How do I know whether to settle with the insurance company or file a lawsuit after an accident?

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By far the most common thing that we hear from our clients is, “I'm not the type of person who sues.”  We understand – no one wants to be seen as “sue happy,” and we try very hard to only represent real victims.

Given that most people are not the “type” who sues, clients often want to know whether their case will realistically have to be sued and/or go to trial. 

Occasionally, car accident claims can be settled without filing a lawsuit.  Don't believe the ads on TV or buses, however, because many times to get the best result following an accident a lawsuit will have to be filed.  To understand how this process works we have to first look at how the process plays out following a car, truck or motorcycle accident.

Step 1: The accident victim, if possible, starts to get medical treatment as needed.

 Step 2: The accident victim receives a letter from the insurance company for the other driver.  This letter typically says something along the lines of, “We are the insurance company for John Smith.  We are investigating the claim and are requesting copies of your medical records and a recorded statement (do not agree to this before speaking to a lawyer).

Step 3: The accident victim or their family contacts and hires a lawyer who (hopefully) handles personal injury claims for victims of car, motorcycle or truck accidents, and who does not represent insurance companies.

Step 4: The lawyer gathers the relevant information, including medical records, accident reports, etc. and speaks with the client about his or her evaluation of liability (fault) and damages. 

Step 5: The lawyer reaches out to the insurance company, discussions ensue, and the claim either gets settled or a lawsuit gets filed.

This is obviously a simplified version of how things happen after a car, truck or motorcycle accident, but the point is that Step 5 becomes the crucial step for many people.  And knowing whether the case should be settled with the insurance company, or a lawsuit should be filed, is crucial to obtaining the best possible recovery for the victim. 

When should a car accident case get settled before filing a lawsuit?

You may have seen the lawyers on TV bragging about getting more for accident victims, or getting quick settlements after an accident.  This may very well be true, but the real question is whether the settlement was fair, and whether it was appropriate.

Sometimes the circumstances of a car accident are such that it makes sense to settle the case with the insurance company rather than filing a lawsuit against the driver.   When is this the case?

  • If the victim has not sustained a “serious injury” under the law.

New York does not allow a victim of a car, truck or motorcycle accident to file a lawsuit unless that victim has sustained a “serious injury” under the law.  Generally speaking, a serious injury includes a fracture, or an injury that significantly limits a major life function. 

If, after reviewing the medical records and having a frank conversation between lawyer and client, it is determined that the victim's injury simply does not legally rise to the level of “serious” under the law, perhaps the claim should be settled with the insurance company.  At this point they have likely evaluated the claim in a similar fashion, and unfortunately there may not be much of an offer on the table. 

  • If the victim's injuries are contained.

Sometimes it makes sense to settle a claim with an insurance company where there is a fair offer of settlement and the injuries are entirely known to the accident victim.  This can be a complicated question, however, because injuries from accidents often carry long term problems and difficulties – for example development of arthritis following surgery to repair a broken ankle.  Consequently, it is important that the accident victim is fully aware of the damages before settling.

  • If the victim has some extenuating circumstances which would make a lawsuit a bad idea.

Sometimes people simply do not, under any circumstances, wish to file a lawsuit.  Perhaps the individual is a well-known figure who is concerned about some publicity issue, or perhaps they have just decided that they cannot handle the stress of a lawsuit. 

We understand these reasons for wanting to settle a claim early, and the decision rests, ultimately, with the client, but we strongly encourage our clients to think carefully before deciding to settle a claim early for this reason.  It is important in this situation to remember that when you settle a claim with an insurance company you will sign a release, which will prevent you from ever filing another claim relating to the car/truck/motorcycle accident.  If things get worse later you will very likely have no recourse.

  • If the insurance coverage is limited, is being offered in full, and we are comfortable that there is no additional coverage available.

Sometimes there is simply not enough insurance coverage to make a car/truck/motorcycle accident victim whole.  In these situations, if the insurance company is offering the entire policy, and we are 100% satisfied that there are no excess insurance policies or significant personal assets, it may make sense to settle the claim before filing a lawsuit.  If the victim truly is facing a situation where they would not be in a position to get anything more from a lawsuit, it simply does not make sense to put them through the unnecessary stress. 

When does filing a lawsuit after a car accident make sense?

There are, of course, many situations where filing a lawsuit is the appropriate course of action. 

  • There is a genuine dispute over liability or the insurance company is taking an unreasonable negotiating position.

Insurance companies are not in business to pay more than they have to.  In fact, they will do whatever they can following an accident to pay as little as possible.  This means that they will delay, ask for unnecessary records, and be otherwise difficult. 

When this happens often the best thing to do is simply move forward with filing a lawsuit. Not only will it show the insurance company that the victim (and her lawyers) are serious, but it will allow the case to move forward towards a resolution.

  • The full extent of the injuries cannot yet be determined and there is adequate insurance coverage.

Where the car/truck/motorcycle accident victim has sustained a severe injury with long term effects it is often difficult to determine early on exactly how things will play out.  Will the victim need long term care?  Are there children who will be affected by the damage?  Is there potential lost income that cannot yet be determined? 

Each of these factors suggests that an early settlement may not make sense, as long as there is sufficient insurance coverage available.  Even in situations where there may not be sufficient coverage, however, it may make sense to file suit to explore whether there may be additional coverage or assets. 

Ultimately the decision as to whether to try and resolve a car accident case early or file a lawsuit is a personal one that should be thoroughly considered between the attorney and client.  The take away here is that there is not a one-size-fits-all approach to settlement of claims, because each case and each client are unique.  Anyone who tells you otherwise is doing you a disservice.

If you have questions following a car, truck or motorcycle accident contact us today.  We're happy to help.

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