Rear-End Car Accident Settlements

When resolving your rear-end car accident claim out of court, here's what to expect in terms of the settlement process and the insurance company's valuation of your injury claim.

If you were hit in a rear-end accident, it's very unlikely that your case will go to trial, and there's a decent chance a car accident lawsuit won't even be filed. The majority of car accident claims -- and almost all rear-end collision cases -- are settled out of court. In this article, we'll take a closer look at what to expect when it comes to settlement of a rear-end accident claim, including key factors that typically determine claim value.

When to Begin Settlement Discussions

As a general rule, you never want to discuss settlement of a car accident claim until you have either:

  • finished your medical treatment, or
  • are very close to completing treatment.

You want to be very close to your medical end result (also called "MMI" or "maximum medical improvement") before making a demand. This is because, until you have finished your treatment and know whether you have fully recovered or not, you and your lawyer cannot determine what your damages are.

So, soon after you have finished treating for your injuries, you or your lawyer will send a demand letter to the other driver's insurance company. Don't be surprised if it takes the insurance adjuster a month or two to respond, but once the other side does come to the table, then the real negotiating can begin.

If your case is a larger one (meaning car accident injuries are significant), then your lawyer may be unable to settle it without filing a lawsuit. But rear-end collision cases are generally easier to settle than other types of car accident claims, simply because liability is usually not an issue (any contentiousness will typically be over the scope and severity of injuries).

Depending on the specifics of your case, your lawyer may not bother with a demand letter. Many lawyers just call up the defense attorney to discuss settlement, especially if they know each other. The lawyers will then go back and forth until they reach an agreement (assuming they can in fact agree). But if the defense attorney thinks that a demand is too high, he or she may simply ignore the demand or say that it's too high to merit a counteroffer.

How are Rear-End Collision Settlement Amounts Determined?

As with any car accident case, rear-end accident claim value is based on the amount of damages the injured person has sustained. "Damages" is another way of saying "losses," monetary and otherwise.

There is no strict formula when it comes to figuring out how much a settlement is worth in a rear-end car accident case. But in practice, insurance companies calculate the value of car accident settlements based on two main factors.

First, the dollar value of all economic damages is determined -- including medical bills, lost income, rehabilitative care costs, and other definitive financial losses incurred by the victim as a result of the auto accident.

Next, the amount of non-economic damages is assessed (this category of damages includes pain and suffering), usually by multiplying the economic damages figure by a multiplier of between 1.5 and 5; perhaps using a multiplier of 2 for minor injuries, and a multiplier closer to 5 (and maybe even higher) for more serious injuries and permanent disability.

Here's an example of how the formula might work when it comes to figuring out non-economic damages. Let's say Kathleen was rear-ended at a stoplight. Her medical bills amounted to $5,000, and she had another $5,000 in lost income. That's $10,000 in economic damages. To calculate non-economic damages, an insurance adjuster might use a multiplier of 3, since Kathleen's injuries were moderate. So, the adjuster might set the value of Kathleen's non-economic damages at $30,000 ($10,000 x 3), putting the overall value of the claim at $40,000 ($30,000 + $10,000).

Mediation May Be Mandatory

If your car accident case has reached the lawsuit stage, keep in mind that most courts now require the parties to attend mediation early on, to try to get the case settled.

Mediation can be done with either a private mediator or a judge (one who has not been assigned to the case). The mediator meets with all sides in the beginning, then meets separately with the plaintiff and the defendant to try to get the parties' numbers closer together.

Learn more about mediation of car accident cases.

Once You Agree to Settlement, You Can't Change Your Mind

Regardless of how simple or how drawn-out the process is, once you accept the other side's settlement offer, the case is over. In almost every state, this decision to settle is final. If you change your mind about settlement five minutes after your lawyer tells the defense attorney that you accepted the offer, you have almost zero chance of getting the court to reverse the settlement (especially if the agreement has already been signed). Bottom line: Don't tell your lawyer that you want to accept a settlement until you're absolutely certain that you're comfortable walking away with the amount of money being offered.

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