Inside the Car Accident Settlement Process

How a typical settlement plays out after a car accident, at every step in the process.

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The accident settlement and compensation process begins when you gather information at the scene of your car accident, and it ends when you receive a check compensating you for your injuries and other damages. This article explains how a typical settlement plays out after a car accident, and what you can expect at every step in the process.

When do you present your claim? While you start gathering information after a car accident right away, you don't present that information to the insurance company and try to settle your claim until you completely recover from your injuries or your medical condition becomes stable. This is sometimes referred to as "maximum medical improvement," and it is, basically, a medical opinion. Your treating doctor will tell you when you reach "MMI." Of course, if your body disagrees with your doctor -- if you continue to have significant symptoms after your doctor says that you are at MMI -- you should return to your doctor for further treatment or seek a second medical opinion before you make your injury claim.

Why do you wait to present your claim until you recover or reach MMI? Because, when you settle your claim, you make a trade. The insurance company, on behalf of the driver who caused your accident, pays you money to compensate you for your various harms and losses, including medical bills, lost income and pain and suffering. In return, you sign a release giving up your right to make any more claims arising out of this accident. Obviously, you don't give up your right to make more claims until you know the full story of your injuries -- until you recover from your injuries or reach MMI.

Are there any deadlines?  Yes. Each state has a "statute of limitations" which establishes a period within which your car accident claim must be either settled or filed in court. If you cannot settle your claim and you file a case in court as little as one day too late, your case will be dismissed and you cannot re-file it. There are no excuses and very few exceptions.

Here's one more time limit trap to beware of. Before you can make a claim against a government -- a city, county, state government, the federal government -- you must comply with special requirements including such things as giving early notice of your claim (within 30 to 180 days) and giving notice and presenting your claim in very specific and precise ways.

What's the first thing you do to begin settlement negotiations? The first step is to submit a "demand package" to the insurance company for the driver that caused the accident. The settlement package includes the documents that you have gathered to prove your claim and a letter to the insurance company. In that settlement letter, you explain how the car accident happened, why their policyholder is responsible and all of the consequences of the accident -- all of the ways that the accident and your injuries have affected your life. You conclude by telling the insurance adjuster how much you will accept to settle your claim. This is known as your "demand." Your settlement letter must be well organized, thorough, authoritative and supported by evidence that proves what you are saying.

What happens after you send your demand package?  The insurance company reviews the information that you submit -- they call this "evaluating the claim" -- and then contacts you with its response. Some call you, others send a responsive letter. This could be a couple of days later or a month later. If you don't have a response in a month, contact the adjuster and find out why not. The insurance company's response to your claim might be that they don’t owe you anything. They might take the position that you have not proven your right to recover for your injuries. If this happens, contact a car accident lawyer in your area. Or, if "liability" is clear, the insurance company's response will probably be that they don't owe you as much as you have "demanded." The response definitely won’t be "how should we make out the check?" If it is -- if the insurance company accepts your initial demand -- you’ve probably asked for far too little. After the initial positions are staked out, there is normally a give-and-take, back-and-forth negotiation process. With preparation, patience and good luck, this process will lead to a car accident settlement.

What should you know about dealing with insurance claims adjusters?

One thing that can be said about all adjusters is that they don't work for you. It is not their job to educate you or to protect your interests. To the contrary, they are trained by their employer to give you as little of the employer's money as they can. They are commended when they settle a case for less than they were authorized to pay. Never lose sight of this fact, no matter how friendly the adjuster acts.

If you show the adjuster that you know what you're doing, that you know the settlement value of your claim and that you are willing to be patient, you have a good chance of settling your claim for a fair amount.

What arguments should you expect the claims adjuster to make to try to defeat or minimize your claim? The insurance claims adjuster's response to your claim will probably come from this list:

  • their policyholder was not negligent, and they owe you nothing.
  • you caused the car accident, and they owe you nothing.
  • you were a joint cause of the car accident, and they owe you nothing -- or they owe you less, depending on the law of your state.
  • there wasn't much damage done to the cars by the crash.
  • you were not hurt in the accident.
  • your injuries are the result of something else, such as a prior accident or pre-existing medical issue 
  • there is a "gap" in your treatment, where you went for a period without being treated.
  • you got too much medical care -- it wasn't all necessary.
  • you paid too much for your medical care -- the charges are not reasonable.
  • you haven’t proven that you had to miss work, or that you had to miss as much work as you did.

How do you respond to the claims adjuster's arguments?  If there is any evidence to support an argument, you will hear it from the adjuster. In support of arguments concerning the cause or severity of your injuries, the adjuster will often refer to your medical records. There's almost always something in your medical records they can rely on. For example, if you are over 25 or so, you probably have degenerative (aging) changes in your spine, so the adjuster may try to blame that fact for your neck pain. When these arguments are made, counter them with facts. Don't argue. Don't get angry. Just go back and point out the facts. Show that while their version is possible, it is far more likely that a judge or jury would believe your version.

How long does the negotiation go on?  There's no absolute answer to this question. It varies. But don't be in a hurry. Some lawyers won't settle a case until they have had at least three conversations (or exchanges of letters) with the claims adjuster. They think that the adjuster won't make their best offer before then. When an adjuster tells you they can't pay any more than what they’re offering, they may merely be testing you.

Is the settlement process the same in no-fault states? No. You only prove and recover medical bills, lost income and other financial losses. But remember that, even in no-fault states, there are circumstances under which you can make a claim against the at-fault driver. Therefore, even if your accident happened in a no-fault state, approach your claim the same way you would if your accident had happened in a fault state, because you may end up making a fault claim against the at-fault driver. Learn more about No-Fault Car Insurance and State Laws.

Updated by: , J.D.

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