Out-of-court settlements are by far the most common resolution to personal injury claims. However, many people wonder: How will I know if the settlement offer is enough to fully compensate me for the expenses and impacts of my injury? What is a good settlement offer? Here is a look at what a fair settlement needs to cover and how an attorney can get the compensation you need through settlement negotiations.
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What Are Settlements?
According to the U.S. Center for Disease Control and Prevention’s National Center for Health Statistics, around 38 million people in the U.S. suffer injuries serious enough to require treatment in hospital emergency rooms each year. When these injuries occur as a result of someone else’s negligence, the injured party can seek compensation for the financial and psychological costs of the injury by filing a claim against a relevant liability insurance policy held by the at-fault party.
The policies that plaintiffs typically file personal injury claims against include:
- Auto liability insurance policies, which cover injuries resulting from the at-fault party’s negligence behind the wheel.
- Homeowners’ policies, which cover the homeowner’s liability if someone is injured as a result of a hazardous property feature or is bitten by the homeowner’s dog.
- Property liability policies, which are available to compensate injuries resulting from hazards on commercial or public properties.
- Medical malpractice insurance, which provides compensation to patients who are injured as a result of a healthcare provider’s negligence.
- Business policies, which cover physical harm incurred to individuals as a result of a defective product, foodborne illness, dangerous drug, or dangerous business practice.
Around 95 percent of all personal injury claims resolve by settlement, with very few claims resulting in litigation. A settlement is the provision of money for the claim in exchange for the claimant waiving the right to pursue the claim through a lawsuit. Most cases are resolved through settlement because litigation is expensive and time-consuming for all parties involved and can generate negative publicity for the defendant, depending on the facts of the case.
When Does a Settlement Occur?
A settlement offer can be made at any time during the claims process, from when the accident is reported to the at-fault party’s insurer until a judge or jury has decided on the matter in court. Many settlement offers come after the claimant’s attorney has valued and submitted the claim and supporting documentation to the at-fault party’s insurance provider. The insurance provider will assign a claims adjuster to the case.
The claims adjuster is an employee or contractor of the insurance company who is tasked with protecting their bottom line by determining:
The claims adjuster looks at the claim to save their employer money by offering as small of a settlement as possible. An experienced personal injury lawyer can negotiate on behalf of the claimant to convince the claims adjuster to increase their offer.
If the insurance provider is reluctant to do so, the claimant and their attorney can file the claim as a personal injury lawsuit within the statute of limitations. This allows them to put the case before a judge or jury and to have the court make decisions on matters regarding liability and the amount of compensation owed to the claimant.
The Type of Compensation That a Settlement Can Recover
Forbes Advisor explains that personal injury claimants often prefer accepting a settlement, as the amount offered is guaranteed to be received. Taking the claim to court presents risks for all sides.
Studies indicate that the median amount of a personal injury award is $31,000 for all types of cases. However, because there are so many different types of injuries and accidents, there really is no “average” settlement for a personal injury claim.
The types of compensation you can recover through a settlement include both the financial costs of the accident—which are known as economic damages—and the psychological impacts of the injury, which are called non-economic damages.
Some of the common expenses and impacts that appear in personal injury claims include:
- The cost of all reasonable medical expenses related to the injury the claimant incurred in the accident.
- The replacement of wages and other earnings lost when the claimant was too injured from the accident to work.
- The permanent loss of future earning capacity experienced as a result of catastrophic injuries that will impair the claimant’s ability to earn an income for the foreseeable future.
- The cost of property damage incurred in an accident, such as replacing or repairing a vehicle that a claimant was driving in a car accident case.
- Physical pain and suffering, emotional distress, inconvenience, loss of consortium, loss of the enjoyment of life, and other impacts the claimant has suffered due to their injury.
How an Attorney Can Get the Compensation You Need
A good settlement provides enough money to not only cover the expenses the claimant experienced or will likely experience in the future as a result of accident-related injuries but also helps to pay for the impacts of the injury, even after payment is made to the attorney for their services, and to any healthcare providers who have provided services in exchange for a medical lien against the settlement. A medical lien is a legal assertion to a portion of the award as payment for services provided to treat the injury.
There are several services that an attorney can provide to assist claimants in getting a good settlement for their case. Some of those services include the following.
Managing the Timing of the Claim
The ability to file a personal injury claim against an at-fault party’s insurance and receive compensation for that claim is provided only for a prescribed amount of time, known as the statute of limitations. The statute of limitations is the maximum time that the parties involved in a legal dispute have to file a lawsuit in court. State laws determine these deadlines, which vary depending on the state where the accident occurred. Most personal injury statutes of limitation range between one to five years.
Failing to file a lawsuit within the statute of limitations will not only result in the loss of the claimant’s ability to use the court process when seeking compensation for the claim but will also usually result in an inability to get the at-fault party’s insurance provider to offer a settlement as they are not legally required to settle expired claims.
Filing your lawsuit within your state’s statute of limitation is an essential requirement for receiving compensation. Your attorney understands the importance of this deadline and will ensure that a lawsuit is filed if the insurer is unwilling to make a fair settlement offer. Often, filing a lawsuit is a catalyst for more productive negotiations with the insurer, as they know the case will go to trial if they do not make a fair offer.
Valuing the Claim
An attorney will almost always wait until the claimant has reached maximum medical improvement before determining the value of a personal injury claim. Maximum medical improvement is when the claimant’s physician determines that they have likely made all meaningful recovery possible for their injury, even if they were to continue receiving treatment. They wait until this point to value the claim so that all expenses related to the medical treatment of the injury can be included in the claim’s value.
Properly valuing your claim by an attorney is a big step toward receiving a settlement that provides enough money to cover your expenses and impacts. It would be challenging to determine if a settlement is good without knowing the entirety of the costs and impacts the claimant has incurred or will likely incur in the future.
Because the value includes not only economic damages but non-economic ones, to determine the value you must calculate:
- The amount of insurance coverage the at-fault party has is available to cover the expenses and impacts of the injury.
- The severity of the claimant’s injury, as more severe injuries generally result in higher expenses and more psychological impacts for the sufferer.
- The presence of permanent injuries that will impact the claimant’s ability to earn an income in the future.
Negotiating With the At-Fault Party’s Insurance Provider
According to Lawyer Monthly, communication skills are one of the most important skills an experienced personal injury lawyer has. Your attorney is tasked with telling the insurance company the story of your accident, injury, and recovery.
They use teams of legal professionals to gather the extensive documentation necessary to prove the claim. Your attorney anticipates an initial offer from the at-fault party’s insurance claims adjuster and has the information ready to help show that a more significant offer is needed to compensate the claim fairly.
Providing Guidance for You
As noted, having a properly-valued claim is key to receiving a good settlement offer. Another vital element to a successful settlement is the claimant’s ability to understand how their case was valued to determine if an offer that has been made constitutes fair compensation for their claim. An attorney can do many things during the claims process to help the claimant as they seek the compensation they need.
However, one thing an attorney cannot do is make major decisions about the status of the case, such as accepting an offered settlement or filing a lawsuit. Those actions are reserved for the claimant. However, the attorney can help their client make informed decisions by ensuring that they understand the value established for their claim and how much is needed to fully compensate them for the expenses and impacts of the injury.
Can You Negotiate a Good Settlement on Your Own?
Many people consider personal injury lawyers an option if they don’t want to file the claim alone. Actually, the attorney has a much more important role than that. Many claimants would not have received as significant of a settlement or any settlement at all if they had not had an attorney to assist them in the claims process.
Some of the reasons you need an attorney to get a good settlement for your personal injury claim include:
- The claims adjuster works for the insurance company, and they’re protecting their employer’s interests, not yours. The adjuster can be the nicest person you’ve ever met, but their mission in the process is still in direct opposition to yours.
- The claims adjuster has an attorney to help them determine what they’re legally required to pay. If the case goes to court, they also benefit from an attorney to help them through the formal and confusing court process. Shouldn’t you have someone to help you navigate the process as well?
- The amount of evidence and documentation needed to prove a personal injury claim is overwhelming for most claimants. Attorneys have teams of legal professionals to assist them in gathering this information to prove your claim.
Personal injury lawyers work on a contingent fee basis, so there is no financial risk to hiring an attorney to help you with your claim. You only have to pay for your attorney’s services if your claim is compensated. Because of this, the question isn’t a matter of whether you can afford to hire an attorney. The question is: Can you afford not to?