Should I File a Car Accident Lawsuit?

Find out when filing a car accident lawsuit is a good strategy, why it's important to rely on your lawyer's advice, some of your alternative dispute resolution options, and more.

By , J.D. · University of San Francisco School of Law
Updated by Dan Ray, Attorney · University of Missouri–Kansas City School of Law

You were injured in a car accident, and you filed a claim with the other driver's insurance company. But settlement talks have stalled. You (or more likely, your lawyer) can't seem to settle the claim for what you think is a fair amount. Should you take what's being offered? Or does it make sense to file a personal injury lawsuit and go to court?

We'll discuss when filing a lawsuit might be a good strategy, analyze some "settle-or-sue" examples, look at alternative dispute resolution possibilities, and more.

Should You Settle or Sue After a Car Accident? The Offer-Versus-Value Balance

The "settle-or-sue" question usually boils down to money. More specifically, you have to navigate the delicate balance between what the insurance company is offering and what you (and your lawyer) believe your car accident case is worth. If your lawyer believes your case is worth significantly more than what the insurer is offering, and that it's unlikely the insurer will increase its offer in settlement negotiations, then it's probably time to file a lawsuit.

But how far apart do you need to be before filing a lawsuit makes sense? Car accident injury claims don't really have a specific value. In most cases, they fall within a range of possible values. It's at this point that you'll want to rely on your lawyer's expertise. Here's why that expertise is so important.

The value of your car accident claim includes compensation for general or noneconomic damages—things like pain and suffering, emotional distress, and loss of enjoyment of life. These damages simply aren't subject to exact calculation. So it isn't realistic to say that a claim is worth, for example, $50,000. Instead, it's more accurate to say that the value of the case falls into a range between $40,000 and $60,000.

When you think about the value of your claim this way, you get a better picture of what your car accident settlement goal should be. In a case that's worth $40,000 to $60,000, your goal should be to settle the case for somewhere in that range—hopefully towards the higher end.

Examples: When to Settle vs. When to Sue

Let's have a look at a few settle-or-sue examples.

If you and your lawyer value your car accident case at $40,000 to $60,000, and the insurer adjuster's settlement offer is $52,000, you take the offer and settle. That's an easy decision. If the insurer's final offer is $38,500, it probably makes sense to take it. It's close enough to your valuation of the case that going to trial isn't likely to leave you better off, dollar-wise. If the final offer is $20,000, that's also an easy decision. It's time to file a lawsuit.

Now for a harder example. Let's say the insurer's final offer is $30,000. In that situation, you're certainly justified in filing a lawsuit. The offer isn't close enough to your valuation of the case. Keep in mind, though, that if you sue, you most likely won't be able to talk settlement again for at least a few months. Once you file a lawsuit, the defense attorney will want to do some pre-trial investigation and discovery, and the insurer probably won't be interested in settlement discussions until its attorneys are ready to make a settlement recommendation.

Here's another important factor to consider. If you file suit, your lawyer's out-of-pocket expenses and case costs will start to increase significantly. The additional money you hope to get by filing suit needs to cover those costs and expenses and put enough money in your pocket to make a lawsuit worthwhile.

Let's look at one more example. Suppose that, pre-suit, your lawyer's costs are $1,000. With a $40,000 offer and a 1/3 contingency fee agreement, your lawyer's fee is $13,000. You'd net $26,000 from the settlement. You reject that offer and file suit. After a year of pre-trial investigation, the insurer's offer is up to $54,000, but your lawyer's costs have increased to $6,000. After deducting the 1/3 attorney's fee and case costs, your net recovery would be $32,000. Was it worth a year's wait to get $6,000 more? Only you can decide that.

So what's the takeaway? Because of the time and expenses involved in a lawsuit, odds are it only makes sense to sue if you and your lawyer feel that your claim is worth substantially more than the insurer's final pre-suit offer.

Alternatives to Filing a Lawsuit

If you're faced with the settle-or-sue decision, there are alternative dispute resolution (ADR) methods that can save you time and money and still improve your net recovery. Mediation and arbitration are two popular kinds of ADR.

Mediation involves voluntarily meeting with a trained mediator who helps the parties to "meet in the middle." But the mediator isn't a judge who decides the case. Instead, the mediator typically listens to brief opening statements from the parties and then separates them into different rooms. The mediator then shuttles back and forth between the rooms, encouraging the parties to adjust their positions and come to a settlement.

Arbitration, on the other hand, involves an agreed upon arbitrator (or panel of arbitrators) hearing evidence and deciding the dispute as would a judge. The arbitrator's decision is usually binding and can, if necessary, be enforced by a court.

Your Options for Going to Court

In most states, there are courts that decide lawsuits where the amount in dispute is relatively small. They're sometimes called "limited jurisdiction" courts because they only have authority to hear cases where the parties are fighting over a limited amount of money.

Small claims court. The best-known of the limited jurisdiction courts is the small claims court. In a few states, lawyers aren't allowed to appear in small claims court—the parties must represent themselves. Even in states where lawyers are allowed to appear, the small amount that's at stake probably makes hiring counsel cost prohibitive. The rules that normally apply in court tend to be relaxed. Think "People's Court" but with real judges and without all the made-for-TV drama, and that's small claims court.

How much can you sue for in small claims court? It depends on state law. The range is from a low of $2,500 in Kentucky to a high of $25,000 in Delaware and Tennessee. Most small claims courts cover claims up to several thousand dollars.

"Regular" civil court. If you want to recover more than the dollar amount that's allowed in your state's limited jurisdiction court, you'll have to file a lawsuit in the civil court for the state where the accident happened. The process here will be slower, more expensive, and governed by more rules than the small claims court. The tradeoff, of course, is that you can recover more money.

You're not required to have a lawyer represent you even if you file a lawsuit in regular court, but it's almost always a good idea. Complex rules of procedure and evidence apply. While most judges will cut self-represented parties a bit of slack, their patience will only go so far. Repeated errors can land you in hot water. If your claim involves anything more than very minor injuries, or if there are difficult legal or procedural issues involved, your best bet will be to have experienced legal counsel handle the case.

Your Lawyer's Opinion Is Key

When it comes time to decide whether a lawsuit is the right move in your situation, your lawyer's opinion should be a key factor in your decision-making process. Valuing a case may not seem like rocket science, but it isn't as straightforward as you might think. An experienced lawyer has handled dozens—perhaps hundreds—of car accident claims, has data regarding car accident case outcomes, and understands local claim valuation and settlement practices.

If you're ready to move forward with your claim, learn more about how an attorney can help in a car accident case. Here's how you can find a lawyer who's right for you.

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