How Are Car Settlements Paid Out?

Most car accident cases are resolved before trial through settlement negotiations between the injured party and an insurance carrier.

Discover more today about how car settlements are paid out, how long settlement takes, and what variables influence the overall settlement amount.

What’s in This Guide

    All car accidents are different, and the amount of your settlement will reflect the unique circumstances of your case.

    Damages can be broadly categorized as follows:

    • Economic damages
    • Non-economic damages

    Economic damages

    Economic damages are all expenses and losses related to the accident that you can quantify and prove. Receipts, bills, and other documentation can be used as evidence.

    As well as ER bills, time off work needed for medical treatment or recuperating after the accident are also classified as economic damages.

    This class of car accident damages includes:

    • Medical expenses
    • Cost of repairing or replacing
    • Loss of wages
    • Loss of future earning capacity

    Medical expenses

    If you are injured in a car wreck, you can expect any or all of the following medical expenses:

    • Ambulance ride
    • Emergency care
    • Hospitalization
    • Surgery
    • Medication
    • Therapy
    • Doctor’s appointments

    Retaining a car accident attorney can help you to access the medical care you need without paying out of pocket. An attorney can provide you with a letter of protection, a legal document guaranteeing that medical providers will be paid once you obtain a personal injury settlement. Alternatively, you can claim reimbursement for any medical bills you pay upfront by including them in your case.

    Cost of repairing or replacing

    If your vehicle is damaged, you can choose a suitable auto repair shop for any necessary repairs. Do not allow a third-party like a claims adjuster or tow truck company to pick a repair shop on your behalf.

    In car accidents where your vehicle is totaled, you’ll be entitled to compensation amounting to the present market value of the vehicle.

    You can also claim compensation for any personal items like cell phones or cameras damaged in the accident.

    Loss of wages

    When you are injured in a car accident, you are liable to need time off work. Keep any letters from your employer along with timesheets and pay stubs so you can verify how much you usually earn and how much work you missed after your car accident.

    Loss of future earning capacity

    If the injuries you sustain in a car accident mean you cannot perform your role at work or you need to reduce your responsibilities, you could be entitled to compensation for lost earning potential.

    Other accident or injury-related expenses

    Any other damages for which you can provide documentation can be classified as economic damages.

    Non-economic damages

    Unlike economic damages, pain and suffering does not leave a paper trail of proof. Just because it’s challenging to put a price tag on emotional distress triggered by an auto accident, that doesn’t mean this aspect of your claim is less valid.

    You are only eligible for non-economic damages to cover the emotional component of an accident and injuries if you can prove you were hurt in the accident.

    Non-economic damages include the following costs:

    • Pain and suffering (mental and physical)
    • Victim’s loss of enjoyment of life and damage to relationship
    • Life difficulties resulting from the accident

    Settlement Negotiation Process

    Settling a car accident claim ideally involves resolving the dispute before it reaches trial. Most cases are resolved pre-trial, meaning you don’t need to take a chance on obtaining a favorable outcome in a jury trial.

    Filing an insurance claim allows you to recover damages for medical bills, lost wages, and the pain and suffering you experience as a result of your car accident.

    You must gather all the evidence and information necessary to support the claim. This includes:

    • Medical records
    • Medical treatment receipts
    • Medication receipts
    • Photos
    • Written witness testimony

    With all this documentation in place, you need to draft a demand letter to the insurance company with the following information included:

    • Statement of your claim
    • Explanation of your injuries
    • Summary of the damages you want to recover

    You send this demand letter to the insurance carrier. The claims adjuster then investigates your case and either accepts or denies the claim.

    If the insurer accepts the claim, they will make a settlement offer. The initial offer is typically low, so be prepared for some negotiation between your attorney and the insurer to achieve a fair and reasonable settlement.

    If the insurer denies the claim, you will have an opportunity to appeal to the claims adjuster.

    Timeline for Settlement Process

    Some car accident claims are resolved in a matter of a month while others drag on for months, even years.

    Different states have different statutes of limitations – limits on when you are legally entitled to file an injury claim. This could be anywhere from one year to six years in the case of car accident injury claims.

    The more complex the case and the more serious the injuries, the longer it is likely to be before you receive compensation.

    What Variables Influence the Amount of a Car Settlement?

    There is no one-size-fits-all solution for car accident settlements. Even if you suffer the same type of injury as someone else, the following variables will all likely differ:

    • Length of time spent in hospital
    • Impairments (physical, cognitive, and behavioral
    • Time required for recovery
    • Disrupted ability to work
    • Types of therapy required during rehabilitation
    • Permanent disability
    • Scarring
    • Emotional impact

    Beyond the way in which your body responds to the injury, these factors can all impact the amount of your settlement:

    • Total amount of bills
    • Your salary
    • Expert testimony
    • Number of at-fault parties
    • Policy limits
    • Scope and severity of injuries
    • Treatment gaps
    • Length of treatment
    • Legal fees
    • Statute of limitations

    [LEARN MORE]: Do I Need to Pay Tax on a Car Accident Settlement?

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