Should You Accept the First Settlement Offer?

Soon after an accident, an insurance company may offer to settle. It can be tempting, especially if bills are piling up. Before you say yes, it helps to understand what you are agreeing to.

What accepting usually means

Most settlements require you to sign a release. By signing, you generally give up the right to make any further claim for that accident, including for costs you did not know about at the time. If your condition gets worse later, you typically cannot reopen the claim.

Why early offers can be low

An insurer's job is to resolve claims in a way that makes financial sense for the company. An early offer is often made before your treatment is complete and before the full picture of your losses is known. That does not mean every first offer is unfair, but it does mean it deserves a careful look.

What you should know before deciding

• The full extent of your injuries. Have you finished treatment, or reached a point where your doctor can say what to expect going forward?
• The total of your losses. Medical bills, future care, lost income, reduced ability to earn, and out-of-pocket costs.
• Pain, disruption, and daily life. Many claims also consider how an injury affected your life, not just the bills.
• Liens and reimbursement. A health insurer, hospital, or government program may have a right to be repaid from a settlement, which affects what you actually keep.
• Policy limits. The amount available may be capped by the other party's insurance.

Questions to ask yourself

1. Do I know how my injuries will affect me over the next few months or years?
2. Have I added up everything this accident has cost me?
3. Do I understand what the release says?
4. Would I be comfortable if my condition got worse after signing?

You can say you need time

You are generally not required to accept an offer right away. It is reasonable to say you need time to review your records, and to talk to a licensed attorney before deciding.

Counteroffers happen

A first offer is often the start of a negotiation, not the end. Insurers often expect that a claimant may respond with a different figure supported by records.

This article is general information, not legal advice. It does not predict the value of any claim or the outcome of any negotiation.