Learn How a Personal Injury Claim is Settled with the Insurance Company
Understand the basics of personal injury settlements.
There are two main routes to injury claim settlement: settlement with an adjuster without a legal claim, and settlement with a lawyer after filing a legal claim. A settlement means a resolution to your claim without the matter going to trial and being decided by a judge.
In Atlantic Canada, the vast majority of legal claims settle outside of court. This means that victims or car accidents, slip & fall accidents, or other forms of injury claims are resolved without ever stepping foot in a courtroom.
A settlement brings closure to the legal claim. The victim will receive money in a lump sum for their injuries. The insurance company will get to close the file and know that the victim will never pursue compensation for that injury again.
A Settlement happens when an insurer or a defendant makes an offer of payment to an injured person. The settlement offer must be accepted will the offer is open for acceptance. The insurer or defendant is able to make a limited-time offer.
- The offer to settlement is often made before any lawsuit is filed.
- An offer may be made after a lawsuit is filed even if the matter is mid-way through a trial.
- Offers can be exchanged during the course of a trial.
Once a settlement agreement is accepted, the victim (also known as the plaintiff) must stop any claims for the injuries and agree to not pursue any potential claims against the defendant which may have arisen from the accident or incident. In short, once you settle it’s all over. Signing a release is a standard part of the settlement process. The wording of the release will spell out the forfeiture of all claims and will likely prevent you from discussing the details of the settlement with other people. The plaintiff does this by signing a full liability release. For example, in a car accident case, the car insurer may offer the plaintiff $50,000 to settle the case. The plaintiff, to receive that $50,000, would have to agree not to sue as a result of the car accident.
For example, a plaintiff in a car accident may get an offer from the insurer for $10,000. If accepted, the plaintiff will receive a cheque for $10,000 but will have to sign a release which acts as an agreement not to sue the insurer for that same car accident in the future.
Settlement and Insurance Companies
Settlements are almost always offered when there is an insurance company are involved in a case. An insurance company is usually involved in a case because there is a policy of insurance which will respond to the claim. For example, the insurance company for the at-fault driver involved in a car accident will respond to the injury claim of the person who was hurt because of the negligence of their customer. There are some cases, however, where there may not be an insurance policy to cover the claim. For example, a victim of assault may only be able to sue the actual person who assaulted them because the incident doesn’t trigger the assaulter’s car insurance policy. In short, nearly all personal injury claims will be advanced against an insurance company, be it the car insurance company, the disability insurance provider, or a homeowners policy provider.
Settlements are popular in the personal injury context because insurance companies are involved. The insurance company is a business with shareholders who expect a profit. It doesn’t benefit the insurance company to pay expensive lawyers months preparing for a trial that they no they will lose. Instead of paying the lawyer, they rather settle a claim because it will be fewer expenses overall and they have certainly over the result. In cases where their customer is at fault, a fair settlement just makes good business sense.
Why Do Most Cases Settle?
It’s important to know what motivates the insurance companies to settle claims. Here are the top reasons why insurance companies look to settle claims rather than pay lawyers and gamble on winning at trial:
1. Settlement allows for cost control and risk control
Insurance companies insurer risk, but they don’t like to be risky. If they know that their customer was at fault, they know they are going lose at trial. The question then is how much the victim will be awarded by a judge or jury if there was a trial. The insurance company is nervous about the uncertainty of a trial. Will a jury be sympathetic to the victim’s story? Perhaps the impact to the victim is more severe than expected and the judge award a larger than expected award. Uncertainty can be avoided by settling the claim. The settlement allows for cost certainty and allows the insurance company to forgo a risky trial. A settlement allows the insurance company to control what they are willing to pay to close the claim.
2. Settlement is private
Companies hate bad press. The settlement allows a company to get closure and control their image. Consider the case where a health food company put out a faulty product that hurt someone. Or where a drug company accidently mislabeled a medication which caused a severe reaction to a child. A lawsuit or trial will cause massive media exposure. The company will see details of the claim in the newspaper and the public will lose confidence and trust in the brand. The companies value may decline because of the bad press. These companies are very keen to settle them claim and have the victim sign a release with a confidentiality clause.
3. Settlement allows the victim to move on
Settlement brings closure to the victim. Legal proceedings can drag on for years, which means that the victim won’t be compensated until the matter is finished. Many victims need money to help offset their lost income or pay for necessary medical care. A plaintiff may also not want to go through the emotional and frustrating processes required to win the legal claim in court.
4. Settlement is a guaranteed victory for the victim
There is no risk to the victim if the case settles. There is no chance that the victim could lose at trial and be left owing legal courts to the winner.
What if Settlement Attempts Fail?
In most instances, settlement should be attempted. Settlement discussions don’t always result in a settlement. The parties may simply be unable to agree on a result that is fair. Learn more about what to do if settlement doesn’t work.
If the case can’t be settled out of court, then a trial will be necessary (unless the claim is dropped). Please contact Jeff Mitchell with any questions about your claim.
NOVA Injury Law is a personal injury law firm dedicated to serving Atlantic Canadian’s who are injured in an accident or denied disability benefits. Contact us today at [email protected] or 902.442.8853