How to Respond to a Low Settlement Offer (With a Sample Counteroffer Letter)

First, don't take it personally

A low first offer is normal. It is not a sign that the adjuster thinks you are lying, and it is rarely their final number. Adjusters work within settlement authority set by their managers, and many insurers use claim-evaluation software that scores your injury from the codes in your medical records. The first figure is usually the bottom of that range, offered to see whether you will take it.

That is useful to know, because it means the offer can move. What moves it is information, not frustration.

Step 1: Get the offer in writing and ask how they reached it

If the offer comes by phone, thank the adjuster and say you will respond once you have it in writing. Then ask two questions:

• Which medical bills and which lost wages did you include?
• Did you leave anything out, and why?

The answers often reveal the problem. The adjuster might have used a lower "paid" amount instead of what you were billed, left out a provider whose records they never received, or decided that part of your treatment was unnecessary. Each of those is something you can argue with.

Step 2: Check what the offer leaves out

Lay your own numbers next to theirs. The items that most often go missing are:

• Future treatment your doctor has recommended but you have not had yet
• Lost wages beyond your first few days off, including overtime, missed shifts and paid leave you had to use
• Out-of-pocket costs such as mileage to appointments, prescriptions, braces and help at home
• Liens that will come out of your settlement, which lower what you actually keep
• Pain and suffering that reflects how long you were affected, not just the size of the bills

Vehicle damage is usually a separate claim and should not be bundled into the injury offer without you agreeing to it.

Step 3: Work out your number and your walk-away number

Before you reply, know two figures:

1. Your opening counteroffer. This should be a reasoned number you can explain line by line, not a random round figure. Start above the point you would accept, because the insurer will meet you somewhere in the middle.
2. Your walk-away number. The lowest figure you would accept, based on your losses and what you would realistically get by hiring a lawyer or going to court. Keep this to yourself.

A good starting point is to total your economic losses and apply a pain and suffering range that fits the severity of your injury. Our settlement calculator does this for you and shows whether the insurer's offer sits below, inside or above your range.

Step 4: Write a counteroffer that gets taken seriously

A short, factual letter works better than a long, angry one. It should:

• refer to the claim number and the date of their offer
• list your losses with totals, and attach anything they did not have
• explain briefly how the injury affected your work and daily life
• name a specific counteroffer
• ask for a written response by a reasonable date

Here is a template you can adapt. Replace everything in brackets.

[Your name]
[Address, phone, email]
[Date]

[Adjuster's name], [Insurance company]
Claim number: [number]  |  Your insured: [name]  |  Date of accident: [date]

Dear [name],

Thank you for your offer of $[amount] dated [date]. I am not able to accept it, because it does not reflect my documented losses.

My medical expenses total $[amount], supported by the itemized bills attached. Your offer appears to leave out [provider or item], which I have also attached. My doctor has recommended [future treatment], estimated at $[amount] (letter attached).

I missed [number] days of work, a loss of $[amount], confirmed in the attached letter from my employer.

For [number] weeks I could not [lift my child / drive / sleep through the night / do my job without pain]. I am still [describe any ongoing effect].

Taking all of this into account, I am prepared to settle this claim for $[amount].

Please send your response in writing by [date, about 2 to 3 weeks away].

Sincerely,
[Your name]

Keep copies of everything you send, and send it in a way you can prove, such as email with the attachments listed.

Step 5: Expect a few rounds

The insurer will usually come back with a higher offer that is still below your counteroffer. That is normal. Each time, ask what changed and what is holding them back. Move down in smaller steps than they move up, and tie each move to a reason.

If the adjuster says they have no more authority, you can ask them to take the file to a supervisor with your latest letter. New evidence is the most reliable way to get a real increase: a doctor's letter confirming that symptoms are likely to be permanent, an MRI report, wage records or a statement from a witness.

Tactics to watch out for

• "This is our final offer." Sometimes true, often not. Ask them to confirm it in writing and to explain what would change their view.
• A quick check before you finish treatment. A fast payment can look generous until you need further treatment that the release you signed no longer covers.
• A request for all your medical records. You only need to share records related to this injury. A blanket authorization lets the insurer look for pre-existing conditions.
• A recorded statement. You are not usually required to give one to the other driver's insurer. If you do, stick to facts and do not guess about your recovery.
• An offer that quietly bundles your vehicle damage. Keep the two claims separate unless you mean to settle both.

When the offer equals the policy limit

If the insurer offers its full policy limit, it may genuinely be all that insurer will pay, even if your losses are higher. Before you accept, check whether your own policy has underinsured motorist (UIM) coverage, and tell your own insurer before you sign anything. Some UIM policies require their consent before you settle with the other driver. This is a point where a short consultation with an attorney is worth having.

Should you bring in a lawyer?

For a small claim with clear fault, many people negotiate successfully on their own. For serious injuries, disputed fault or an insurer that will not move, it is worth doing the maths honestly.

Suppose the insurer's best offer to you is $12,000. A lawyer who takes a 33% fee would need to get about $18,000 before you would keep the same amount, and more once case costs are counted. If your injury justifies $30,000 and the lawyer can realistically achieve it, you come out well ahead. If it does not, you might not. Most personal injury lawyers offer a free consultation, so you can ask them directly what they think the claim is worth and why.

Don't forget the deadline

While you negotiate, the statute of limitations keeps running. If you get within a few months of it without a settlement, you will need to file a lawsuit to protect the claim. Insurers know this date too. Check yours in our statute of limitations guide.