Key Takeaways
- You are not required to accept an insurance company’s first settlement offer.
- Rejecting an offer usually leads to further negotiations and a counteroffer, not an immediate lawsuit.
- Insurance companies often make low initial offers to limit payouts and close claims quickly.
- If negotiations fail, options may include mediation, arbitration, or filing a lawsuit.
- Rejecting a settlement can increase compensation—but it may also extend the timeline and risk.
After an accident or injury, you may already be dealing with physical pain, emotional stress, and mounting bills. When an insurance company presents a settlement offer, it’s common to feel pressure to accept it quickly—especially if money is tight.
If the offer doesn’t fully cover your losses, however, you have the right to reject it. Understanding what happens next can help you make a more informed decision about whether to negotiate further or pursue other legal options.
Understanding Insurance Settlements
An insurance settlement is a financial agreement intended to resolve a claim for injuries or damages. In exchange for payment, the injured party typically agrees to release the insurance company (and the insured party) from further liability related to the incident.
Key things to understand before accepting any settlement:
- A settlement is usually final. Once accepted, you generally cannot pursue additional compensation later—even if new injuries or costs arise.
- Initial offers are often low. Insurers frequently start with amounts that do not reflect the full value of medical expenses, lost income, or pain and suffering.
- Negotiation is expected. Rejecting an offer is a normal part of the claims process, not an aggressive or unreasonable move.
Why Insurance Companies Try to Settle Quickly
Insurance companies are motivated to resolve claims fast for several reasons. Early settlements help them control costs, reduce legal exposure, and close files efficiently. Quick offers may also come before the full extent of injuries or long-term impacts is clear.
In many cases, early offers are made before future medical needs, lost earning capacity, or non-economic damages are fully understood—benefiting the insurer more than the injured person.
What Happens If You Reject a Settlement Offer?
Rejecting a settlement offer does not mean your claim is over. Rejecting a settlement offer does not automatically lead to a lawsuit or end negotiations. Instead, it usually signals the start of further negotiation. After rejecting the offer, you (or your attorney) may submit a counteroffer that more accurately reflects your damages. This typically includes documentation such as:
- Medical records and treatment summaries
- Bills for medical care, rehabilitation, and medications
- Proof of lost income or reduced earning ability
- Evidence supporting pain, suffering, or long-term impact
If negotiations do not result in a fair agreement, additional options may become necessary.
What Happens If Negotiations Stall?
If rejecting an insurance settlement offer does not lead to a fair counteroffer, there are several possible paths forward. Which option makes sense depends on how far apart the parties are, how strong the claim is, and how much time and risk you are willing to take on.
Your Options at a Glance
| Option | Level of Formality | Typical Timeline | Binding Outcome |
| Continued negotiation | Low | Weeks to months | No |
| Mediation | Moderate | Often weeks | No |
| Arbitration | Moderate to high | Often faster than trial | Often yes |
| Lawsuit | High | Months to years | Yes |
Below is a closer look at what each of these options involves and when it may make sense to pursue them.
Continued Negotiation
In many cases, rejecting a settlement offer simply leads to continued negotiations. The insurance company may respond with a higher offer after reviewing additional documentation, medical records, or evidence of damages.
This option often makes sense when both sides still believe an agreement is possible and want to avoid the cost and risk of formal dispute resolution.
Mediation
Mediation involves a neutral third party who helps guide settlement discussions between you and the insurance company. The mediator does not decide the outcome but works to facilitate compromise.
Mediation can be helpful when negotiations have stalled but both sides remain open to resolution without going to court. It is typically less expensive and less time-consuming than litigation.
Arbitration
Arbitration is more formal than mediation. An arbitrator hears evidence from both sides and issues a decision, which is often binding and enforceable.
This option is sometimes required by contract or agreed to by both parties. While arbitration can resolve disputes faster than a lawsuit, it usually limits appeal options and may restrict how much evidence can be presented.
Filing a Lawsuit
If settlement efforts fail, you may choose to file a personal injury lawsuit. Litigation allows a judge or jury to decide liability and damages and can result in a higher recovery when injuries are severe or the insurer acts unfairly.
However, litigation involves additional time, cost, and uncertainty, which should be carefully weighed. This path is usually considered when other options have not produced a fair outcome.
Speaking with a lawyer can help you evaluate which of these paths aligns best with the value of your claim, the insurer’s conduct, and your long-term goals.
Advantages and Disadvantages of Going to Trial
Going to trial may offer the opportunity for higher compensation, especially when injuries are severe or liability is strongly disputed. However, it also comes with tradeoffs.
Potential advantages:
- Ability to pursue full damages, including future losses
- Court oversight if an insurer is acting unfairly
Potential disadvantages:
- Uncertain outcome
- Longer resolution timeline
- Higher costs and emotional strain
The decision to proceed to trial should be made carefully and with legal guidance.
Steps to Take After Rejecting an Insurance Settlement Offer
- Do not accept or sign anything immediately. Once you accept a settlement, your claim is usually over and you typically cannot seek additional compensation.
- Gather and organize documentation. Medical records, bills, proof of lost income, and correspondence with the insurance company strengthen your negotiating position.
- Evaluate future costs. Consider ongoing treatment, rehabilitation needs, and any long-term limitations before agreeing to a number.
- Consult a lawyer. A San Diego personal injury lawyer can assess whether the offer is fair and help negotiate further or determine whether litigation makes sense.
Frequently Asked Questions
How do you respond to a low insurance settlement offer?
You can reject the offer and submit a counteroffer supported by evidence of your losses. It’s often wise to consult an attorney before responding to avoid undervaluing your claim.
When should you reject a settlement offer?
You should consider rejecting an offer if it does not cover medical expenses, lost income, future treatment, or pain and suffering—or if the insurer rushed the offer before your condition stabilized.
How long do you have to accept a settlement offer?
Insurers may set internal deadlines, but you are not required to accept immediately. Keep in mind that California’s statute of limitations for personal injury claims is generally two years, so timing matters.
What happens after you accept a settlement offer?
After acceptance, you typically sign a release of liability. The insurer then issues payment, minus attorney fees, costs, and any applicable medical liens.
Can the insurance company withdraw the offer if I reject it?
Yes, an insurance company can withdraw or change a settlement offer after you reject it. In practice, this does not happen often, but insurers may do so if new information comes to light, deadlines expire, or negotiations break down. Even if an offer is withdrawn, discussions can usually continue, and rejecting an offer does not prevent you from pursuing a higher settlement or other legal options.
Contact Gomez Trial Attorneys for Help With Your Settlement Offer
Insurance settlement negotiations can be complex, especially when insurers pressure you to accept less than your claim is worth. If you’re unsure whether to reject an offer or how to proceed, Gomez Trial Attorneys can help you evaluate your options and protect your interests.
