What Is a Good Settlement Offer?

Most legal cases wind up in court on television and in the movies. In reality, however, most personal injury claims will resolve through settlements before they see the inside of a courtroom.

While a settlement agreement may bring many benefits, you need to ensure that it will cover not only the past expenses and impacts of your injury but those you will likely incur.

How do you know a reasonable settlement offer when you see it? An experienced personal injury attorney will give guidance based on many years of experience and a deep understanding of the laws that apply to your case.

One of the biggest decisions you will make is whether to accept a settlement offer.

What Is a Settlement?

Only about 4 or 5 percent of personal injury claims go to trial. The rest resolve before the trial date rolls around, often by settlement, where the claimant agrees to an amount of compensation in exchange for dropping all future claims against the defendant.

The personal injury claims process does not usually begin by filing a lawsuit but by presenting your third-party insurance claim to the at-fault party’s insurance provider in a demand package. The demand package details the facts of the case, documents your expenses, and demands payment of the claim’s value.

When the at-fault party’s insurance adjuster sees and reviews the claim, they have three options:

1. The insurance company admits to the insured’s liability and processes the claim for payment.
2. The insurance adjuster denies the claim and sends a notification to the claimant, including providing a reason for the denial.
3. The insurance adjuster admits to some liability of their insured but offers to pay less than the claim’s value.

If the insurance company admits to liability and pays the claim, your case resolves. If they deny the claim, you and your attorney will likely consider filing your personal injury lawsuit in court to pursue compensation through that method.

If the adjuster offers a settlement, however, this will often kick-start the settlement negotiation process in which your attorney will make counteroffers to the insurance adjuster’s proposed settlement until both sides agree on a fair amount.

Even when a settlement is impossible and a case proceeds to court, you should not assume that a judgment is necessarily the final word for recovering all financial compensation. This is because it may be possible for the insurance company to refuse to pay any money above and beyond what it must pay under policy limits. The defendant must pay anything additional personally. A defendant who lacks significant assets cannot pay much.

In such cases, victims may have to take dramatic measures to recover their awards, such as placing liens on a defendant’s assets or getting the defendant’s wages garnished. These measures still require additional court actions and will not necessarily be very effective when there is no money to recoup.

The Danger of Accepting an Early Settlement Offer

Insurance companies try to reduce or completely diminish what they pay for injury claims after accidents caused by their insured. One of the most common tactics they use is an early settlement offer.

Often, these offers will come quickly after the accident, sometimes even while the injured party is still in the hospital and before they even speak with an attorney. The offer usually comes with a great deal of feigned concern for the injured party’s well-being and under the guise of helping the victim obtain a quick resolution.

Unfortunately, as good as an offer can seem while a person is in pain and only beginning to realize the long road to recovery they face, accepting an early settlement offer without the assistance of an attorney is often a mistake.

These early offers rarely reflect the expenses and impacts of the injury you currently or will likely face. You may not know the cost of your injuries at this point in your recovery.

However, if you accept a settlement agreement and later realize that it was not enough, you cannot go back and ask for more. You need to understand the risks of drawing conclusions about permanent injuries or disabilities too early in the settlement negotiation process because you will presumably still be undergoing treatment and evaluation for the severity of your injuries.

It can be a mistake to accept settlements too early in the case because you need to know how long you will be dealing with your injuries and when treatment will finish before you can draw any conclusion. Accepting an early settlement offer often means that most people cannot obtain the full value of their cases.

Insurance companies may imply a “now or never” aspect to their initial settlement offers, but do not let them fool you. Every initial settlement offer is just the beginning of a lengthy negotiation process.

Any final settlement offers are final and binding, and many injuries cost far more than they initially appear. Furthermore, total accident expenses can be much more than just your out-of-pocket expenses, so you will want to be sure you have a lawyer on your side who knows how to correctly calculate your car accident settlement value.

The Danger of Rejecting an Early Settlement Offer

If the settlement doesn’t cover your expenses, you should reject it, right? No. Instead, speak with an attorney as soon as possible. Your lawyer can properly value your claim and present a counteroffer on your behalf.

Establishing a Value for Your Claim

We are often asked: What is the average settlement for a personal injury claim? In truth, no average applies to a settlement. Settlements depend on unique factors in the cases they resolve.

Some of the factors that can affect the value of your claim, and therefore the settlement offers you receive, include:

• The amount of the at-fault party’s insurance. Many personal injury claimants do not realize how big of a factor insurance is. Insurance pays nearly all personal injury settlements and court awards. While nothing prohibits you from filing a claim against an uninsured person and even obtaining a court judgment in your favor, most individuals cannot afford to pay someone’s accident expenses out-of-pocket.
• The severity of your injuries. More severe injuries will likely result in higher expenses such as medical costs and wage loss. They are also more likely to cause permanent disabilities with more quality-of-life impacts for the sufferer and a greater probability that the injury will affect the claimant’s future earning capacity.
• How much you earned at the time of the accident. While no life is worth more than another, the values of claims are determined based on the expenses and impacts you have suffered because of your injury. Your income before the injury determines some of the damages you can recover through the personal injury claims.

Economic Damages

In personal injury cases, damages refer to compensation for harm. Economic damages involve compensation for the expenses you incurred because of your injury.

Examples of the types of expenses you can be compensated for include:

• Wage loss resulting from being too injured to work.
• Medical costs include the cost of ambulance transport, emergency services, diagnostic tests, physician and surgical services, hospitalization, prescription medication, assistive devices such as prosthetic limbs or a wheelchair, physical therapy, and rehabilitation.
• Loss of future earning capacity.
• The cost of repairing or replacing damaged property, such as your vehicle.

Non-Economic Damages

Non-economic damages refer to the compensation you can receive for the psychological impacts of your injury. Non-economic damages refer to the intangible kinds of losses that you cannot quantify, so it is usually a jury who ends up deciding the value of these damages.

You can seek compensation for:

• Emotional distress, either from the trauma of the accident or the uncertain financial and physical circumstances an individual experiences after a severe injury.
• Physical pain and suffering because of the injury, medical treatments, or complications.
• Loss of the enjoyment of life if your injury prevents you from enjoying hobbies or activities that were important to you before the accident occurred.
• Loss of consortium, which is on behalf of the injured person’s spouse for the loss of physical companionship and intimacy that often comes after a serious injury.

How an Attorney Can Help You Get a Good Settlement Offer?

One of the most important skills an attorney brings to the table when working on your case is the ability to communicate. This helps you understand the process and the value of your claim. It also helps communicate the details of your case to the court or the insurance adjuster during settlement negotiations.

In addition to communication skills, your attorney can provide:

• The ability to properly value your claim gives you enough money to cover injury expenses now and in the future. The value also includes the psychological impacts of your injury and a percentage for your attorney’s services through the client-friendly contingent-fee billing method. There should be enough wiggle room in the overall value that your attorney can negotiate a settlement for less. You will still have enough compensation to cover your expenses and impacts.
• The experience to help you determine when to file a lawsuit. Personal injury settlement negotiations generally begin before filing a lawsuit, but they do not have to stop once you file. Settlement negotiations can continue until the court renders a decision. When negotiations stall, you often file a lawsuit, and filing can make those conversations start again. While insurance companies do not like to pay out on settlement agreements, they like a trial’s expense and uncertain outcome even less.
• Guidance as to what constitutes a fair settlement in your claim. The decision to accept a settlement offer is yours alone to make. However, your attorney has a wealth of information to consider, so you may feel confident in your decision.

One common insurance company tactic is to string victims along in personal injury cases by promising to work with them and then continuously delaying their handling of the case. This can become a major problem for people who invest hope in the insurer and do not realize until it is ultimately too late that they need legal representation.

Multiple studies prove that victims get more compensation if they have lawyers in personal injury cases, but their settlements will be much higher than handling cases alone. Most personal injury attorneys refuse to accept the first offer and spend time negotiating and pushing for the maximum amount possible.

One study by the Insurance Research Council (IRC) found settlements were 40 percent higher on average for people represented by attorneys compared to those who did not have legal representation. A separate study found that settlement payouts were about 3.5 times higher with legal representation than without it.

When you are seeking a settlement, you should enter negotiations with a specific settlement amount in mind that will be satisfactory. Do not disclose your intended settlement amount to the party you negotiate with.

You should also know the minimum settlement amount you will accept. Consider this a worst-case scenario if negotiations are proving to be unproductive.

When an insurance company makes an offer you believe is too low, you may ask why. The insurance adjuster can offer specific reasons why the company is lowballing you, and you can write down every reason and then respond to them in a letter to the insurer in which you possibly decrease your demands or justify them.

Consider the most emotional points of your injury, such as an inability to properly care for your child. Such non-economic damage factors do not have inherent financial value but still help make a compelling case for why settlements need to compensate people for these dramatic changes to their lives.

What Happens if the Settlement Isn’t Enough?

Settlement agreements are final and almost always include a provision that bars the claimant from seeking further compensation on the matter. Remember that virtually all insurance companies will use your desperate circumstances against you in negotiating settlement amounts. They may focus on covering your medical bills without mentioning the income you will lose or the cost of future medical care.

There can also commonly be issues with your claim possibly exceeding a negligent party’s insurance policy limits. In these cases, you need an attorney because you may need to file a lawsuit against the negligent party when their insurance policy does not provide adequate financial compensation to cover all of your losses.

Accident victims must not just think about their current bills. Many other bills can arrive later, when they need physical therapy, or a person will not return to their regular job and must accept a lower-paying position. When a person does accept a settlement offer too soon, they will not have many options to pursue further compensation, although there can be options in some cases.

Some victims can challenge the release given to the insurance company when they can prove that an insurer misrepresented the effects of the release, misrepresented the terms of the policy, or did not pay the settlement after a victim signed the release. In certain other cases, victims can file lawsuits against other negligent third parties involved in their cases.

How Long Does It Take to Obtain a Settlement Agreement?

As previously mentioned, it is not difficult to obtain a settlement offer, and in cases where liability is clear, these offers are often made very quickly after the accident. However, obtaining a reasonable settlement offer that fairly compensates you for the expenses and impacts of your injury can take a while.

Another common tactic of insurance companies seeking to avoid a big payout is to wait the claimant out by failing to budge on an offer that the client or their attorney deemed insufficient. The idea is that the claimant will get desperate enough for any amount of compensation that they will agree to the settlement.

Settlements can be made at any point until the court decides the matter. In other words: Obtaining a reasonable settlement agreement can take time. Usually, clients who understand the process and the value of their claim and will remain patient through negotiations obtain a higher settlement than what they will have if they rush to resolve the case.