How Do Car Accident Settlements Work?

Car accidents can be disruptive and devastating. You could end up with your mobility and earnings impact, sometimes long-term. If someone else was responsible for causing your injuries, you could be entitled to recover compensation for your expenses and losses.

When you are injured in an auto accident caused by another party, you are legally entitled to compensation for damages. When you file a car accident claim, you can recover compensation for the following:

  • Medical bills, present and future
  • Repair or replacement of vehicle
  • Loss of earnings
  • Pain and suffering

Today’s guide will help you discover more about how car accident settlements work, and how you will get the compensation you deserve.

In This Guide:

    What is the Settlement Process for a Car Accident Claim?

    Car accident settlements follow the same basic steps as follows.

    Filing a Personal Injury Claim

    If the other motorist is at-fault for the wreck, they will be legally liable for all your damages. These could include:

    • Medical expenses
    • Lost wages
    • Loss of earning capacity
    • Vehicle repair costs
    • Disability benefits
    • Pain and suffering
    • Loss of enjoyment of life
    • Mental anguish

    While the at-fault driver may have been responsible for the accident, you will typically receive payment for your damages from their insurance company. This means you will need to file a personal injury claim with the insurance carrier rather than the motorist.

    You should file a claim as soon as possible after suffering injuries in a car accident. The statute of limitations for auto accident claims varies from state to state, so you should consult an experienced car accident injury attorney. They can not only guide you through the claims process, but there is also a strong chance they will help you achieve a superior settlement.

    Investigating the Accident

    After you file your claim, the insurance company of the at-fault driver will start investigating the accident. The insurance company will try to pay as little as possible for the claim, and they may use aggressive tactics to pressure you into accepting a lowball initial offer. Avoid the temptation to comply with an unreasonable offer.

    You should not sign any documents from the insurance company, and you should not give them any statements without first speaking to a car accident lawyer.

    Once you have retained an attorney, they can help you investigate the accident and build a strong claim. Vital steps include:

    • Tracking all expenses
    • Photographing your injuries and the accident scene
    • Obtaining a copy of the police accident report
    • Getting medical care for your injuries
    • Gathering the contact details of all witnesses

    Claim Approval or Denial

    After the insurance claims adjuster finishes investigating your claim, they will issue an approval or denial letter.

    When insurers deny personal injury claims, this typically occurs for one of two reasons:

    1. Errors in the claim
    2. Accident not covered by their policy

    In the event of your claim being denied, you should receive an explanation. Your attorney will explain what steps to take next. One option is to file a lawsuit – more on this below.

    If the insurer approves your claim, they agree that your damages are covered by one of their policies. This does not automatically mean they will also agree to paying you fair compensation for your injuries and losses.

    Seeking a Fair Settlement

    Most insurance companies send a lowball initial settlement offer after accepting a personal injury claim. You are not obliged to accept any offer. You have the legal right to negotiate for fair compensation relative to your injuries and costs.

    An experienced lawyer will have more chance of negotiating a fair settlement with an insurance claims adjuster than you. Also, the contingency basis of fees means you won’t pay anything upfront, and you won’t pay any legal fees unless you win your case. The nature of contingency fees means your lawyer will be highly motivated to get you as high a settlement as possible as quickly as possible.

    What Can I Do If the Insurer Will Not Agree to a Settlement?

    In some cases, a claims adjuster will not move upward from a low initial offer, even after negotiations with a skilled attorney representing your claim. You have options if this happens.

    Mediation Meeting

    Mediation involves meeting with representatives from the insurer in the presence of a third-party mediator. The mediator does not attempt to influence the decision, merely to help both sides reach an agreement.

    Your lawyer can attend mediation with you.

    If this meeting is successful, you will finalize a settlement value. When you accept this offer, you will sign a release of liability, meaning you forfeit the future right to sue for damages pertaining to this accident.

    Filing a Lawsuit

    If you cannot reach a fair settlement agreement with the insurer even after mediation, your attorney may advise that you file a lawsuit. This can be costly and time-consuming, but it is also sometimes the best remaining option.

    How Can I Collect My Auto Accident Settlement?

    In most cases, the insurance company will write a check for the settlement amount when you sign the release. Typically, payment is made to your attorney. The lawyer then deducts a percentage as their fee before sending you the remainder of the settlement, minus any medical liens in place.

    If the case goes to trial, the outcome will depend on whether the at-fault driver was insured, or whether they have the money to pay what you are owed at once.


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