Should I Take the First Offer of a Car Accident Settlement?

by Doug Zanes | Last Updated: December 28, 2021

Let us get directly to the point here. In nearly all circumstances, you should not accept the first offer you receive after a car accident. If the insurance company is making you an offer, the chances are that they have more room to move from their initial settlement attempt. If you take the very first offer, you will leave money on the table. An experienced attorney knows this and will give you advice on how to handle the settlement process.

Insurance Companies Do Not Make Money by Writing Checks

Insurance companies are for-profit businesses. Their money comes from investing premiums in the stock market and realizing profits on their portfolio. They take money out of these accounts to pay for claims.

The same is true when filing a claim against your own auto insurance or against another driver who was responsible for your injuries. When insurance companies write settlement checks, it directly impacts their bottom line. This is why they do everything that they can to avoid paying you the full amount you deserve.

The settlement process is one large negotiation. Some people mistakenly view the insurance company’s offer as the final determination of what they will receive after their car accident. An insurance company does not have the power to decide that. They are merely trying to settle the case on behalf of the policyholder on terms that allow them to save as much money as possible. If the insurance company does not pay you what you deserve, you can always take the case to court.

You Do Not Have to Just Take a Settlement Offer You Receive

With that in mind, you have some power in the settlement process. The insurance company does not necessarily want to go to court, even if they do everything they can to make your life more difficult. Sometimes, the most important word that you can say in a settlement negotiation is “no.” This turns down a low offer and forces the insurance company to go back to the table with a better offer if they want to close and settle your claim. Your rejection should come with your own set of figures that demand what you think you should get. Eventually, you may exchange enough proposals and counter-proposals to get you to a place where you agree on an amount.

Insurance Companies Know the Exact Value of Your Claim

You should know how insurance companies operate once you make your claim. They have extensive data about the value of your case, comparing it to years worth of similar claims in your exact area. They have sophisticated computer programs and models that can come up with an estimate of your claim, along with adjusters and actuaries who constantly fine-tune these programs. An insurance company’s opening offer comes from a very specific place. Namely, it is the value of your case minus a large amount.

There are several reasons why an insurance company might do this. Based on how the system works, they have nothing to lose if they put a low offer out there just to see if you will take it. There is little downside for them. If you take a low offer, the insurance company has won. If you reject the offer, it will make your claim take longer. In a sense, the insurance company has you in a box, and they take full advantage of it.

Insurance Companies Want to Put Up as Many Roadblocks as Possible

They also view the settlement process as one large back and forth between you and them. The insurance company knows that a settlement agreement of your claim might not happen quickly. They expect a drawn-out process, and their initial offer is just the first step. At least, this is how they are viewing it. Just like you may put in a request with a high number in it, the insurance company is going low at the beginning of negotiations.

Rejecting the opening offer takes it off the table. When you say no, you are not legally entitled to go back and accept the offer. However, you can likely get the same amount if you go back and settle the case based on the original offer. However, there is little reason why you will want to since it is likely to be far lower than you deserve. The opening offer is usually a placeholder, and it is not a serious attempt to settle.

An Experienced Lawyer Gives You Power in the Claims Process

Because the insurance company likes to play games, you need an experienced attorney for your claim. You will only know that the original offer is low because your attorney will know your claim’s worth. Without that knowledge, you will have to guess what you deserve, and you may be more likely to accept a very low offer. This is exactly what the insurance company wants.

In addition, your lawyer knows how to negotiate with the insurance company and deal with them in a way that they understand. Sometimes, you do not want a “Mr. Nice Guy” working on your behalf because it encourages the insurance company to take liberties with your legal rights. You want and need a fighter who can tell the insurance company that their lowball offer is far from enough to fairly compensate you and has the tenacity to back it up with action.

In short, you must always be on guard when you are dealing with the insurance company. That they made you an offer is not always good news. On the contrary, it may show you how far you have to go to finally reach a deal with them to get the money you deserve, and a lawyer can help with this process.

Doug Zanes
Doug Zanes: Founding Attorney Raised in Douglas, Arizona, and went to college at Arizona State University and graduated from law school at St. Mary’s University School of Law in Texas. Doug began practicing law in Phoenix Arizona in 1997.
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