When should I accept an offer to settle a personal injury claim?

Insurance companies will use various strategies to minimise the amount they have to pay out in compensation. You may receive a number of offers to settle your claim as your case progresses. You may even receive an offer before you start a claim. So how do you know when the best time to accept an offer is?

The purpose of compensation

The purpose of financial compensation is to try and put claimants back in the position they were in before they were injured.

A compensation settlement should help compensate you for any pain, suffering and loss of amenity. Compensation should also cover the cost of medical procedures and treatments, as well as reimbursing you for any financial losses.

As a claimant, you will need to secure enough compensation for you and your dependents to live whilst you are unable to work. It should be enough pay for any medical care and support costs you need now and in the future. It should also fully reimburse you for any financial cost and losses you have incurred as a result of your accident.

Types of settlement offers

An estimated 99% of injury claims settle out of court. No one wants a claim to go to court as the cost, time and stress involved in a court hearing is significant. As such, the claims process is designed to encourage settling out of court. Most injury claims are essentially a negotiation between the claimant’s solicitor and the defendant or their insurance company.

Settlement offers can be made by the defendant (or claimant) at any stage in the legal process, from before you start a claim up to the last minute before a court hearing begins.

Pre-Med Offers

A ‘Pre-Med Offer’ is when a defendant's insurer offers an immediate settle before the claimant has had a medical.

Pre-Med offers are a tactic used by insurance companies to minimise the amount of money they have to pay out on a claim.

A Pre-Med Offer can be a very tempting prospect to a claimant. The idea of being able to settle immediately, avoid a potentially drawn-out legal process and have the certainty of receiving what might seem like a generous amount of money, can be compelling.

However, generosity is not what insurance companies are best known for and in most cases, a claimant will receive substantially more money if they reject any pre-med offer. For this reason, pre-med offers are largely frowned upon by the legal profession and there are moves by the government to ban the practice.

Personal injury solicitors will usually tell you to reject a pre-medical offer. Until you have had a medical exam and a report detailing the extent of your injuries has been prepared, you simply cannot know the value of your claim.

A medico-legal report will consider the value of your claim from a pain suffering and loss of amenity perspective. It will include a prognosis for your recovery, the probability of future complications and the need for medical treatments and care costs.

For example:

If you were seriously injured at work as a 30-year-old and there is a possibility that you might not be able to work again, an insurer might make a pre-med offer of £600,000. To a claimant sitting at home, unable to work and worried about feeding a family, such an offer could seem like a godsend.

However, this sum of money will need to last you for the rest of your life. If you earned £30,000 a year and we assume no future pay raises, bonuses or pension contributions, £30,0000 a year for the next 40 years would still equate to £1.2m.

What seems initially like a very large sum of money, would be clearly inadequate to compensate you.

Furthermore, If you accept a pre-medical offer and then experience future complications or symptoms, you cannot make a further compensation claim.

Offers made during the claim process

Once you have instructed a solicitor and your case is underway, you could receive a settlement offer at any stage. You could receive a near immediate offer, even before you have had a medical exam. However, if you haven’t had a medical exam you still won’t know the full extent of your injury and what your future or ongoing needs might be.

As with pre-med offers made before a solicitor has been instructed, an insurance company will try to pitch a tempting offer.

Pre-med offers made once you have instructed a solicitor tend to be higher than offers made before you have a solicitor. The mere fact that you have instructed a solicitor demonstrates you intend to go all the way with the case if necessary. The insurance company does not want to incur legal costs so it will usually increase their offer at this point. However, the amount offered will still usually be less than you would ultimately receive if you reject the offer.

This may seem like poker and to some extent it is. If you make a faster than anticipated recovery, it could be that the pre-med offer is actually better than you might otherwise receive. Your solicitor will be familiar with the strategies employed by individual insurance companies and they will advise you accordingly.

A settlement offer can be made at any stage in the process but will usually be relatively quick if the defendant has admitted liability.

If the defendant accepts part liability, the insurance company may make an offer on the basis of ‘contributory negligence’. So if it is argued that, for example, you were equally responsible for an accident with another driver, you might receive an offer for 50% of the amount you would otherwise receive.

Your solicitor will collate the evidence and should know whether a court is likely to hold the defendant partly or fully responsible. The solicitor will then advise you on whether they think you should accept the offer.

Part 36 offer

A ‘Part 36 offer’ is a tactic sometimes used by the defendant (or claimant) to convince the other side to settle the claim early and before the claim goes to court.

A Part 36 offer is a ‘without prejudice’ offer - meaning that the offer itself does not constitute an admission of guilt. Part 36 offers differ from other offers as if you reject the offer and a judge subsequently awards you less than the Part 36 offer, you would receive the lower amount.

In addition, you may have to cover the defendant’s legal costs from the point that the offer was made. It may be that the ATE insurance policy (taken out when you sign a ‘Conditional Fee Agreement’) will cover these fees but it will not usually cover the difference between the Part 36 offer and the award made by the judge.

Part 36 offers must be accepted within 21 days of the date of the offer.

Injury Claim
Compensation Calculator

Find out how much could claim

Calculate my claim

I need the money now

If you are unable to work and in need of immediate income, an early-stage offer can be very attractive. Insurance companies know this only too well and it could be argued that this gives them an unfair advantage. The legal process takes this into account however and often allows for interim payments to be claimed if you have an immediate need for the money.

Have you received an offer but are yet to speak to a solicitor?

If you have been contacted by an insurance company offering you a pre-med settlement or perhaps encouraging you to use one of their recommended solicitors, you should seek independent legal advice. Speaking to a solicitor will cost you nothing and you will get another perspective on how best to proceed.

Have you been injured at work?

If you have been injured at work in the last 3 years, you may be able to claim financial compensation.

Find out more about making a work accident claim:

• Do you qualify?
• How much compensation could you get?
• How does No Win, No Fee work?

Read more: Work accident claim guide