Can an Accident Injury Attorney Help You Obtain an Auto Insurance Settlement?
Are you wondering, “When should you settle an accident claim?” Learn what you need to know and get a free claim assessment from a local accident injury attorney.
When should you settle an accident claim? If you have been injured in a car accident, this is a crucial question—and you cannot afford to get the answer wrong. If you settle for too little, you could suffer the consequences for years to come. However, if you negotiate a fair settlement, you will have your medical bills and other losses covered, and you will be able to put the accident behind you as you move on with your life. An experienced accident injury attorney can help make sure this happens.
The best way to decide when to settle your accident claim is to get advice from an experienced accident injury attorney. Experienced accident injury attorneys will have handled hundreds, if not thousands, of insurance claims—and he or she will know when to recommend settlement. You can hire an attorney for car accidents at no out-of-pocket cost, and there is no reason not to get legal representation for your insurance claim.
In this ultimate guide to the question, "When should you settle an accident claim?", we cover:
- What Type(s) of Insurance Coverage are Available?
- 7 Factors that Will Influence Your Decision Regarding Settlement
- 5 Factors that Should Not Influence Your Decision Regarding Settlement
- 3 Important Facts You Need to Know about Your Insurance Company
- What Questions Should You Ask Your Accident Injury Attorney Before Settling?
- 3 Examples of Possible Auto Insurance Settlement Scenarios
There are four types of auto insurance that provide coverage for injuries from car accidents. When it comes to the question of, "When should you settle an accident claim?", one of the first things you need to know is what type(s) of coverage are available to you. The types of auto insurance that cover injuries from car accidents are:
- Personal Injury Protection (PIP) – Personal injury protection (PIP) provides coverage for medical expenses and lost wages. It is coverage you buy to protect yourself, and you can file a claim regardless of who was at fault in your accident (with a few very limited exceptions). A fairly standard PIP policy limit is $10,000.
- Medical Payments (MedPay) – Medical payments (MedPay) is similar to PIP, but it covers medical expenses only, and policy limits are often quite low (in some cases only $1,000 or $2,000).
- Bodily Injury Liability (BIL) – Bodily injury liability (BIL) insurance covers other drivers and passengers when the insured driver is at fault in an accident. This insurance covers all accident-related losses (including pain and suffering), and policy limits are typically much higher than PIP.
- Uninsured/Underinsured Motorist (UIM) – Uninsured/underinsured motorist (UIM) insurance provides the same type of coverage as BIL insurance, but it is insurance you buy to protect yourself in the event that an at-fault driver doesn’t have enough insurance (or any) insurance to cover your losses.
Why is knowing what type(s) of claim(s) you have important for deciding when to settle? The main reason is that different types of coverage generally have different policy limits. In many cases, the maximum amount you can recover will be determined by the applicable policy limit(s). So, for example, if your losses are $25,000, you do not want to mistakenly assume that you only have access to a PIP policy with a $10,000 policy limit. Likewise, if your losses are $100,000 and you have access to UIM coverage, you may be able to “stack” multiple UIM policies to secure full compensation even if each individual policy limit is only $30,000.
As you can see, knowing what type(s) of claim(s) you have is extremely important to answering the question, "When should you settle an accident claim?" If you don’t know what coverage is available to you, this is one of the first questions you will want to address with one of the accident injury attorneys near you.
Now, let’s say you have identified the coverage that is available to you, and you have filed an accident claim with your insurance company. When should you settle an accident claim, and what factors should you consider before you settle?
Factor #1: Your Financial Losses
The first factor to consider is the extent of your financial losses. If you have been seriously injured, these losses will fall into four main categories:
- Medical bills, prescription costs, and other costs related to your treatment and recovery
- Other out-of-pocket costs, such as transportation expenses and the cost of hiring a babysitter, nanny, landscaper, or cleaning service
- Loss of income, including all wages, salary, commissions, tips, and benefits you have been unable to earn as a result of the injuries you sustained in the accident
- Loss of future earning capacity for as long as you will either be: (i) unable to work at all, or (ii) forced to working in a lower-paying job due to a physical disability or chronic pain
Depending on the extent of your injuries and what you do for work, your financial losses could range anywhere from thousands to millions of dollars. Before you settle, you need to know both (i) how much your injuries have cost you to date, and (ii) how much more your injuries will cost you in the future.
Factor #2: Your Non-Financial Losses
The next factor to consider is the extent of your non-financial losses. While these losses are often broadly characterized as “pain and suffering,” there are several different types of non-financial losses that can – and should – be considered when negotiating a car accident insurance settlement. These losses include:
- Physical pain and suffering
- Emotional trauma (including post-traumatic stress)
- Permanent scarring and disfigurement
- Loss of enjoyment of life due to physical disabilities and/or emotional trauma
- Negative impacts on your relationships with your spouse, children, and friends
When it comes to calculating just compensation for non-financial losses, there are two methods, both of which require an in-depth understanding of the long-term effects of your injuries. In many cases, auto insurance companies will not include any compensation for non-financial losses in their initial settlement offers. Before you can answer the question, "When should you settle an accident claim?", you need to know what constitutes a reasonable amount of compensation for these losses, and you need to make sure that this amount is reflected in your settlement.
Factor #3: The Evidence of Liability
When deciding how much to accept for your auto insurance claim, you also need to consider the available evidence of liability. In other words, is it clear that the other driver was at fault? Or, is there some evidence to suggest that you may have played a role in causing the accident as well?
The more questions there are regarding liability, the less willing the insurance company will be to offer full compensation—because it will have a greater chance of winning if your case goes to trial. This is a key factor to consider when evaluating the question of when should you settle an accident claim.
For example, let’s say that you were hit head-on at an intersection, and there is traffic camera footage showing that the other driver ran a red light. In this scenario, there is strong evidence that the other driver’s insurance company is liable for your injuries. As a result, you should generally be less willing to settle for a low amount.
But, now let’s say that you were injured in a sideswipe accident on the highway. Both cars were speeding, and it is not entirely clear who was in a better position to avoid the collision. In this scenario, it may make more sense to accept a settlement—even if it is on the lower side—because you would have a greater chance of receiving a less-favorable result in court. However, as with all scenarios, you would want to consult with your accident injury attorney to make an informed decision.
Factor #4: The Offer vs. Your Losses
When you receive a settlement offer, you need to compare the offer to your losses. If the offer is equal to the amount of your losses, then it is a no-brainer to accept. However, the more the gap grows, the more difficult it will become to make a decision—until it gets to the point that it is a no-brainer to reject the offer and keep fighting for more.
Since calculating just compensation for non-financial losses is not an exact science, the amount you should be willing to accept will not be described by an exact dollar amount, but instead by a range. For example, rather than fixating on $100,000, a fair settlement might be anywhere from $90,000 to $110,000. While you can reject an offer that is within your range if you so choose, it will be important to understand that the risks of doing so might not necessarily be outweighed by the potential rewards.
Remember, once you reject a settlement offer, it is off of the table. You cannot change your mind. There are also additional costs involved in taking your case to court. So, while you might want to fight for more, this may or may not ultimately be in your best interests. As a result, when it comes to the question of when should you settle an accident claim, there is much more to consider than simply the dollar amount on the table.
Factor #5: Your Legal Costs and Fees
When you settle an accident claim, the amount you take home is not the entire amount of your settlement. The funds you receive will first be used to pay off any outstanding bills for which collection was put on hold, and then your legal fees and costs will be deducted as well. Costs will be billed at the actual amount your law firm incurred on your behalf (i.e. for hiring an investigator or paying filing fees), while your legal fees will be calculated as a percentage of your settlement.
In terms of when you should settle your accident claim, it is important to focus on the take-home amount. This could be somewhere in the range of 50% to 70% of the total settlement amount. Your accident injury attorney can tell you how much you will take home, and then you can decide if this amount is acceptable in light of the other factors we’ve discussed.
Factor #6: The Potential Benefits of Trial
If you do not ultimately accept a settlement offer, then the only alternative is to take your case to trial. While this will be a necessary alternative in some cases, in others it might not be worth it.
For example, let’s say you receive a settlement offer of $85,000, and you think your case is worth $90,000 to $110,000—as in our example above. If you go to trial, you might receive a verdict that is in your range, but:
- A favorable outcome is not guaranteed,
- It could take several months (if not a year or longer) to go to trial, and
- Going to trial increases your legal costs, and will typically increase your legal fees as well.
So, is it worth it? This answer is up to you. You will need to weigh your options carefully, and you will want to rely on one of the many experienced accident injury attorneys near you for guidance.
Factor #7: Your Goals and Preferences
The last factor we'll cover in this ultimate guide to, "When should you settle an accident claim?" is this: What are your goals and preferences? Are you set on receiving maximum compensation, no matter what? Or, are you willing to accept slightly less in order to resolve your case sooner and without the risks of going to trial? Everyone’s thought process will be different, and you will ultimately need to make a decision based on what you believe is best for you.
In addition to making sure you consider all relevant factors, you need to avoid considering irrelevant factors as well. This is a topic that often goes overlooked in discussions of the question, "When should you settle an accident claim?" For example, here are five issues that people often let cloud their judgment:
Non-Factor #1: Your Short-Term Financial Needs
If you are struggling to pay your bills, it will be difficult to pass up on a settlement offer that lets you get back on firm financial ground. But, when you have an accident claim, you need to make decisions with your long-term best interests in mind.
Unfortunately, the insurance companies know that accident victims are often in financial distress, and they try to use this to get accident victims to accept lowball settlements. Be patient, ask your accident injury attorney what options you have available in the short-term (i.e. a letter of protection or pre-settlement funding), and take the time necessary to obtain the full settlement you deserve.
Non-Factor #2: The Insurance Company’s Defense Tactics
In addition to trying to take advantage of your financial situation, your insurance company may try to use various other defense tactics as well. For example, it may make lowball settlement offers regardless of your financial situation, and it may try to blame you for your own injuries. You need to recognize these tactics for what they are – attempts to get you to settle for a fraction of what you are owed – and you need to avoid settling for too little because you misplaced your trust in your insurance company.
Non-Factor #3: Simply Receiving an Offer
When trying to answer the question, “When should you settle an accident claim?”, the answer is not, “As soon as you receive an offer.” While it can be exciting to receive an offer, you need to resist the temptation to simply say, “Yes.” You need to carefully evaluate the offer taking into consideration all of the factors we discussed above, and you need to make an informed decision based on whether the offer reflects just compensation.
Non-Factor #4: Concerns about “Losing” Your Settlement
When you are negotiating an insurance settlement, you need to avoid settling because you are concerned about “losing” your settlement. While it is true that you cannot change your mind once you reject an offer, it is also true that the settlement negotiations will generally continue—assuming you have an accident injury attorney representing you, and assuming your attorney believes that there is more on the table. Accident injury attorneys can help you understand when rejecting a settlement offer is likely to lead to litigation, and your attorney can help you make an informed decision about when you should reject an offer and when you should settle your accident claim.
Non-Factor #5: Other People’s Opinions
Finally, the decision to settle your accident claim is a decision that you need to make yourself in consultation with one of the many accident injury attorneys who are available to help you. When answering the question, "When should you settle an accident claim?", you should not rely on other people’s opinions. While your friends and family members may have the best intentions, the reality is that it requires in-depth legal knowledge to know when to settle, and this knowledge can only be gained by handling hundreds (if not thousands) of car accident claims.
When deciding whether you should accept a settlement offer, there are also some important facts you need to know about your insurance company. These facts are:
Fact #1: Your Insurance Company is Focused on Minimizing Your Recovery
Insurance companies are in business to maximize their profits, and they do not maximize their profits by paying more than necessary. When you file an accident claim, your insurance company has one goal: to get you to accept as little as possible. As a result, when deciding whether you should settle your accident claim, you cannot rely on the information your insurance company provides, and you cannot rely on your adjuster’s opinion. Instead, you need to make your own decision based on the advice of your accident injury attorney.
Fact #2: Your Insurance Company Does Not Have to Accurately Calculate Your Losses
When you have an accident claim, it is up to you to calculate your losses. While your insurance company has a legal obligation to handle your claim in good faith, this does not include calculating your losses for you. If you simply submit your medical receipts, the most you can expect to receive is reimbursement for your medical expenses.
In order to secure compensation for your lost wages, lost earning capacity, pain and suffering, and other losses, you will need to prove that you are entitled to this additional compensation. While there is no single "right" answer to, "When should you settle an accident claim?", one fact that is clear is that you should not settle until you have a clear picture of how much you are entitled to recover.
Fact #3: Your Insurance Company Wants You to Settle Before You Know How Much You are Entitled to Recover
Insurance companies will often offer settlements early in the process when an accident victim has suffered serious injuries. Is this because the insurance company is trying to be helpful? No. In fact, the truth is quite the opposite. The insurance company wants you to accept a settlement quickly so that you waive your rights before you know the full amount you are entitled to recover. Remember, once you accept a settlement your claim is over, and your insurance company will have every right to refuse to even consider a request for additional payment.
Given the importance of negotiating a fair settlement, it is extremely important that you rely on the advice of an experienced accident injury attorney. With this in mind, here are five questions you will want to ask before you decide whether to accept or reject a settlement offer for your accident claim:
- How much will I take home if I accept the insurance company’s settlement offer? When you accept a settlement offer, the amount you take home will be reduced based on your outstanding medical bills, your legal costs, and your attorney’s fees.
- Is this amount in the range of just compensation for my injuries? When should you settle an accident claim? When the amount of your settlement is in the range of just compensation for your injury-related losses.
- What are my chances of recovering more if I take my claim to trial? If you do not accept a settlement offer, then you will need to fight to win just compensation at trial.
- How much more can I reasonably expect to win if I go to trial? In order to decide whether it is worth going to trial, you need to know how much more you could potentially win in court.
- What are my chances of recovering nothing if I take my claim to trial? The outcome of trial is never certain, and you need to know the chances that you could end up with nothing if you do not accept a settlement.
Now, let’s take everything we’ve covered so far and apply it in some hypothetical real-world scenarios. Here are three examples of situations that are fairly common with car accident insurance claims. So, when should you settle your accident claim?
Example #1: You Receive an Offer in the Range of Your Total Losses
You were injured in a car accident; and, working with your accident injury attorney, you determined that your total losses are in the range of $50,000 to $60,000. You receive a settlement offer of $50,000. Should you accept?
This is a situation in which it would be perfectly reasonable to accept the offer. It is in the range of just compensation, so you are unlikely to recover much more (if any more) if you take your claim to trial. If it is early in the settlement negotiations, accident injury attorneys may advise that it is possible to secure a little bit extra, but you will need to decide if it is worth the risk to reject an offer that is reasonable under the circumstances at hand.
Example #2: You Receive an Unsatisfactory Offer, and Liability is Clear
You were injured in a car accident, and your attorney's investigation produced clear evidence that the other driver was at fault. There is plenty of insurance available to cover your losses, which total $50,000 to $60,000. You receive a settlement offer of $25,000. Should you accept?
In this scenario, you would most likely want to consider rejecting the offer. Not only is the offer low, but it is also not supported by the facts at hand. Your losses are significantly greater, and there is no question that the other driver was at fault. In consultation with your attorney, you would most likely conclude that you should keep fighting for more money.
Example #3: You Receive a Low Offer, But There are Questions Concerning Liability
This example is the same as Example #2, except it is less clear that the other driver was 100% at fault in the accident. So, should you accept the insurance company’s offer of $25,000?
In this scenario, you have a much more-difficult decision to make. The offer is less than the full amount of your losses, but it is also not entirely clear that the other driver is fully to blame. If you take your claim to trial, a jury could easily conclude that you are only entitled to recover a portion of your losses—so you might not end up with more than the insurance company’s offer. You have a tough decision to make, and you will want to take your time while relying on your accident injury attorney’s advice.