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How Do Car Accident Settlements Work?

About 38,800 people in the U.S. died due to car accidents in one recent year, according to the National Safety Council. Also, roughly 4.4 million people sustained injuries in car crashes that required medical treatment. Car accidents can be minor or very complex, depending on the specific circumstances. Regardless, car accidents are usually stressful incidents that can disrupt an injured person’s life temporarily or permanently.
People who sustained injuries due to the negligent actions of another driver may recover compensation for covering qualified accident-related expenses, such as:

  • Medical treatment expenses
  • Hospital bills
  • Lost wages
  • Property damage
  • Loss of earning capacity
  • Loss of companionship
  • Pain and suffering

They can recover compensation for these expenses and damages through a car accident settlement.

What Exactly Is a Car Accident Settlement?

A car accident settlement entails all the parties in the accident agreeing on a specific payout or compensation amount to cover expenses related to the accident. The settlement can happen without going to court, before a trial, or during an ongoing trial. Essentially, a car accident is a contract that states the liable party agrees to compensate the injured individual for losses incurred due to the accident and resulting injuries.
Done right, car accident settlements can save money and time for all parties involved. Rather than wasting weeks to months fighting it out in a trial and spending lots of resources, moving forward with a fair settlement is usually a better option than going to court. However, settlements will only work if all involved parties cooperate and reach a settlement agreement.
Note that auto insurance companies also offer car accident settlements directly to injured parties who don’t have legal representation. In cases like this, you have to keep in mind that you have the right to reject a low settlement offer, even if it means negotiating with the insurance company to come up with a fair settlement amount. You can also consider finding a car accident lawyer who offers free consultations to help you review the facts of your car accident claim.

What Happens During Settlement Negotiations?

After your lawyer establishes whom you can hold liable for the car accident and your injuries and how much compensation will be fair for all parties, your lawyer will then demand compensation from the liable party. Your lawyer may send the liable parties and/or their lawyers a demand letter detailing your claim and demands. Your lawyer may also choose to sue the liable party.
Once the liable party’s insurer evaluates your demand letter and responds to it, the car accident settlement negotiations will begin. Expect back and forth discussions between all parties everyone tries to come up with a fair settlement agreement. If the parties manage to agree to a settlement, negotiations will end, and you’ll recover your compensation.
On the other hand, if negotiations break down and the parties simply can’t agree on a settlement amount, you might consider alternative dispute resolution or mediation. If the parties still can’t agree, your lawyer may take your car accident case to court. Take note, though, that car accident claims rarely make it to court since settling is usually easier, more affordable, and less stressful for everyone.

How Much Money Can I Recover from a Car Accident Settlement?

Each car accident case will differ from one case to the next and comes with varying weaknesses and strengths. This means that the settlement amount will likewise vary greatly.
When estimating how much compensation is commensurate for your damages, your lawyer may consider:

  • The specific nature and severity of your injuries, which can include pain and suffering damages as well as any long-term effects on your life
  • Whether fault for the car accident is obvious or easily determinable
  • Whether the liable party is open to settlement negotiations

When receiving compensation through a settlement, you can receive it in the form of a structured settlement, annuity payment plan, or a lump sum. With a structured settlement, you’ll receive installment payments regularly over time. With a lump-sum payment, you’ll receive the settlement amount in its entirety. But there can be significant tax implications when receiving a massive amount of money. Your lawyer can advise you on the most cost-effective and tax-friendly option for you.

Be Extremely Cautious When Speaking to an Insurance Claims Representative

Following the car accident, regardless of whether you have a lawyer or not, the liable party’s auto insurance provider will most likely contact you and offer to settle your claim. This may tempt you, especially if you’re struggling to pay your bills. But you have to remember that the insurance company isn’t on your side. All too often, insurance providers, through an insurance claims representative or adjuster, will try to get injured victims to accept a fast but extremely undervalued settlement offer.
Accepting this offer will also mean that you’ll be waiving your rights to seek more compensation and sue the liable party when you realize that you didn’t receive a fair amount. Furthermore, accepting the low offer, particularly before you receive a long-term and more thorough prognosis for the injuries you suffered, would result in not getting the compensation amount that you truly deserve.
Instead, direct all discussions with the adjuster to your lawyer. If you don’t have a lawyer, consider contacting one that offers free case consultations so you can better understand your case before accepting anything from the insurance company.

When You Need a Lawyer for Your Car Accident Case

Tatiana Boohoff Managing Partner at Boohoff Law
Tatiana Boohoff, Car Accident Lawyer

Injured victims who recover from simple injuries typically can negotiate with insurance companies without any issues and legal representation. On the other hand, victims who’ve sustained potentially permanent and severe injuries such as spinal cord injuries, brain injuries, extensive scarring and/or burns, or injuries that need a long recovery or lifetime care will require the experience of a lawyer.
A car accident lawyer can review all the facts of your claim, explore your legal options, estimate the value of your claim, determine all liable parties, negotiate with insurance providers, and represent you in court, if necessary.

June 12, 2021

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The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.