How Much Should I Settle for Following a Car Accident?

Contrary to how most legal processes are portrayed in movies and on television, the truth is that most personal injury lawsuits never see the inside of a courtroom.

Litigation is expensive and time-consuming for all parties, including the claimant and their legal team, the defendant and their legal team, and the courts themselves. Because the financial and time demands of litigation are so severe, settlement negotiations can begin as soon as the insurance adjuster receives a demand for the value of the claim and can continue after filing a lawsuit. If the parties don’t agree when the trial begins, they can still settle.

Suffice it to say, settlement negotiations are a major part of seeking compensation after being injured in a car accident caused by someone else’s negligence. To determine how much to settle for, consider the following.

What Is a Settlement?

As explained by the American Bar Association, settling a case means that you agree to accept a monetary amount in exchange for dropping your legal claim against the at-fault party’s insurance provider.

As noted, the settlement negotiations process generally begins before you file your claim in court. Your attorney will send the at-fault party’s insurance provider a demand package with details of your claim, documentation of expenses, and a demand for the full value of the claim.

Claims are valued based on the expenses and impacts you incurred. Expenses that make up the economic damages portion of your claim include medical costs, wage loss, loss of future earning capacity, and the cost of repairing or replacing the vehicle you were driving when the accident occurred.

You can also obtain compensation for the impacts on your quality of life caused by your injuries, such as pain and suffering, emotional distress, permanent disability, and loss of the enjoyment of life.

Why Not Just Go to Court?

Once again: Litigation is expensive. In addition to the expense of litigating your case, there are many other reasons why attorneys seek settlements, insurance companies offer them, and personal injury claimants accept them.

These reasons include:

  • Control over the outcome of the claim. If the case goes to court, control over whether the at-fault party will be found liable and the amount of compensation you receive will be left to a judge or jury to decide. A negotiated settlement is a contractual agreement that seeks to satisfy the needs of both parties, with each side having a say in how to resolve the claim. A settlement agreement is only complete if all parties have signed off that they agree to its provisions.
  • A quicker resolution. Even when insurance companies choose to drag their feet about entering serious negotiations, the resolution to a case through a negotiated settlement still tends to occur quicker than one that litigation decides.
  • No appeals. Unlike a decision from the court, which both sides can appeal, a settlement represents a final resolution to the claim, including a firm statement within the settlement that releases the at-fault party from any future liability.

Is There Ever a Reason to Reject a Settlement Offer?

In a word: Yes. However, we need to follow that with an equally important statement: Do not reject a settlement offer without the assistance of an attorney.

Why should you only reject a settlement offer with the assistance of an attorney? Because if you firmly reject the offer, the insurance provider is not obligated to make a follow-up offer.

An experienced attorney can review the offer to determine whether it will fairly compensate you for your injury. If, after receiving guidance from your attorney, you decide that the offer is not enough, your attorney will not outright reject the offer, but will instead make a counter-offer and continue negotiating until the insurance company agrees to sufficient compensation.

This preserves your right to continue seeking a fair settlement, and the right to file a lawsuit against the insurance company for non-payment of a valid claim.

Factors That Can Affect the Value of Your Claim

One question our clients most often ask is: “How much is the average settlement for a car accident?” To be clear: There is nothing average about a car accident settlement

Settlements in personal injury cases represent factors unique to that case, including:

  • The amount of insurance that the at-fault party has. The most important factor in any settlement generally isn’t the severity of the injury or the defendant’s recklessness. It’s insurance. Insurance pays nearly all car accident injury claims. The pockets of an at-fault driver are rarely deep enough to compensate for accident injuries outside of insurance and—because it isn’t illegal to go into debt in the U.S.—it is extremely difficult to collect compensation from an uninsured driver.
  • The severity of your injury. No, this isn’t a more important factor in valuing your claim than the presence of available insurance policies, the severity of your injury is still a major consideration in your claim, as more severe injuries have a higher likelihood of a higher level of medical treatment, resulting in a longer absence from work and even a higher risk of permanent disabilities that will impact your ability to earn an income, and higher levels of emotional impacts such as pain and suffering. In other words: the severity of your injury impacts all categories of compensable damages.
  • The clarity of liability. For the most part, personal injury claimants can assume that the at-fault party’s insurance adjuster will attempt to reduce the liability of their insured by shifting blame for the accident onto the victim. They will question previous medical histories, social media posts, and even a claimant’s response of “fine” to an insurance adjuster asking how they’re doing.
  • How patient you are. In many personal injury cases, the claimant’s attorney is in the process of negotiating a settlement for almost the entirety of the case. While it is not necessarily difficult to garner a low-ball settlement offer from the insurance company, particularly early into the case before you have had a chance to speak with an attorney, negotiating a settlement that fairly compensates you is typically a different animal. A common insurance company tactic to reduce or eliminate payouts on injury claims involves waiting out the claimant by failing to make a fair offer while hoping that you will become desperate enough to accept the lower offer.

How Much Should You Settle For?

In short, you should settle for an amount that fairly compensates you for your injuries.

Fair compensation includes:

  • Payment of your past, current, and future medical expenses, such as the cost of ambulance transport, hospitalization, physician services, surgical services, diagnostic labs, imaging scans, hospitalization, prescription medication, physical therapy, rehabilitation, and the provision of devices or services to accommodate your injuries, such as a wheelchair or the cost of hiring a nurse to help with your care after you return home.
  • Payment for all wages and other benefits you lost as a result of being too injured to work.
  • Payment for the wages and benefits you would have likely earned through your career if your injuries result in permanent disabilities and you are no longer able to earn an income.
  • The cost of repairing or replacing the vehicle you were driving when the accident occurred.
  • Reasonable costs associated with the quality-of-life impacts you experienced as a result of the accident such as pain and suffering or emotional distress.

Your attorney will generally value your claim high to give you ample room for the insurance company to negotiate and still provide you with enough compensation to cover your expenses and impacts.

How to Help Your Attorney Garner the Best Settlement in Your Case

Even though your attorney will almost exclusively negotiate your car accident settlement, the decision to resolve your claim through a negotiated settlement is yours alone.

You can help obtain the highest amount of compensation available through your settlement with these actions:

  • Obtaining as much evidence as possible to support your claim. This includes evidence from the accident scene, such as information about the other driver’s insurance, contact information from anyone who witnessed the accident, the name and badge number of the officer(s) who investigated the accident, photos of the accident scene such as any visible injuries incurred by you as well as all visible damage to all vehicles involved.
  • Seek medical attention. Even if you do not feel like your injuries are serious enough to go to the hospital, get a thorough medical evaluation after an accident to 1) Ensure that you do not have serious injuries with delayed symptoms that can result in an emergency if left unmonitored; and 2) Protect your right to compensation by providing documentation of injuries that you need to prove your claim.
  • Report the accident to your insurance provider. While it might seem as though reporting an accident to your insurance provider even though you intend to file a claim against another driver’s insurance policy won’t impact your settlement, think again. Your auto insurance generally requires you to report the accident, and failing to do so can result in a loss of insurance coverage, thus depriving you of a second option for seeking compensation. By reporting the accident to your insurance, you also protect your claim, should the at-fault party attempt to seek compensation from your insurance provider under the guise that you were liable. Additionally, reporting the accident to your insurance provider gives you yet another important piece of documentation for proving your damages.
  • Be truthful with both your doctor and your attorney about any pre-existing conditions you have. However, don’t talk to your doctor about your legal claim, as doing so can result in the doctor mentioning it in their notes, which the insurance company will see.
  • Do not sign any settlement offers until you have spoken with an attorney and they have had the chance to properly value your claim. Settlement offers are final. If you sign an agreement, you will usually be bound to the terms of that agreement and barred from seeking additional compensation if you later discover that what you received wasn’t enough.
  • Never release your medical records to the insurer. There are limited circumstances in which the insurance company needs to see your records, and your legal team will be aware of those circumstances and will let you know when they arise. However, carelessly authorizing the release of all medical records pretty much ensures that the insurance adjuster will be picking through those records in search of a reason not to compensate you.

Prepare for your case to go to court, and make sure you have an attorney comfortable with litigation. Only 4 to 5 percent of all personal injury lawsuits ever go to trial. However, there are no guarantees that you will be in the majority. Further, not all lawyers like litigation, and many will only accept cases they believe they can settle. Hire an attorney who is equally comfortable fighting for your compensation in the courtroom or through settlement negotiations.

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