How to Handle a Low Ball Initial Insurance Settlement Offer

When you buy insurance to protect yourself against the economic loss of your valuables, you expect your insurance company to treat you fairly by offering you a reasonable settlement for any claims you report. Unfortunately, disputes often arise between insurance companies and policyholders regarding the value of a claim. Rather than just accepting what the insurance company is offering, you have several ways in which to dispute the settlement amount and hopefully receive the settlement you deserve.

Gather documentation to support the amount you are seeking for the claim. For instance, if the dispute is regarding the cost to repair your automobile, obtain two or three estimates of repair from different repair shops. For a homeowner’s claim, get a couple of estimates from contractors.

Submit your supporting documents along with a letter that outlines what you believe the claim is worth to the insurance adjuster. Request that the insurance company respond in writing within a specified time period.

Request to speak with a supervisor or manager if the adjuster continues to make an unreasonably low settlement offer. Keep escalating the matter to higher levels of management until the claim is resolved or you reach an impasse.

File a complaint with the department of insurance for your state. Every state has its own department of insurance that is responsible for regulating insurance companies that conduct business in that state. Contact the department of insurance for your state for instructions on filing a complaint (see Resources).

Invoke the appraisal clause of your contract if the dispute involves automobile or homeowners insurance. This does not apply to other lines of insurance such a life and health. When the appraisal clause is invoked, you and the insurance company each hire an independent appraiser to determine the value of the claim. If the appraisers do not agree on a value, a third individual, called an umpire, is hired to decide which appraisal is correct.

File a lawsuit against the insurance company. Sue in small claims court if the amount in dispute is under the small claims limit for your state. Otherwise, consider hiring an attorney to sue in superior court.


  • Request all settlement offers from the insurance company in writing. You may need this as documentation for your department of insurance complaint or litigation.

    Be aware of the statute of limitations for your claim. Some states require that you settle a claim or file a lawsuit within one year of making a claim.