Asking what is a good settlement offer is really asking three questions at once: Does the number reflect my actual damages? Is the discount for risk reasonable? And what will I actually keep after fees and liens? Many people fixate on the gross figure an adjuster quotes, but a higher gross with large liens can net less than a lower, cleaner offer. Figuring out what is a good settlement offer means working from your full damages down to your net recovery, while honestly weighing liability, comparative fault, policy limits, and the cost and risk of trial. This guide walks through that math with a worked example.
Before you can judge an offer, anchor on your own number. Add up your special damages — all medical bills (past and reasonably expected future care), lost wages, and out-of-pocket costs. Then estimate non-economic damages for pain, suffering, and disruption to your life. Consumer-education sources like Nolo describe a common rough method of applying a multiplier to your specials based on severity, though no formula is binding. The point is to define your full-value range first. Only then can you measure an offer against something objective. An adjuster's number means little until you know whether it represents 30% or 90% of what your claim is reasonably worth.
Full value assumes you would win outright. Real claims carry risk. If fault is disputed, or if you share some blame under your state's comparative-negligence rules, your recovery shrinks accordingly. In a comparative-fault state, being found 20% at fault typically reduces your award by 20%. A reasonable settlement bakes in that risk: an offer at 70% of full value may be fair where liability is genuinely contested, but stingy where fault is clear. The American Bar Association and state bar resources explain that settlement reflects the probability of winning multiplied by the likely award, minus the cost of getting there. So a “good” offer is not always full value — it is full value honestly adjusted for the strength of your case.
Sometimes the offer is constrained not by your damages but by the at-fault party's insurance coverage. If a driver carries a $50,000 liability policy and your damages exceed that, the insurer generally will not pay above the limit, regardless of how badly you were hurt. In that situation a policy-limits offer may genuinely be a good outcome, because pursuing more means chasing the defendant's personal assets — often a slow, uncertain process. Before rejecting an offer as low, confirm the available coverage, including any umbrella policy or your own underinsured-motorist coverage. The Insurance Information Institute notes that underinsured-motorist coverage exists precisely for these gaps. A modest offer can be the best realistic recovery when coverage is the ceiling.
A settlement is money now and certainty; a trial is the chance of more (or less) money later, after expense and delay. Litigation can add expert-witness costs, court fees, and months or years of waiting, and there is always the risk a jury awards less than the offer on the table — or nothing. The American Bar Association observes that the vast majority of civil claims settle, partly because both sides prefer certainty to risk. When you evaluate an offer, factor in what trial would realistically cost you in money, time, and stress, and the genuine possibility of losing. A “lower” settlement that you keep today can beat a “higher” verdict that is uncertain, taxed by costs, and years away.
The gross offer is not what lands in your bank account. From it, your attorney's contingency fee (commonly around one-third), case costs, and any medical liens or subrogation claims (from health insurers, Medicare, or providers) are deducted. Two offers with the same gross can produce very different nets depending on lien size. Always ask your attorney to estimate the net before you accept or reject. Liens can sometimes be negotiated down, which raises your net without changing the gross. Per IRS Publication 4345, compensation for physical injuries is generally not taxable, so taxes rarely reduce a personal-injury net — but fees and liens always do, and they are where a seemingly generous offer can quietly shrink.
Suppose your documented full damages are about $90,000, liability is somewhat disputed, and the adjuster offers $60,000. Here is how the net might shake out.
| Line item | Amount |
|---|---|
| Gross settlement offer | $60,000 |
| Attorney fee (33.3%) | −$20,000 |
| Case costs (filing, records, experts) | −$2,500 |
| Health-insurer lien (after negotiation) | −$8,500 |
| Unpaid medical bills | −$4,000 |
| Net to client | $25,000 |
The same $60,000 gross with a $3,000 lien instead of $12,500 would net roughly $34,500. This is why the gross headline never tells the whole story — always run the net.
Not every low first offer is bad faith. A first offer can be reasonable when liability is genuinely weak, coverage is limited, or your damages are modest and fully accounted for. It is a lowball when it ignores documented specials, assumes fault you do not bear, or arrives before you have reached maximum medical improvement and know your future costs. Warning signs of a lowball include an offer far below your specials alone, pressure to decide immediately, and refusal to explain how the number was reached. Nolo and state bar guides advise countering with a written demand backed by your documentation rather than accepting or flatly rejecting. The adjuster's willingness to justify the figure often reveals whether it is a serious opening or a test.
Settlement is a negotiation, and both sides anchor. Your written demand sets a high, justified anchor; the adjuster's first offer sets a low one; the fair number usually lands somewhere between, shaped by the strength of your evidence. A productive range starts with a demand you can support with documentation — not a wild figure that damages your credibility — and a bottom line (your “walk-away” net) that you calculate privately in advance. Each counteroffer should cite a reason: new medical evidence, a permanency rating, clearer liability. The American Bar Association notes most claims resolve through this back-and-forth. Knowing your full-value range and your minimum acceptable net keeps you anchored to reality instead of reacting to whatever number the adjuster names first.
A fair offer leaves you with a net — after fees and liens — that reasonably reflects your full damages discounted for liability risk. Compare it to your specials plus a sensible estimate of non-economic damages, then account for comparative fault, coverage limits, and trial risk.
Not always. A first offer can be reasonable when liability is weak or coverage is limited. It is a lowball when it ignores your documented bills, assumes fault you do not bear, or comes before you reach maximum medical improvement. Counter with a documented demand rather than accepting blindly.
Attorney fees, case costs, and medical liens or subrogation claims are deducted from the gross offer. Two offers with the same gross can net very differently depending on lien size, so always estimate the net before deciding.
Yes. If the at-fault party's policy limit is low, a policy-limits offer may be the most you can realistically recover without chasing personal assets. Confirm available coverage, including underinsured-motorist coverage, before treating an offer as unfair.
In comparative-fault states, your share of blame reduces your recovery by that percentage. If you are 20% at fault, your award drops by 20%. A reasonable offer reflects that discount, so full value is not always the right benchmark when fault is shared.
Per IRS Publication 4345, compensation for physical injuries or sickness is generally not taxable. Portions for lost wages, punitive damages, or interest can be taxable. Taxes rarely reduce a physical-injury net, but fees and liens always do.