In today’s article, I’ll answer the question: what does it mean to settle your case? Should you settle quickly? And what are the dangers of settling a personal injury claim too early?
There are a handful of things you should consider when thinking about settling your case. You will learn what it means to settle and what you should keep in mind when thinking about settling that case.
What Is settlement?
First of all, let’s define what a settlement is. At its most basic, a settlement is a contract, an agreement between you and the person or business who caused you harm. In most cases, it’s an insurance company that’s paying the money, but they’re settling the claim on behalf of their insured.
What Does An Insurance Settlement Look Like?
In some cases, a settlement agreement can look more like a contract you might be familiar with, but usually, it’s as simple as a form release in which the insurance company agrees to pay you money, and you agree to either drop your lawsuit or not to bring one in the first place.
When can you settle a claim?
You can settle a claim at any time after the claim arises. In theory, you could settle a claim on the roadside right after a car crash. Or you could settle it right up until the moment you walk up the courthouse steps ready for trial.
Just because you can settle a claim early doesn’t mean that you should.
What are the dangers of settling a personal injury claim too early?
For starters, you only ever get one chance to settle your injury claim. So if things get worse later on, you can’t go back for more money. Personal injury or liability claims are handled very differently by insurance companies than other kinds of insurance claims.
Most people are familiar with medical insurance or even unemployment insurance, where each time a bill comes in or you miss a week of work, you can submit a claim and get paid.
That’s not the case with liability claims, though. There’s only a single settlement, and it includes all the harms, past, present and future.
Understanding the extent of your injuries and recovery
What that means is that you better be sure that you understand the full extent of the harms and losses you’ve suffered and how long they’re expected to last. If you’re still treating for your injuries, or your doctor is still looking for ways to help you, or you have an upcoming surgery, these are all reasons not to settle your claim yet.
That’s because we don’t know the outcome. If the surgery is successful, great! But if there are complications from the surgery and you’re out of work for a long period of time, those are all harms and losses that the original person who hurt you is responsible for, and that should be part of your settlement or recovery.
Except for the unusual circumstance where your injuries are serious and there’s only a single small insurance policy, settling a claim quickly is usually not a good idea.
Accounting for liens and subrogation rights
Another important consideration when thinking about settling your claim is what lawyers call lien or subrogation rights. In many cases, medical insurance companies that have paid for your medical care, and these include Medicare and Medicaid, will want to be paid back out of your settlement.
In many cases, it can take months or longer for those medical insurance companies to process those bills and assert a claim against your recovery.
What you don’t want to run into is a situation where on the day that you settle your claim, it looks like you only owe Medicare $5,000, but then they finish processing and it turns out you owe them $25,000. You’d still have to pay the balance, and that could leave you with nothing from your settlement.
So you definitely do not want to settle your injury claim without knowing exactly how much any medical insurer, including Medicare or Medicaid, want to recover out of your injury settlement, because it could leave you with nothing – or worse.
Finding all available insurance policies
A third and final consideration when thinking about settling your injury claim is that there’s often more money out there to pay for your injuries, and a quick settlement may affect your ability to find that money and access it to pay for your injuries.
Sometimes people will settle their injury claim because they really need the money, so they’ll take a smaller amount than they otherwise would. Only later does it turn out that there are other insurance policies available, but like we said, you can only settle once.
So if you settle too soon, and you don’t know about that other insurance, you may have given up the opportunity to get that insurance money to pay for your bills.
Let me give you an example
Let’s say that you have some serious injuries from a car crash, but the other driver only has $25,000 of insurance.
Let’s say you accept that $25,000 fairly quickly, but you don’t realize that you have underinsured motorist coverage through your own insurance policy, and you don’t get their permission to settle that claim with the other driver’s insurance.
If you don’t get permission to settle for your own insurance carrier, chances are you won’t be able to make a claim under your own underinsured motorist coverage, because those contracts typically require notice and the right to consent to any settlement with the other driver. That could really be the difference between a settlement that makes for a full and fair compensation and one that doesn’t.
Just know that additional sources of coverage is an important consideration when thinking about settling an injury claim.
Statute of limitations
Finally, of course, although we’re talking about quick settlements here, you always be mindful that, in most cases, there’s a three-year statute of limitations in any injury claim typically resulting from a motor vehicle collision.
In that case, if you’re bumping up against the three years after a car crash, and you still don’t know the full extent of your injuries, you may have no choice but to file suit.
Your takeaways from today’s article about the dangers of settling a personal injury claim too early:
- Number one, understand that you only get one opportunity to settle a personal injury claim, so you better make sure that you understand the full extent of the harms and losses before you settle.
- Number two, make sure that you understand and you know about all of the different sources of money that might be available to satisfy your injury claim and make you whole because if you don’t follow certain technical requirements, such as putting a carrier on notice, you may give up the opportunity to get any of that money to pay for your injuries. Number three, make sure that you have a full and complete understanding of any claims made or potentially to be made by medical insurance companies who’ve paid for your medical care and want to get paid back out of your settlement.
Contact Us Today
If you want to speak with experienced Vermont personal injury lawyer Drew Palcsik about your personal injury claim, feel free to call my office or send me a message using the contact form. I serve clients at offices in Burlington and Middlebury, Vermont, and Plattsburgh, New York.