Should You Accept an Auto Insurance Settlement?

Settlements often require negotiation, and it can be hard to know when to accept an offer.

An auto insurance settlement may offer you exactly what you seek without having to step inside a courtroom. However, settlements often require negotiation, and it can be hard to know when to accept an offer. While an initial offering from an insurance company may be discouraging, a less-than-perfect offer could still be better than fighting it out in court. Here are a few things to keep in mind during your settlement talks.

Know Your Damages

When deciding whether to accept an offer, the main question will be whether the settlement offer is large enough to compensate you for the financial, physical, and emotional damage done to you in the accident? To answer this question, you must know what your damages are. They probably include some of these costs:

  • Initial medical bills
  • Ongoing medical bills
  • Increased medical insurance costs
  • Vehicle damage estimates or repairs
  • Lost wages
  • Pain and suffering
  • Legal costs

You can use this Auto Accident Settlement Calculator to make an estimate of your damages. An attorney may be able to make a more precise calculation for you – particularly for your pain and suffering. Also, if you're not fully recovered physically, you may not be able to know the full extent of your damages because you may still have bills coming in. In that case, you'll need to either make an estimate of future costs, or decide to hold off on settlement negotiations until you've reached maximum medical improvement or MMI.

Consider Other Benefits or Risks of the Offer

In addition to assessing whether the settlement offer is big enough to cover your damages, keep an eye out for other types of benefits or risks included in the offer. For example, do the terms of the settlement prohibit you from suing in the future? This might be okay if you're certain about your damages. But if you have an inkling that other accident-related expenses may pop up, this might be a deal breaker for you. Or maybe in addition to a cash payment, the settlement provides you with future automobile or medical insurance. For example, an auto insurance company may offer to cover the medical portion of your automobile insurance for your lifetime. If you think you might have a hard time getting insurance in the future, the value of this type of offering could be much higher than amount it costs the company to offer it to you – a win for both sides.

Are You Willing to Negotiate?

After assessing your damages and the contents of the offer, you can begin to consider whether you want to accept it. Remember that insurance companies expect to negotiate, and they are in the business of saving money, so you can expect initial offerings to be low. If you are willing to negotiate, you will almost certainly be able to get the offer raised. However, negotiating is not for everyone. You may decide that the offer is good enough, and it is not worth the time or mental anguish to negotiate. Or you may just want to accept the offer to put it behind you. However, if you're considering taking the offer simply because you do not want to negotiate, consider getting help from a lawyer.

Hiring a lawyer to negotiate on your behalf can take some of the stress out of the negotiation process. And an experienced lawyer will know how to pressure the insurance company for a better offer. It's true that it will cost money to hire a lawyer, and that money will likely reduce the amount of your settlement. But a good lawyer should be able to raise the settlement offer higher than you could do alone, and in that case, you would be well served by hiring an attorney.

Even if you want to handle most elements of a settlement yourself, it's wise to hire a lawyer to review an offer before you accept it. Getting an attorney's opinion may help you decide whether to accept the offer, continue negotiations, or hold out for a trial. (In which case you will definitely need to hire a lawyer. ). Learn more about Hiring a Car Accident Lawyer.

Are You Willing to Go to Court?

Insurance companies enter into settlement agreements to keep from having to go to court. For both sides, the process of going to court is expensive and –worse – unpredictable. Even professionals have a hard time knowing what a judge or jury will decide – and the losses for an insurance company could be substantial. Given all of these, if you believe that the insurance company is not making an reasonable offer, your best negotiating tactic may be to threaten to take the case to court. For this to be effective, the insurance company will have to believe that you're willing to do that – and if you refuse to budge, it may call you on your threat. So if you go this route, be sure you're up for it. Going to court can take a very long time, with weeks and months during which nothing happens. And , as mentioned, it will be expensive and unpredictable. The payout could be huge, or you could end up with less than what the insurance company originally offered. It is a huge risk for both sides, which is Why Auto Accident Cases Rarely Go to Trial.

Get More Information

To learn more about negotiating a car accident settlement, read If the Car Insurance Claim Adjuster's Offer is Too Low and Settlement Negotiation Tips After a Car Accident. Or go to this site's section about Car Accidents and the Lawsuit Process.

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