The Difference Between an Insurance Company’s First Offer and a Fair Settlement
One of the questions we are regularly asked by clients about a personal injury settlement offer is whether they should accept the first offer made by an insurance company. Sometimes that offer arrives relatively quickly, while the injured person is still recovering and the full extent of their losses may not yet be known. On other occasions, it comes after medical evidence has been obtained and the claim has been investigated in more detail.
There can be a temptation to look at the figure, compare it with what you had expected and make an immediate judgement about whether it sounds reasonable. However, there is no universal rule that an insurance company’s first offer should always be rejected. Equally, the fact that an offer has been made does not automatically mean it reflects everything the claim may be worth.
The more useful question is what the offer has actually taken into account and whether there is information that is still missing.
Quick Links:
- What Does an Insurance Company’s First Offer Actually Represent?
- An Injury Does Not Come With a Fixed Price
- What Has the Offer Actually Taken Into Account?
- What Can You Actually Prove?
- The Question People Often Forget: Are You Fully Recovered?
- Why Accepting a Settlement Is Usually Final
- When an Early Offer Could Make Sense
- If You Reject the Offer, What Happens Next?
- A Fair Settlement Is About More Than Getting the Highest Possible Figure
- Why Choose Stonehewer Moss?
If you have received a personal injury settlement offer and are unsure whether it properly reflects your injuries and losses, call 01606 872200 or arrange a free 30-minute consultation with Stonehewer Moss Solicitors.
What Does an Insurance Company’s First Offer Actually Represent?
An offer is an attempt to resolve a claim based on the information available at that particular time. That does not automatically mean the insurance company is acting unfairly. Insurers are entitled to consider the evidence, form their own view about the value of a claim and make an offer accordingly.
Sometimes an early personal injury settlement offer may be perfectly reasonable. In other cases, further medical evidence, information about financial losses or evidence about the longer-term consequences of an injury may justify a different figure. An offer therefore needs to be considered in the context of what was known when it was made, rather than simply whether it is the first figure put forward.
An Injury Does Not Come With a Fixed Price
It is easy to assume that if two people suffer what appears to be the same injury, their compensation should be roughly the same. Personal injury claims are not quite that straightforward.
Two people may have similar injuries but experience very different consequences. One may recover within a few months and return to normal life, while another may require treatment, experience continuing symptoms or find that the injury affects their ability to work. One person may lose no earnings at all, while another may be unable to work for a significant period.
The injury itself is therefore only part of the picture. The effect it has had on the individual person’s life and finances may also be relevant, which is why comparing your personal injury settlement offer with somebody else’s compensation figure is rarely a reliable way of deciding whether it is fair.
An Injury Does Not Come With a Fixed Price
It is easy to assume that if two people suffer what appears to be the same injury, their compensation should be roughly the same. Personal injury claims are not quite that straightforward.
Two people may have similar injuries but experience very different consequences. One may recover within a few months and return to normal life, while another may require treatment, experience continuing symptoms or find that the injury affects their ability to work. One person may lose no earnings at all, while another may be unable to work for a significant period.
The injury itself is therefore only part of the picture. The effect it has had on the individual person’s life and finances may also be relevant, which is why comparing your personal injury settlement offer with somebody else’s compensation figure is rarely a reliable way of deciding whether it is fair.
What Has the Offer Actually Taken Into Account?
Before deciding whether a personal injury settlement offer is appropriate, it is important to understand what the figure is intended to cover. In personal injury claims, compensation is often divided into two broad categories.
General Damages relate to the injury itself, including the pain, suffering and loss of amenity caused by it. Special Damages cover financial losses and expenses resulting from the accident, which may include loss of earnings, treatment costs, care or assistance, travel expenses and other relevant losses.
This is why the headline figure alone does not tell the whole story. An offer may need to compensate for the injury itself as well as a range of financial losses, and whether the overall figure is appropriate depends on what has actually been included.
What Can You Actually Prove?
This is an issue that can sometimes cause frustration for clients. We occasionally hear, “But I told them I lost that money. Why won’t the insurer pay it?”
The answer is often evidence. If you are claiming loss of earnings, there may need to be evidence showing what you would have earned and what you actually lost. If you have paid for treatment or incurred other expenses, receipts, invoices or other documents may be needed to support the claim.
A genuine loss does not automatically become easy to recover simply because the person making the claim knows it happened. The insurer is entitled to ask for evidence showing what is being claimed and how the figure has been calculated. Equally, where a loss is properly supported by evidence, an insurer should not simply ignore it.
This is why keeping relevant payslips, receipts, invoices and other documents can be important. A personal injury claim is not simply a list of everything that has gone wrong since an accident. The losses being claimed need to be identified and, where possible, supported by evidence.
The Question People Often Forget: Are You Fully Recovered?
One of the most important questions when considering an offer is whether you have fully recovered. If your recovery is complete and there is clear medical evidence about the injury and its consequences, it may be easier to assess the overall value of the claim.
If you are still recovering, you may not yet know whether your symptoms will resolve completely, whether you will need further treatment or whether the injury will have an ongoing effect on your ability to work or carry out other aspects of your life.
That does not mean an early settlement is always inappropriate, but it is important to understand what is known, what remains uncertain and whether the proposed settlement reflects that uncertainty.
Why Accepting a Settlement Is Usually Final
A final settlement is generally intended to bring the claim to an end. Once you have accepted it, you cannot normally return to the insurer months later because your symptoms have continued, you now require further treatment or your financial losses have turned out to be greater than expected.
That is why it is important to consider whether there are significant questions that remain unanswered. Have you recovered? Is your future prognosis clear? Have all of your financial losses been identified and is there evidence to support them?
Settlement can provide certainty and bring a stressful process to an end, but that certainty works both ways. Before accepting an offer, it is worth understanding exactly what you are agreeing to and whether there is information that could materially affect the value of the claim.
When an Early Offer Could Make Sense
It would be wrong to suggest that every early offer should be treated with suspicion or automatically rejected. Sometimes an early offer may make perfectly good sense.
If the medical evidence is clear, the likely outcome of the injury is understood, financial losses have been identified and supported and the offer appropriately reflects the overall value of the claim, there may be no particular advantage in continuing negotiations simply because it is the first offer made.
A client may also place value on certainty and wish to bring the matter to an end rather than continue negotiations when there is no guarantee that a better outcome will be achieved. The important thing is that the decision is informed and based on the individual circumstances of the claim.
If You Reject the Offer, What Happens Next?
Rejecting an offer does not necessarily mean that the claim is immediately heading to court. In many cases, negotiations continue while further information is obtained and both sides reassess their positions.
Medical evidence may provide a clearer picture of the likely long-term consequences of an injury, while financial losses may become easier to calculate as more information becomes available. Further documents may also support part of the claim or clarify an issue that was previously uncertain.
As the evidence develops, either side may change its position. An insurer may increase its offer if further evidence supports a higher valuation, although new information may also reveal difficulties with part of a claim.
Where a formal settlement offer is made under Part 36 of the Civil Procedure Rules, specific rules can apply to how offers are made, accepted and withdrawn, as well as the potential costs consequences of accepting or rejecting an offer.
A Fair Settlement Is About More Than Getting the Highest Possible Figure
When people talk about whether an offer is fair, it is easy to assume that the aim must always be to obtain the highest possible figure. In reality, a fair settlement is not simply the largest number that can be mentioned during negotiations.
It should appropriately reflect the injuries suffered, the consequences of those injuries and the financial losses that can properly be established. It should also take account of the evidence available and any genuine uncertainties that remain.
Sometimes that will mean negotiating for a higher figure. Sometimes it may mean accepting an offer that is appropriate based on the available evidence. In other cases, it may mean waiting until further medical or financial information is available before making a final decision.
Why Choose Stonehewer Moss?
At Stonehewer Moss, we believe that deciding whether to accept a settlement should involve more than simply looking at the headline figure. When you work with us, you deal directly with a qualified solicitor who can explain what an offer represents, what information has been taken into account and whether there are further matters that need to be considered.
We will also be honest about the evidence supporting the claim. If a financial loss cannot currently be established, we can explain what evidence may be needed. Equally, where an insurer has failed to properly take relevant evidence into account, that position can be challenged.
Our role is not simply to chase the highest possible number. It is to assess the claim as a whole and help our clients make informed decisions about whether a proposed settlement is appropriate in the circumstances. As an APIL accredited firm, Stonehewer Moss has extensive experience in personal injury claims and settlement negotiations.
And because it’s Free to See if you’ve got a claim, you can speak to a qualified solicitor about your circumstances before making an important decision.
Frequently Asked Questions
The deadline for accepting a personal injury settlement offer can vary. The terms of the offer should normally set out any relevant time limit.
An insurer may be able to withdraw an offer before it has been accepted, depending on the circumstances and the type of offer made.
Compensation for personal injury is generally not subject to income tax, although the treatment of specific payments can depend on individual circumstances.
It is possible to negotiate directly with an insurer, but assessing injuries, financial losses and the evidence supporting a personal injury settlement offer can be complex.
If an agreement cannot be reached, negotiations may continue or the claim may proceed to court where appropriate.
Compensation may affect entitlement to certain means-tested benefits, depending on the amount received and the individual’s circumstances.
Most personal injury settlements are paid as a lump sum, although periodical payments may be appropriate in some cases.
It may be possible to change solicitors during a claim, although the practical and financial implications should be considered first.
