formally accept their offer.

In this letter, you should also request that the insurance company replies back in writing. None of the letters you write need to be complex or a novel - a concise statement that includes the essentials will suffice.

Knowing When to Seek Professional Legal Counsel

Negotiating a settlement award after being injured in an accident can be a daunting task. If you've been negotiating with an insurance adjuster and feel you aren't receiving the results you believe you deserve, please get in touch with a Colorado bad faith insurance dispute attorney at The Babcock Law Firm to schedule your free consultation.

Resolving cases without legal counsel is very risky. Often times, other organizations are entitled to some of the money being paid in a settlement through subrogation liens/reimbursement rights. For example, a health insurer who pays for your medical treatment following a car accident may or may not be entitled to reimbursement out of your personal injury settlement.

Individuals who don't fully  understand the laws risk accepting what they think is a good settlement, just to find out that they have to pay most or all of that settlement to someone else. They also risk having an organization seek repayment for which they aren’t legally entitled to.

Want to learn more? Browse our blog and Legal Library for more information.
Or start by reading: How Your Insurance Company Inspects Your Auto Accident Claim.

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