What Happens if You Refuse a Settlement Offer?

March 9, 2024 | By Francis Firm Injury Attorneys
What Happens if You Refuse a Settlement Offer?
What Happens if You Refuse a Settlement Offer

Most personal injury claims resolve through insurance settlements. The insurance company reviews your claim and demands, then makes an offer for you to review. If you accept the offer, you receive those funds and the claim ends.

However, you never have to accept a settlement offer that the insurance company makes you. If it is too low, you can and should say no. You can continue to ask for an amount that covers all your losses, and you may need to go through an entire negotiation process before you can reach an agreement and receive a check.

Most settlement agreements will result from negotiations between you and the insurance company. Like any negotiation, it may have ups and downs. Both parties might reject offers and find issues with the other side’s arguments.

Always have representation from an experienced lawyer when negotiating any financial matter, especially one that can have as significant an impact as an insurance settlement. When you must file an injury insurance claim, hire an experienced Texas personal injury attorney with experience negotiating injury settlements like yours.

Your lawyer can tell you when it is best to turn down an offer and counter with one of your own. They will ensure you do not accept an offer that is too low, and they can inform you of what might happen if you refuse a settlement offer on the table in your case.

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You Are Not Obligated to Accept a Settlement Agreement

You Are Not Obligated to Accept a Settlement Agreement

settlement agreement is a binding contract between you and the defendant (or the insurance company responsible for paying for the damages caused by its policyholder). Like any contract, an agreement only comes after negotiations, and quick settlements rarely happen after you have filed your claim.

No one can force you to accept a settlement, and you should always choose your best course of action, even if it means rejecting a contract agreement. 

Each Party Has Motivations in Settlement Negotiations

Both you and the insurance company will negotiate a settlement with different positions and motivations. Let's begin with what the insurance company seeks in a settlement negotiation.

Plain and simple - the insurance company is out to save money. A settlement negotiation is a zero-sum game, where any dollar the insurance companies pay you comes from their pocket.

Higher settlement checks mean lower profits, and they will need to answer to angry shareholders, demanding to know why their investment is not performing better.

You, on the other hand, may have two motivations in a settlement negotiation:

  • You want to maximize the value of your settlement so that it fully and fairly pays you for all the harm you have suffered.
  • You want to get your settlement check sooner rather than later because you need the money.

In many cases, these two motivations conflict with each other, and insurance companies will make you wait and work for every dollar they give you. They have a general sense of your financial situation, know you need the money, and will try to take advantage of what they perceive as desperation.

Insurance Companies Want to Add Time to the Negotiations

Insurance companies try to gain the upper hand by dragging out your settlement negotiations. Their adjuster can quickly examine your claim and know your case may cost $500,000. However, the insurance companies will not initially make that offer and may barely offer you 10 percent of that.

The insurance companies may test you and add time to the process. If you don’t know your claim's worth, they may pressure you to accept a quick settlement agreement because they know you cannot ask them for more money once the ink is dry.

Insurance companies may think you will jump at the first offer since you need the money, but there is little to no chance of this happening when you have the guidance of an experienced lawyer.

Then, the insurance companies may also be trying to wear you down during settlement negotiations by preying on what they think is your desperation. They are banking on you becoming more willing to accept a low settlement as time passes. When they begin very low, they can gradually raise their offer over time, which will likely be lengthy.

Time Is Not Always Money in a Settlement Negotiation

Time Is Not Always Money in a Settlement Negotiation

You may need to sacrifice a speedy settlement agreement to get the money you deserve. No one can force the insurance companies to move quickly, and it will take time to go through the negotiating process to get closer to a realistic settlement agreement.

You and your lawyer must make crucial decisions when the insurance company has made you a settlement offer to resolve your claim. Remember that insurance companies cannot dictate anything and are merely the representative of their policyholder, whose actions have injured you. They must negotiate a settlement with you and cannot impose any contract.

You Can and Should Reject a Low Settlement Offer

In practice, you can reject anything that does not pay you what you believe you deserve. Your attorney will review the settlement offers you receive and advise whether you should accept them.

If the settlement offer is too low to compensate you fully, the right move is to say no.

You may respond to a low settlement offer in one of two ways:

  • You will respond with a counteroffer of your own. By doing so, you will reject the insurance company's offer, which is then off the table. You may even send a formal demand letter. 
  • You can file a lawsuit against the responsible driver in court, and your case will proceed through a trial. Since there is a lengthy discovery process, there will still be plenty of time to continue negotiating a settlement with the insurance company. Very few cases will go all the way to the jury, and if you can build a strong case through the discovery process, the insurance companies may begin to raise their offer. Many cases will settle on the eve of the trial because both parties have risks. 

The Insurance Company May Want Settle Your Case Fast and Cheaply

Remember that the insurance companies may be more motivated to settle with you than vice versa. Without a settlement agreement, your case will go to a jury trial, posing definite risks to both parties.

From your standpoint, there is always the risk that you may not get anything for your personal injury case. You must meet your burden of proof to show that the other party was negligent in the accident, and if you fail, you will not receive a dollar.

The insurance companies have risks in a jury trial because juries are composed of human beings with emotions. If you can prove your case and make a sympathetic plaintiff, the jury may award you more money than you would have received in a settlement agreement.

Your other advantage is the potential for punitive damages. An extremely angry jury that wants to send a message to the defendant and others may add a punitive damages award.

Rejecting a Settlement Offer Makes the Insurance Company Pay Up

It often makes sense to turn down a settlement offer and make the insurance companies return to the drawing board. The worst they can say is no when you are trying to get more money, and if they made a settlement offer once, you can still get that offer.

If the insurance companies tried to settle your claim for much lower than a prior settlement offer, they may be getting perilously close to a bad faith claim.

The only way to put your best foot forward is to hire an experienced personal injury lawyer. If the insurance companies are across the table from you alone, they know you have few ways to get any recourse against them.

If you do not believe that they are offering you enough money, you need to have a way to make them raise their settlement offer, and your best bet is to threaten a lawsuit against them. Litigation is often the only language that the insurance company understands.

Get Legal Help as Soon as Possible After Your Injury

Hire an attorney early in your case to be in a solid legal position for settlement negotiations. In order to know that a settlement offer is too low, you have to understand the exact value of your case, which your lawyer will quickly determine. They may work with experts who can review your facts and help develop a number for you to seek in a settlement.

Your personal injury damages can consist of:

The insurance companies have this data ready and at their fingertips through their adjusters and actuaries. You need someone in your corner, and that person is your personal injury attorney.

An attorney levels the playing field, even when the insurance company has invested in trying to get the edge over you. When it comes to a claim, your legal rights are what matter the most.

The Risks of Not Having a Lawyer Early in Your Case

You need to hire an experienced lawyer soon after your injury, and they will work to protect your legal rights from the insurance companies.

If you are unrepresented by counsel, you may not even get to negotiate a settlement agreement because the following can happen:

  • The insurance company will deny your claim entirely because you lack the evidence to establish liability.
  • The insurance companies may rush you into a settlement agreement because they have tricked or pressured you. 

When you have a lawyer, their job is to get you the most possible money for your claim; everything they do is to maximize your recovery. Your lawyer owes you this duty since you are their client, and they must work in your best interest.

You Do Not Have to Pay Upfront for a Personal Injury Lawyer

If you are wondering how much it costs to get legal help, you may be happy to know that it will never cost you anything from your pocket, and you will not need to write a check upfront to cover your legal costs.

Your lawyer accepts your case on the promise that you will pay them from the proceeds of any settlement or jury award you may receive. If you do not get one, your lawyer does not receive payment.

Never Wait to Consult a Personal Injury Attorney After an Accident

Why is it so important to seek legal advice as soon as possible? Well, there are a few key reasons. First and foremost, the statute of limitations for personal injury claims can vary from state to state, so you want to make sure you don't miss any crucial deadlines.

A personal injury attorney can explain the time limitations that apply to your case and ensure that you take appropriate action within the required timeframe.

Additionally, consulting with an attorney right away allows them to guide you through the legal process and protect your rights. If you have a lawyer from the start, they handle all insurance conversations.

This can protect your claim, reduce complications, and increase the chances of a quicker settlement that you might accept. You can receive payment and move on with your life much faster in many situations with an injury lawyer leading the process.

Michael Francis, Personal Injury Lawyer

For personal injury settlements, never hesitate to consult with a personal injury attorney. They can provide you with the guidance, support, and experience needed to navigate the legal process and achieve the best possible outcome for your case. Remember, time is of the essence, so don't delay in seeking legal advice after an accident.