Is My Car Accident Settlement Offer Fair? How to Judge It Before You Sign

Nobody can tell you whether an offer is fair without your medical records, your bills and your state's rules. What you can do is check whether the number was built from real damages, whether treatment is finished, and what signing gives up.

Start with what the offer should include

• Medical bills so far, and a realistic estimate of future care if you are not recovered.
• Lost income, including time off for appointments.
• Out-of-pocket costs such as prescriptions, travel to treatment and equipment.
• Pain, loss of normal activities and other non-economic harm, which has no fixed formula.
• Property damage, which is often handled separately from the injury claim.

Ask the adjuster how the number was calculated

A fair offer can be explained. Ask in writing which bills and wage losses were counted, what was left out and why. If the response is a single sentence about "a fair value for your injuries," the number is probably a starting point. Compare it with your own list of bills and missed pay. Online settlement calculators are a poor guide because they cannot see your records or your state's fault rules. See our guide to why they mislead.

Why a round number can mean a policy limit

An offer of exactly $10,000, $25,000 or $50,000 is sometimes the at-fault driver's liability limit. If your damages are below the limit, taking it may be reasonable. If they are above it, the limit is the most that policy will pay, and the rest may have to come from your own underinsured coverage, health insurance or another responsible party. Do not sign a release before you know what other coverage exists. See our guide to low policy limits.

Are you finished treating?

Settling before you reach a stable point in recovery is the most common mistake. A signed release usually closes the claim for good, including problems that appear later, such as a herniated disc that shows up on a later scan. Ask your doctor whether you have reached maximum improvement or still need treatment, and what that treatment would cost.

Liens and what you actually keep

Health insurers, Medicare, Medicaid, hospitals and sometimes your own auto insurer may claim repayment out of the settlement. If you owe $9,000 in reimbursements from a $20,000 settlement and pay a lawyer's fee, the amount in your pocket is much smaller than the headline number. Ask for a written list of liens before you accept, and compare net amounts when you weigh offers. See our guide to medical liens.

What a release gives up

A release usually says you accept the money and will not make further claims against the person or company. Read it for broad language, such as claims known and unknown, and for any term that affects your own insurer's rights. Once a check is cashed and a release is signed, courts rarely undo it. If something about the offer or the document does not make sense, a free consultation with an injury lawyer before signing is cheap protection.

Deadlines keep running while you negotiate

Negotiating does not stop the statute of limitations. In many states the filing deadline for injury claims is two or three years from the crash, and it can be shorter against a government entity. Calendar it on the day you start negotiating.

A hypothetical worked example

Suppose an adjuster offers $9,000 after a rear-end crash. Your medical bills are $6,200, you lost $1,400 in wages, and your health insurer says it paid $4,100 of the bills and wants that back. Out of $9,000, you would owe the insurer, pay any lawyer fee, and be left with a small amount for pain and future care, even though the headline number looks decent. If you still have therapy scheduled, the offer may not cover it. The same $9,000 could be reasonable in another case. The point is to run your own numbers before you decide.

What to put in writing back to the insurer

If you are not ready to accept, say so in a short reply. List your bills and wage loss with dates, state that treatment is ongoing if it is, and ask them to explain how they arrived at the figure. Do not make a counteroffer until you have your records together, and do not sign the release attached to the first offer letter. A written exchange also gives you a record if you later need a lawyer.

Frequently asked questions