How to Counter the Adjuster's First Car Accident Settlement Offer

You don’t have to jump at the first settlement offer you receive. Review it carefully before you act.

By , Attorney · Pepperdine Caruso School of Law
Updated by Dan Ray, Attorney · University of Missouri–Kansas City School of Law

You've been injured in a car accident, and you started a car accident claim. Maybe you've sent a demand letter to the insurance adjuster. Now the adjuster has made an opening offer. How do you decide if the adjuster's offer is fair? Odds are it isn't, and you'll need to come up with a counteroffer. How do you do that?

Chances are your car accident claim will settle—upwards of 90% do. The goal of this article is to show you how to:

  • arrive at a fair value for your case
  • decide if the insurance adjuster's offer is fair, and
  • make a counteroffer.

How the Car Accident Settlement Process Works

Before we review the settlement process, let's start by making sure you understand what you're up against when you decide to settle your own car accident (or other personal injury) claim. It isn't a fair fight, and the insurance company has no desire to pay you a fair settlement. Quite the opposite.

Know Your Opponent

The insurance company you're dealing with spends untold sums and devotes countless resources to two goals. First, pay as few claims as possible. Second, pay the minimum amount possible for any claim, and not a penny more. Nearly all the advantages—power, money, and armies of claims adjusters and lawyers—are on the insurance company's side. And almost all the disadvantages belong to you. You can't afford to fight the insurance company by yourself. You've been hurt. Maybe you're out of work. The bills are piling up.

Time is on the insurance company's side. Often, all it needs to do is wait you out. Sooner or later you'll get desperate or tired of the process and you'll jump at an offer.

Here, then, is the moral of the story. Don't go to battle on your own with an insurance company unless you're able to fight on your terms. Come up with a strategy, like the one here, and have the discipline to stick to it. If that's not for you, think long and hard about hiring a car accident lawyer to help you resolve your claim.

The Settlement Process

The settlement process usually begins when you send the other party's insurance company a demand letter. Your demand letter should explain:

  • the facts—who was involved, when and where the collision occurred, and how it happened
  • your injuries, the medical treatment you've received, and any treatment you'll need in the future, and
  • why the other party was at fault and is legally responsible for your injuries and damages.

Your letter should conclude with a settlement demand, letting the insurance company know how much money you want to settle your claim. Think of this demand as your opening settlement bid. It should be higher than what you're actually willing to settle for, but it shouldn't be outrageous or unreasonable.

The insurance adjuster assigned to your claim will likely respond to your demand with an offer. Expect this starting offer to be much lower than your demand, perhaps insultingly low. Why would an adjuster start with a ridiculous "lowball" offer like this? Lots of reasons.

For starters, experience has taught the adjuster that unrepresented claimants like you often are "in over their head," and that some early hardball tactics will yield a quick, cheap settlement. The adjuster also suspects that you might be hard up for cash if you're injured and unable to work or stuck with a totaled car you haven't paid off. Dangle some cash, the adjuster thinks, and you won't be able to resist.

Your first reaction to the adjuster's offer is likely to be anger. But don't fall for that trick. Think of it this way: Did you really want the adjuster to jump at your first offer? No way. If the adjuster accepts your initial demand, it means you started too low. And once your offer is accepted, the deal is almost certainly done.

So don't be offended and don't get upset. If you don't like this offer, and you probably won't, you can respond with a counteroffer. We'll explain how to do that below. This process of back-and-forth counteroffers goes on until you reach an agreement.

If you've sent a settlement demand but the adjuster hasn't responded within the time you requested, just send a quick follow-up note. Don't be testy or unpleasant. Simply remind the adjuster of your demand and ask for a response within some reasonably short (like a week or two) time frame.

If you still don't get a response, then write to the adjuster and ask that your claim be assigned to a different adjuster or escalated to the adjuster's manager. If that doesn't work, then you should contact the adjuster's manager yourself. Keep an eye on the time limit for filing your claim (called the "statute of limitations"). The fact that the adjuster hasn't been responsive won't stop the limitation period from running.

How to Counter an Adjuster's Settlement Offer

Here's a step-by-step breakdown of how to counter an adjuster's settlement offer.

Step One: Determine the Value of Your Claim

The first step in crafting an effective counteroffer is to figure out the total value of your claim. If settlement negotiations began with your demand letter, you should have done much of this work already. If you didn't, or if you're having second thoughts about the value you put on your claim, here are the steps to follow.

Calculate Your Special Damages

Special damages (also called "economic" damages) compensate you for your out-of-pocket expenses related to the accident. Examples of special damages include:

  • medical expenses (past and future)
  • the cost to repair or replace damaged property
  • lost wages and loss of earning capacity, and
  • the cost of hiring someone to help you with tasks you can't perform because of your injuries (like landscapers and child care providers).

When you're injured in a car accident caused by someone else's negligence (carelessness), unless you share blame for the accident (discussed more below), you expect that all of your special damages (the damages you're out of pocket for) will be paid. It isn't fair that you should be hurt through someone else's fault and not be made whole for those expenses.

You'll need to support your demand for special damages with documents like a police report, medical records and bills, repair estimates, photos, and proof of lost income.

Calculate Your General Damages

General damages (also called "non-economic losses") compensate you for non-monetary damages in an injury claim. The most common types of general damages include:

General damages are harder to value than special damages. Most adjusters use a multiplier to calculate them. For example, an adjuster might multiply your total medical costs by a factor between 1.5 and 5 to arrive at a value for your general damages.

Most of the settlement haggling will be over your general damages. After all, these damages are more difficult to pin down. You can't see them on an X-ray or measure them in a lab. In practice, then, there's often a lot of room for negotiation when it comes to general damages.

You should begin with a figure that's higher than what you're willing to accept. The adjuster will respond with a lowball number you're unwilling to accept. In most cases, you and the adjuster will go back and forth until you arrive at a mutually acceptable number. If you're unable to get to a settlement figure for your general damages that you think is fair, you might consider hiring a car accident lawyer to help.

AllLaw's settlement calculator can help you estimate a reasonable value for your claim.

Add Your Special and General Damages Together

The sum of your special and general damages is a good beginning estimate of the value of your claim. But before you can feel confident that you're at a realistic settlement amount, consider whether you need to adjust your valuation.

Step Two: Adjust the Value of Your Claim

Depending on the facts and circumstances of your case, you might need to adjust your valuation upward or downward.

Upward Adjustment

In most cases, a multiplier of two or three times your medical expenses gives a reasonable starting point for settlement negotiations. In some cases, like those involving serious permanent injuries or some lasting disability, an upward adjustment to four or five times your medical expenses is appropriate.

But there will be cases when you need to adjust your opening settlement number upward significantly, well beyond five times your medical damages. We're talking here about cases involving injuries that are truly catastrophic—paralysis, brain damage, or serious and permanent disability or disfigurement are examples. In a case like this, formulas and multipliers should be off the table.

You should not try to handle a case with these kinds of injuries on your own. Hire a personal injury lawyer who's experienced at handling catastrophic injury claims. You simply don't have the experience or the resources to go it alone.

Downward Adjustment

In some situations, you'll need to adjust your settlement figure downward. Most often, this will be for one of three reasons:

  • you're partially at fault for the accident
  • you've got problems of proof—proving the other side is responsible or proving your damages, and
  • you're not willing to assume the risks of lengthy negotiations or a trial.

You're Partially at Fault

The value of any personal injury claim depends, in part, on who's at fault for the accident. If you're at fault, then depending on the state where you live, your share of the fault will reduce the value of your claim or may end your claim entirely.

Problems of Proof

Sometimes it's clear who was at fault, or what caused your injuries. If you're stopped at a red light and get slammed into from the rear, causing you a back injury when you never had a bad back before, there aren't any real problems of proof. But what if the wreck happened in the middle of an intersection and there's conflicting testimony about who had the green light? Or what if you have a preexisting injury so that not all of your damages can be blamed on the other side? On facts like these, you'll need to be ready to adjust your settlement value downward, though by how much will be a matter of negotiation.

Risk of Negotiations or Trial

As mentioned above, in many cases settlement negotiations end because you—the injured party—simply can't bear the risk of protracted negotiations or a trial. If that's your situation, be prepared to adjust your settlement value downward. The lower you're willing to go, the greater the likelihood that your case will settle quickly.

Finally, keep in mind that if you're representing yourself, you won't have to pay any attorney's fee. You might consider a downward adjustment for that savings as well.

Step Three: Evaluate the Adjuster's Offer

Once you're comfortable with the value you've assigned to your claim, the next step is to evaluate the adjuster's offer. Before you spend a lot of time looking at how the adjuster valued your special and general damages, stop to consider the bigger picture. Is the offer reasonable? In other words, does the offer fall within the boundaries of a realistic settlement range? Or is it so low as to be insulting, something you can't take seriously?

As mentioned earlier, sometimes an adjuster will test you with an offer that's absurdly low, just to see if you'll jump at it. The adjuster might think you're desperate, or that you have no idea what you're doing. If you're faced with a bad faith offer, you should feel comfortable rejecting it out of hand.

Tell the adjuster you're unwilling to negotiate unless there's a serious offer on the table, that you won't bid against yourself, and that if a serious offer isn't made you'll have no alternative but to file suit. Once the adjuster knows you can't be played like an amateur, it's more likely that serious discussions can start. If that doesn't happen, you should think about having your case evaluated by an experienced car accident attorney.

If the offer is within a realistic settlement range, then you must spend some time trying to understand how the adjuster arrived at it. Did the adjuster reduce your special damages? If so, why? Was it because the adjuster thinks you're partially at fault? Or did the adjuster say they're just too high?

Expect the adjuster to cut your general damages down, perhaps significantly. This is likely where most of the negotiating will happen. As with your special damages, try to figure out why. Odds are the adjuster will argue that you've started too high, but it might also be because the adjuster thinks you're partially to blame for the accident, you didn't get the "right" medical treatment, or some other reason. Ask the adjuster to explain to you exactly why the offer is low.

Step Four: Prepare a Counteroffer

Finally, draft a counteroffer in the form of a letter. Start by summarizing the adjuster's offer and tell the adjuster that the offer is rejected. Explain, point by point, why the offer is too low. If you have any bills or other documents to prove your damages that you haven't already provided, you should attach those. End by clearly stating the amount for which you will settle, and ask the adjuster to respond within a certain time period.

Sample Counteroffer Letter for Your Insurance Settlement Negotiation

Here's an example of a counteroffer letter you can use to draft your own.

John Doe
1234 Anytown Lane
Anytown, IN 23456

December 28, 20xx

Ms. Jane Roe

Senior Adjuster

All Risk Insurance Company

9876 Commerce Street

Bigtown, OH 56789

Your Claim No: 557873

Claimant: John Doe

Your Insured: Curly Howard

Date of Injury: February 3, 20xx

Dear Ms. Roe:

Thank you for your letter dated December 15, 20xx responding to my settlement demand dated November 20, 20xx. In your letter, you offered $14,400 to settle all of my claims against your insured, Mr. Howard. For the reasons discussed below, your offer is rejected.

Your letter objected to my settlement demand of $32,000 for three reasons. First, you argue that my figure for general damages in the amount of $24,000 (four times my medical damages of $6,000) is unreasonably high. You claim that half that amount, or $12,000, is more appropriate. Second, you correctly pointed out that I did not have any proof of my claim for $2,000 in lost wages. Third and finally, you believe that a jury would find me to have been at least 20% at fault for the collision. According to you, then, my damages should be computed at ($12,000 (general damages) + $6,000 (medical damages)) x .80 (percentage of Mr. Howard's fault) = $14,400.

Valuation of General Damages

Your value of two times my medical expenses is unacceptably low based on the facts as shown by my medical records, as well as testimony that will come from me, my family, friends, and coworkers. Dr. Smith's medical records establish that I was in significant pain as a result of the broken ankle I suffered. Dr. Smith prescribed powerful painkilling medications to help me cope with the pain.

Similarly, the records from Anytown Physical Therapy document the excruciating pain I experienced when we began with range of motion exercises after Dr. Smith removed my cast. Finally, family, friends, and coworkers will testify that the pain I suffered, and the emotional distress I experienced, made it difficult for me to participate in family activities like attending our children's sporting events, taking dance classes with my wife, and doing all of my assigned work at the factory once I was able to return.

I continue to experience pain in my ankle today. Dr. Smith tells me (and his records document) that I should expect this to be permanent. I'll just have to live with the pain and limitations. As you might imagine, I worry about how this will affect my life, and my relationships, in the future.

In the spirit of compromise, I'm willing to reduce my general damages demand to 3.5 times my medical expenses, or $21,000. I'm making this concession though I continue to believe that a jury wouldn't hesitate to award me much more than my original demand.

Documentation of Lost Wages

When I sent you my original demand letter, I was waiting on a letter from my company's human resources office to document my lost earnings. I've since received that letter and it's attached. As you can see, I actually lost wages of $2,383 because of the injuries I suffered. Once again, in the spirit of cooperation, I'm willing to stick to my original lost wage demand of $2,000.

My Fault for the Accident

I strongly disagree with your claim that a jury is likely to find me at least 20% at fault for this accident. The lone witness you cite as "proof" that Mr. Howard entered the intersection on a yellow light and not a red light admits that he never looked directly at the traffic signal. He claims to have seen it for a split second out of his "peripheral" vision. My own testimony, as well as that of two eyewitnesses, refutes this claim.

As to your claim that I failed to yield the right of way, I maintain that I had no duty to yield because my traffic signal was green. We both know what really happened. Mr. Howard made an ill-advised attempt to beat the yellow light, which he ultimately failed to do. His driving was negligent bordering on reckless.

All the same, I do not want to prolong this any more than necessary. For that reason, I'm willing to assume, solely for the sake of arriving at a settlement, that a jury would assess 5% of the fault to me.

Revised Settlement Demand

I'm willing to reduce my settlement demand to the sum of $27,500 ($8,000 special damages + $21,000 general damages) x .95 = $27,550, rounded down to $27,500. I demand that sum to settle all of my claims against Mr. Howard.

As this demand continues to be in pursuit of settlement, nothing contained in this letter will be admissible in evidence if I must file suit and this case goes to trial.

Please let me hear from you within fifteen days from the date of this letter.



John Doe

Talk to a Lawyer

Some people think you only need to hire a lawyer if you're going to court. But getting a car accident lawyer involved in the insurance claim process can help you maximize the value of your claim.

A lawyer can answer your questions, help you estimate the value of your claim, and take on the stress of negotiating with an adjuster for you. You can connect with a lawyer directly from this page for free.

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