After you’ve been involved in an accident and have suffered injuries, you have two avenues through which to receive compensation from the negligent party: accept an out-of-court settlement, or begin the process of a lawsuit to collect damages. Usually, personal injury cases settle out of court before a trial has even begun. Even though a lawsuit may eventually result in a higher amount of compensation, there are several valid reasons to try to settle out of court first.
What is a Settlement?
A settlement is when the negligent party’s insurance company makes you an offer of payment either before a lawsuit is filed, or during a lawsuit, but before a verdict has been rendered. Occasionally a settlement is made after a jury begins deliberation, as either the plaintiff, the defendant, or both parties begin to get nervous about a potential negative outcome.
If a settlement is ultimately reached, the plaintiff must agree that they will not sue the defendant for damages related to this incident. To ensure this, the plaintiff must sign a release of liability before the insurance company issues the settlement check. How are Insurance
Companies Involved in Settlement?
When you’re injured due to someone else’s negligence, you bring a claim against the insurance company that represents the negligent party. Because the insurance company has the funds to pay out on claims and are well-aware of the costs involved in going to trial, they will almost always attempt to offer a settlement that will keep them out of the courtroom. This is the surest way the insurance company can maintain control over the situation, rather than letting a judge or jury decide, which will often result in a larger payout than attempting to settle out of court.
Why Do Most Cases Settle?
There are myriad reasons why a case would settle instead of going to trial. Control, cost, privacy – these all factor in when the insurance company decided to settle. Let’s look into it in more depth:
- Settling a case out-of-court allows the insurance company to control the risks involved and avoid expensive legal costs. If the defendant is, in fact, at fault and knows he or she is liable, he or she may not want to risk going in front of a sympathetic jury who will likely grant a large settlement to the plaintiff. This can be avoided by settling well before the case gets to the point of a trial.
- When it is a business or someone with a high public profile who is the negligent party, they may very well want to keep the case as private as possible to avoid any negative publicity. One way to accomplish this is to settle the case outside a courtroom. In addition, a company may write into the settlement a confidentiality agreement stating that nothing is to be said publicly regarding the case if the plaintiff accepts the settlement offer.
- A trial is a long, arduous process that can last for several months or even years. If the plaintiff is in need of compensation to pay off their medical treatment expenses and avoid financial ruin, they may opt to accept a settlement for a lower amount of money rather than waiting years for the often greater amount that would be awarded at the end of a trial.
- Opting to agree to a settlement ensures the plaintiff compensation for their damages. A trial by judge or jury may result in less compensation, or none at all if the attorney for the plaintiff can not convince the judge or jury that the defendant’s negligent acts were at fault for the accident that caused the damages
When a Settlement Won’t Work
There are also a few situations where a settlement simply isn’t going to happen. Some examples include:
- The defendant doesn’t offer a settlement, forcing the plaintiff to file a lawsuit to recover damages.
- A settlement is offered but is deemed insufficient by the plaintiff. The plaintiff can reject the settlement and file a lawsuit, or begin negotiations with the defendant.
- If punitive damages figure largely into the equation, the plaintiff may find the prospect of a lawsuit attractive because, in these cases, the awarded compensation is usually much higher than the actual monetary damages suffered.
Negotiation is almost always a possibility, and it is therefore wise for a plaintiff to submit their demand letter early on in the process. Negotiation is best accomplished by an experienced attorney skilled in the art and tactic of negotiations with insurance company adjusters. Here at The Sevey Law Firm, we focus solely on personal injury lawsuits, and we have decades of experience negotiating with insurance companies. We know how they work, and this enables us to obtain the most compensation for your damages.
Should You Accept a Low Settlement?
There are specific situations that would warrant accepting a lesser offer from the defendant. If you aren’t especially confident about proving fault in court, or your injuries weren’t that severe, you can accept a lesser amount in settlement rather than risking being denied any settlement at all. One thing the defendant will not do is pay out exorbitant settlement amounts for an accident resulting in minor injuries and few damages.
Another situation where you would accept a lesser settlement amount is when the settlement offered is close to the insured’s policy limits. The reason for this is that even if you went to court and were awarded a larger amount, you would likely have a problem collecting that amount if it exceeds what the insurance policy limits are for the defendant. As an example, let’s say the defendant’s insurance policy caps out at $30,000. You go to court and are awarded $150,000 from the judge or jury. The insurance company pays you the amount of the policy – $30,000, but then a judgement is placed against the defendant for the remaining $120,000. If the defendant has little or no assets, they won’t be able to pay that judgement, even if you garnish their wages or place additional liens against them. Taking these actions will cost you more money in court and administrative fees, and is often a lesson in frustration.
The wisest thing you can do to make sure you’re taking the correct action in your case is to consult with an attorney who solely practices personal injury law, such as the attorneys at The Sevey Law Firm. Call us today for your free, confidential consultation at (916) 788-7100, or contact us through our online contact page.