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After an accident, you have only two choices to collect the damages- file a lawsuit against the persona at fault or negotiate and settle a claim outside of court. Though you might get more money if you file a civil lawsuit but it is a fact that most of the personal injury cases are settled even before a lawsuit is filed.
Settlement is considered to be when the defendant or his/her insurance company offers a sum of money to the victim to cover the medical and other costs. This is done even before the victim files a lawsuit as the chance of a potential claim can rise. Additionally, the settlement might be offered after the trial begins but there is no verdict given as yet. There have been settlements made after the jury is deliberating but the defendant is worried about the decision and offers settlement.
It is important to know that once you have accepted the settlement terms and payment has been made, you have to relinquish all claims and potential claims arising out of that specific accident against the defendant. A legal agreement or full liability release has to be signed by the plaintiff.
Role of insurance companies
Whenever insurance companies are involved in a personal injury case, settlements are sure to follow. The reason that insurance companies pay out for settlements is because the case going on trial, legal fees and dealing with the jury might be even more expensive. Additionally, there are other reasons including:
- Avoiding legal costs of a trial and risk control: If the defendant knows that he/she might get the liability and come off worse after the trial, settling the claim helps to stay on the right side of law. Offering a settlement helps to contain the amount to offer while the jury might settle a higher compensation.
- Stay out of public eye: This holds true in case of a celebrity or a large company. If it is a product liability claim, the company might want to contain the bad publicity about the product, instead of later dealing with loss of sales and negative publicity due to trial. Most of these settlements include a clause for confidentiality.
- Avoid the trial: As trials can last for years, settlements ensure that the plaintiff gets the compensation that they need for medical costs and other financial requirements. They cannot wait for the long trial and thus, agree to the settlement. Additionally the risk of losing out on winning the case remains.
Process of negotiations
Before you start the negotiation process, it is important to hire a personal injury lawyer so that he can negotiate on your behalf. This is essential as they are used to dealing with aggressive legal teams of insurance companies. In the first meeting, the adjuster and your lawyer will put forth the strength and weaknesses of the claim. The adjuster will give a lower amount as settlement as compared to the plaintiff’s demand letter. With two-three negotiations, an amount will be settled upon. After the legal agreements and procedures, the claim settlement is completed.