What Happens When You Reject an Insurance Settlement Offer?

After an accident, dealing with an insurance company can be one of the most stressful parts of the recovery process. When an insurance company makes a settlement offer, it may seem tempting to accept and move on.

However, initial offers are often lower than what you may be entitled to. If you reject an insurance settlement offer, understand that the claims process will continue. You will not automatically be denied compensation because you rejected the offer.

The Negotiation Process After a Rejection

Settlement rejections lead to negotiations, which can follow these steps:

• Counteroffer Submission: You or your lawyer may present a counteroffer with a more reasonable amount, backed by evidence. That may include medical bills, lost wage documentation, and expert opinions.
• Insurance Response: The insurance adjuster may either accept the counteroffer, provide a revised offer, or request additional documentation.
• Further Negotiations: Several rounds of offers and counteroffers may take place before both parties reach an agreement.

Negotiations are a common part of the claims process. Claimants should be prepared to justify their counteroffer with clear documentation.

Why You Might Reject an Insurance Settlement Offer

Insurance companies aim to minimize payouts, and their first offer is often not their best. You might reject a settlement for several reasons:

• The offer does not fully cover medical expenses, lost wages, or other damages.
• Future medical treatments or complications have not been accounted for.
• You believe you deserve compensation for pain and suffering that was not considered.
• The offer was made before the full extent of your injuries was understood.

Rejecting an offer does not mean you will not receive compensation. Instead, it signals to the insurance company that you are willing to negotiate for a fairer amount.

Potential Delays and the Risk of a Stalemate

Rejecting an initial settlement can lengthen the claims process. Insurance companies may delay negotiations in hopes that you will accept a lower offer out of frustration. In some cases, they may refuse to budge, leading to a stalemate.

At this point, you may need to decide whether to continue negotiating, pursue alternative dispute resolution (ADR), or consider litigation.

Alternative Dispute Resolution Options

If negotiations stall, ADR methods such as mediation or arbitration may help resolve the dispute without going to court:

• Mediation: A neutral third party helps facilitate discussions between you and the insurance company to reach a settlement.
• Arbitration: A neutral arbitrator reviews evidence from both sides and makes a legally binding decision on the settlement amount.

The National Association of Insurance Commissioners notes that ADR can often be faster and less costly than litigation. (Source: National Association of Insurance Commissioners)

Filing a Lawsuit

If negotiations fail and ADR is not an option, you may need to file a lawsuit. Litigation involves:

• Filing a Complaint: A formal lawsuit is filed against the responsible party (often the insurer) in civil court.
• Discovery Process: Both sides exchange evidence, interview witnesses, and build their cases.
• Trial or Settlement: Many cases settle before trial, but if not, a judge or jury will determine the final compensation amount.

Note that civil litigation can take months or even years. However, it provides an avenue for claimants to receive fair compensation when negotiations fail.

The Risk of Losing at Trial

While litigation can lead to a higher payout, it also carries risks. If the court rules in favor of the insurance company, you may receive nothing. Additionally, trials involve court fees, expert witness costs, and extended time commitments.

Final Considerations: When to Accept a Settlement

Deciding whether to accept a settlement requires weighing:

• The certainty of receiving compensation now vs. the possibility of more later.
• The costs of further legal action.
• The strength of the evidence supporting your claim.

Claimants should carefully review any settlement agreement to ensure it fully covers their losses before accepting.

What If I Reject a Car Accident Settlement?

If you reject a car accident settlement, negotiations may continue, but if no agreement is reached, your case could proceed to trial. For example, suppose the insurance company offers $20,000, but your damages exceed $50,000.

Rejecting the offer means your attorney may file a lawsuit, gather evidence, and argue your case in court. A judge or jury may award a higher amount—or less. Litigation also extends the timeline and adds legal costs.

Achieving a Fair Resolution

Rejecting an insurance settlement offer is a strategic decision that can lead to better compensation but may also extend the claims process. Whether through negotiation, ADR, or litigation, understanding your rights and options can help you achieve a fair resolution.

For more information regarding your insurance claim, we suggest connecting with an accident attorney.