Should I Accept a Settlement Offer from the Insurance Company?
After an accident or injury, the at-fault party’s insurance company might contact you regarding a personal injury claim. The insurance company might offer to settle your personal injury claim. If you have been out of work and medical bills are piling up, it might be tempting to accept a settlement offer from the insurance company.
However, most settlement offers from insurance companies made directly to the victims are not for amounts equal to the actual values of the claims. The insurance company is attempting to settle a claim that it knows could be worth more before you have the chance to talk with a personal injury lawyer.
Before you accept a settlement offer from an insurance company, it is important to know three important things about settlement offers:
- If you accept the settlement offer, you give up your legal right to pursue any further claims related to your injury
- You release all parties, known and unknown, who might have any liability for your injury claim
- You cannot demand more money in the future, even if you discover additional injuries or damages
It is always a wise decision to have a personal injury lawyer review the settlement offer before you enter a settlement agreement. You want to ensure that you are doing what is in your best interest and not what is in the best interest of an insurance provider.
Most Personal Injury Cases are Settled Out of Court
Settlement offers are common in personal injury cases. Insurance companies understand that they are liable for claims when their insured is at fault for an accident or injury. That applies whether the injury is related to a slip and fall accident, defective product, motor vehicle accident, or medical malpractice.
The insurance company analyzes the claim to determine whether it is more cost-effective to settle the claim or take the claim to court. In most cases, it is less costly for the insurance company to settle disputed claims than to pay the expense of a trial, which could lead to a higher jury award for the claim.
However, that does not mean that you should always accept a settlement offer from an insurance company. Insurance companies use a variety of tactics to undervalue injury claims. Some insurance companies cross the line into bad faith insurance practices to save money.
Four Things to Consider Before Accepting a Settlement Offer From an Insurance Company
If an insurance company offers to settle your personal injury claim, consider these four things:
Have You Completed Medical Treatment?
If you have not completed medical treatment, you do not want to accept a settlement offer. Until your doctor releases you from care, you cannot be sure of the extent of your injuries and damages. You do not know the total amount of your financial losses, nor do you know if a catastrophic injury caused a permanent impairment.
Insurance companies often issue quick settlement offers to victims that are not represented by an attorney. The company hopes that the victim accepts the settlement offer before the victim understands how much the personal injury claim is worth. Once you agree to the settlement, you cannot go back for more money.
Could You Be Partially Liable for the Cause of Your Injury?
If you could be partially liable for the cause of your injury, a jury award for damages could be reduced by your percentage of fault. The Texas comparative fault laws state that a victim’s compensation is reduced if the victim contributed to the cause of the injury.
For example, you were texting while driving when a drunk driver slammed into your vehicle at an intersection. Even though you had the right of way, the insurance company claims that you were distracted at the time of the car accident, thereby contributing to the cause of the crash.
If a jury agrees with the insurance company, it could find that you were partially at fault for the cause of the wreck. The jury must then decide what percentage of fault to assign to you. If the jury decides you were 51 percent or more at fault, you cannot recover any money for your injury claim.
However, if the jury decides you are less than 51 percent at fault, your compensation is reduced by the percentage of fault assigned to you by the jury. Suppose the jury decides you were 40 percent responsible for causing the accident, your compensation is reduced by 40 percent.
If there is a chance that you could be partially at fault for the cause of your injury, your lawyer may advise that you accept the settlement offer. The offer might be favorable given the chance that you could lose a substantial amount of money if you go to trial.
Does the Settlement Offer Compensate You for all Damages?
An insurance company might try to reduce compensation for some damages to save money. For example, it might agree to compensate you for all lost income and medical costs, but it may try to undervalue your pain and suffering damages.
Calculating the value of non-economic damages is much more complicated than placing a value on economic losses. Many insurance companies use a multiplier for calculating pain and suffering damages.
The company chooses the lowest multiplier to reduce the value of the claim.
A personal injury lawyer understands how to value all damages correctly in a personal injury case. An attorney can review the settlement offer to ensure that you are receiving compensation for all damages, including but not limited to:
- The cost of medical care and treatment
- Personal care costs and in-home health care costs
- Out-of-pocket expenses, such as travel costs and help with household chores
- All losses of income and benefits, including wages, bonuses, salaries, and commissions
- Future damages related to a permanent impairment or disability, including decreases in earning potential and future medical or personal care
- Pain and suffering, including your physical pain, emotional distress, and mental anguish
- Loss of quality of life or enjoyment of life
If a settlement offer from an insurance company does not compensate you fully for all damages, you want to negotiate the offer for a higher amount. In many cases, the insurance company expects you to make a counteroffer and is willing to pay a higher amount to settle the claim.
Is the Statute of Limitations About to Expire?
The statute of limitations or deadline for filing personal injury lawsuits in Texas is generally two years after the date of injury. The deadline could be shorter if a government entity is involved. In some cases, as in the case of minors, the deadline for filing a claim could be longer.
If the statute of limitations is about to expire, you might want to consider the settlement offer seriously. You must decide if you want to accept the offer or proceed with a personal injury lawsuit. Because you lose your right to pursue a legal remedy if you miss the filing deadline, you might need to act quickly.
Talking with a lawyer as soon as possible after an injury or accident is generally in your best interest. A lawyer can protect you from aggressive insurance adjusters and bad faith insurance practices designed to cheat you out of the money you deserve after an injury.