How Do Car Accident Settlements Work?

How Do Car Accident Settlements Work?

Ideally, car accident settlements would go smoothly. After a car accident, you and the other driver would submit details about the accident to the insurance company. The liable driver would admit fault, and that driver’s insurance company would pay you for any damages suffered in the accident, including medical costs, lost income, and compensation for the suffering you from the car accident, in addition to the damage to your vehicle.

Unfortunately, car accident claims rarely proceed smoothly. Often, insurance companies make the process unnecessarily difficult, especially in cases involving serious injuries. While, in some cases, you may resolve your car accident claim quickly, car accident victims with serious injuries often find themselves fighting to recover the compensation they need to cover their damages after an accident.

Reporting the Accident

Immediately after a car accident involving significant property damage or injury, report your injury to the police.

If the other driver caused the accident, clearly admits liability, and you suffered only property damage or minor injuries, you may choose to report the accident directly to the at-fault driver’s insurance company. On the other hand, if you suffered injuries, expect the other driver to dispute liability, or foresee difficulties in your claim, consult a lawyer and have the lawyer deal with the insurance company on your behalf.

You may also need to report the accident to your insurance company. Your insurance company may need to know about the accident if you plan to use your PIP insurance to cover the cost of your injuries, if your plan mandates reporting all accidents to your insurance company, or if you need to use your own insurance to cover the costs you face after an accident.

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Generally, the insurance investigation will begin after the liable driver reports the accident to their insurance company. Your lawyer will also begin an investigation into the accident as soon as possible. An investigation may involve various factors, depending on the severity of your accident and the preceding conditions.

After a car accident with a non-commercial driver, the insurance company and your lawyer will generally want to review several key pieces of evidence, including:

  • The police report from the accident
  • Witness statements
  • Reports from both drivers
  • Photos from the accident scene
  • Any video footage of the accident

In more complicated accident cases, including accidents involving commercial truck drivers, both the insurance company and your lawyer may investigate several additional pieces of evidence. They may, for example, look into the commercial truck driver’s record and logbooks, including how long he was on the road. They may look at his cargo, who loaded it, and whether a shifting load could have caused the accident.

If outside factors contributed to the accident, like a mechanical failure, both sides may investigate the manufacturer, any vehicle problems such as recalls, and the vehicles themselves.

Investigating Your Injuries

In addition to investigating the accident cause, the insurance company may investigate the extent of your injuries and your subsequent medical treatment.

The insurance company may want to review:

  • Your medical records
  • Statements from your medical care providers
  • A breakdown of your medical care costs following the accident, including what treatments you needed for your injuries

In addition, the insurance company may want you to undergo an independent exam from an outside medical care provider, who will provide an assessment of the extent of your injuries and how they may impact you.

Talking to the Experts

Both sides may bring in experts to look at the accident and its aftermath as part of the investigation. The specific experts the insurance company and your lawyer need to talk to may depend on the conditions that led to your accident and any specific issues that arise during the investigation.

Health Experts

Sometimes, the insurance company may need a health expert’s assessment of your injuries from the accident and their long-term effect on your independence, mobility, and health. In the case of severe injuries, a health expert may provide more information and better insight into your direct losses and how they impact you.

Accident Experts

If there is disputed liability following your accident, the insurance company may want to bring in subject matter experts who understand the accident’s conditions to effectively evaluate your claim and give a better account of what caused the accident. These experts may reconstruct the accident scene or may take advantage of existing evidence to give a better idea of what caused the accident.

Your lawyer may also work with accident experts to help recreate the accident and better establish the other driver’s liability for the accident and your injuries.

Evaluating Insurance Policies

As part of the investigation process, your lawyer may carefully look at your insurance policy and the liable driver’s insurance policy. The insurance policy can provide more information about how much coverage you can expect after an accident and what compensation you can likely recover for the damages you sustained in the accident.

In the case of a serious accident, including one involving property damage or one in which you need to use your PIP coverage, your lawyer may also want to look at your insurance policies. Uninsured or underinsured motorist coverage, for example, may provide you with the compensation you deserve after an accident with a driver who does not carry adequate insurance.

In some cases, your lawyer may also want to look at your health insurance coverage to help you learn more about your specific rights and what help you can expect to pay your medical bills after the accident.

Pursuing a Settlement

In most cases, the parties involved in a car accident, generally the injured party, the insurance company, and any lawyers involved in the process, can settle the accident claim out of court. Generally, insurance companies want to avoid going to court over car accident claims, since simply taking the claim to court may raise their legal costs significantly. Your lawyer will let you know if you may need to go to court to reach a reasonable settlement regarding your car accident.

The Insurance Company’s Initial Offer

The insurance company that covers the liable driver will frequently issue a first settlement offer soon after the car accident. You may not have a chance to fully evaluate your injuries or what your medical costs might look like before the insurance company starts pressuring you to accept a settlement offer.

The insurance company may use various strategies to get you to accept this offer on the spot. The insurance agent may tell you that you cannot expect additional compensation based on the policy’s terms.

You might hear that you only have a limited amount of time to accept a settlement offer before the insurance company removes it from the table. Generally, insurance companies use these strategies to pressure accident victims into accepting an early settlement that does not fit their needs rather than dragging the process out and potentially paying out considerably more in compensation.

You do not have to accept a settlement offer immediately. You have the right to talk to a lawyer before accepting the insurance company’s offer. Furthermore, working with a lawyer early in the claim process may help you put together a more reasonable, realistic idea of the compensation you deserve.

Your Demand Package

Whether your lawyer submits your demands ahead of the insurance company or you wait until after you receive the first settlement offer, your lawyer will put together a demand package to showcase the losses you faced because of your accident. You may have considerable financial losses related to the accident. A lawyer can ensure that your demand package includes a reasonable assessment of those losses and how they impact you.

Your demand package will include several critical elements.

Evidence Related to the Accident

Your lawyer may start by clearly showing that the other party caused your accident and that, as a result, the insurance company must pay for your injuries. Your demand package may include a collection of evidence that clearly shows liability or indicates why you should not accept partial liability for the accident.

A Breakdown of Your Medical Costs

Medical care after an accident can prove exceptionally expensive. Often, you may find yourself dealing with high, ongoing medical bills, especially if you suffered injuries in the accident that require ongoing care. Your lawyer will work with you to break down your medical costs: both the current fees you have faced for treatment and the long-term, ongoing costs you may face for injuries that will cause lifelong challenges and limitations.

Information About Lost Income

Some car accident injuries can keep you out of work. You may miss out on vital income during that time. In other cases, your accident may prevent you from working in your current profession. In that case, you may need to claim compensation for your lost earning potential.

Request for Compensation for Pain and Suffering

Your lawyer may ask you to break down how the accident has impacted you physically and emotionally. While those elements can prove harder to evaluate and assign a direct financial cost, your lawyer can integrate your pain and suffering into your accident claim.


In many cases, you will go through several rounds of negotiation with the insurance company as you attempt to arrive at a fair, reasonable settlement agreement. While the insurance company may not want to pay out more compensation than necessary, you deserve fair compensation for your accident-related losses. A lawyer can help you determine when to accept a reasonable offer and when to continue negotiating.

Mediation and Court

When you cannot reach a settlement agreement for your accident on your own, your lawyer may recommend pursuing mediation. During mediation, you will sit down with a mediator, often a judge, former judge, or prominent attorney, to outline your claim and better understand the court’s recommendation. The mediator will then recommend a compensation package that seems to fit the needs of both sides or that falls into line with the law.

If you cannot reach an agreement through mediation, you may have to take your car accident claim to court. In court, both sides will have the opportunity to lay out their evidence and the information, including the extent of your injuries and what compensation you may deserve. The court will then determine compensation for your losses.

Dealing with a car accident claim can prove incredibly difficult and frustrating. By working with a lawyer, however, many car accident victims find they alleviate the stress and negotiate more successful settlement agreements.

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