When you sustain injuries in an accident that’s not your fault, the insurer for the responsible party should pay for your injuries. Of course, you’ve seen commercials and billboards that tell you this. However, until you go through the car accident settlement process, you probably don’t have a true idea of how it works.
You probably understand that when someone injures you, they owe you for your medical bills and other costs. It’s a bit more complicated than that.
The person who injures you must be legally at fault based on the legal standards and guidelines in force where the accident occurred. The insurer must also acknowledge their insured’s liability. Only then will they negotiate a settlement.
Insurance Companies Make the Initial Decisions About Fault and Settlement
Insurance companies pay most car accident settlements. They become involved in your accident because they provide liability insurance for the vehicle that caused your accident. They handle liability claims on behalf of the responsible driver.
#1. Investigate the accident
When an insurer receives a report, they determine if their insured was at fault for your accident. If your accident is a no-injury fender bender with clear liability, they often make a decision based on their insured’s initial report.
If you sustained serious injuries, they conduct a comprehensive liability investigation before they decide if they owe you a settlement.
Liability investigations often include:
- Statements from the parties involved in the accident
- Witness statements
- Police reports
- Site inspections, diagrams, and photographs
- Vehicle inspections
#2. Analyze liability
When an insurance company’s claim department completes their investigation, the information they accumulate helps them decide if their insured owes you for your damages.
They decide negligence by finding the answers to these basic questions.
- Did their insured driver have a duty to act in a certain way? (Stop at a light, yield the right of way, etc.)
- Did he fail to act properly given the circumstances?
- Did his actions or inaction cause the accident?
- Were your vehicle damage and injuries a direct result of this breach of duty?
#3. Obtain your medical documentation
Before an insurer considers settling your case, they require information for a proper evaluation. They usually request a medical release so they can obtain your medical bills, hospital records, and physician’s report directly from your healthcare providers. This allows them to ask your doctor specific questions about your injury that he might not include on a fill-in-the-blanks medical report.
#4. Evaluate your injury claim
An insurer sets an initial reserve for your injury but they update it as you continue your recovery. Reserves comply with a legal requirement that insurers set aside funds for your unpaid claims. In establishing this reserve, they initially guess your claim value based on immediately available information. They increase or decrease their reserve based on ongoing information about your injuries and your recovery.
A claim evaluation usually includes a combination of economic and non-economic damages.
- Economic damages: The total of all out-of-pocket costs incurred during your treatment and recovery: doctor bills, hospital bills, medication, therapy, surgery, income losses, and more.
- Non-economic damages: The dollar value placed on pain, suffering, anxiety, stress, loss of consortium (spousal sex, society, and services), and other emotional and psychological losses.
In evaluating your injury claim, insurers should take your circumstances into account. They should understand your pain, suffering, and disabilities. Their evaluations should acknowledge how the injury changed your professional and personal life. Unfortunately, insurers often evaluate injury claims using a cookie-cutter approach.
Some insurers add up your out-of-pocket costs, then multiply them by a random number to produce a settlement figure. Some negotiators rely on their experience or gut reactions to determine injury and settlement values. A growing number of insurers use claim software such as DXC Assure Claims for automated injury evaluations.
#5. Negotiate your claim
When you reach maximum healing, it usually becomes the milestone that triggers negotiation activity. Once an insurer has all the information they need, they sometimes (but not always) initiate negotiations by making an offer. If you don’t feel their offer is fair, you counter with a demand of your own.
Some insurers treat negotiation as though it’s a game. They toss out a low offer and you counter with a higher demand. Although you won’t necessarily get the settlement you believe you deserve, insurers resolve all cases eventually. Of course, if you and the insurer are too far apart, litigation is always an option.
Insurance Companies Don’t Always Initiate Settlement Negotiations
Often, an insurer waits for a signal from you that you’re ready to negotiate a settlement. This puts the responsibility on you. You must let them know that you’re ready to settle. You also need an idea of what you want based on your injuries.
An Insurer’s Primary Duty is to Their Insured
A liability insurer represents their insured’s legal interests. They perform according to the promises made in their insurance policy. Insurers protect their insured’s interests by completing a liability investigation, making contact with you, evaluating your injuries, and determining liability. Sometimes it means settling your claim, but not always.
Once they get all of the information they need, an insurer won’t necessarily talk to you about settling your claim. If their insured is legally liable for your accident, they usually pay for your vehicle damage.
After that, each insurer handles the injury portion of a case differently.
- Some insurers investigate your claim, evaluate your damages, and make sure you know how to reach them. Once they have provided their contact information, they never talk to you again unless you call them first.
- Some talk about your case and offer to pay your out-of-pocket expenses. They rationalize that you might just want your bills paid, and if you don’t ask for a settlement, they don’t offer one.
- Some insurers realize that you might not understand your right to recover an injury settlement. If you don’t talk about a settlement, they sometimes put their files on hold and wait for the statute of limitations to run.
- If an insurance company denies liability, they send out a denial letter. After they’ve made their position clear, they do nothing else unless your attorney contacts them or files a suit.
What Happens If the Insurer Doesn’t Offer You a Settlement?
As the injured party, it’s up to you to make sure you recover all of your damages. Often, this means asking the liability insurance company a direct question about your settlement. It also means that you must initiate negotiations by making a demand for the amount of money you deem appropriate for your injuries.
If possible, make any claim inquiry in writing. The Model Unfair Claim Practices Act, which most states follow, requires insurers to acknowledge insured or claimant communications with “reasonable promptness.” If you send an email or a letter, it documents your inquiry better than a phone conversation.
When an insurer doesn’t believe their insured caused your injuries, they sometimes offer a small settlement. They won’t pay more unless you force them to.
You Must Settle or Sue Before Your Statute of Limitations Expires
Each state has a time frame in which you must settle your liability claim. The countdown begins the moment you have an accident. If you don’t settle your claim or file a suit before your statute of limitations expires, you lose your right to make a claim.
If you are dealing directly with an insurance company, they will not tell you that your time is almost up. Advising you of a pending statute of limitations is often considered legal advice. Instead of jeopardizing themselves due to inappropriate behavior, insurers simply stop communicating with you.
A Car Accident Attorney Can Help
Car accident claims often involve complex liability and damage issues. Attorneys investigate and evaluate your case, and deal with insurers and their lawyers. They work to reach a fair settlement for your injuries. If necessary, they file suit to help you recover your damages.
If you sustained an injury in a car accident, a car accident attorney takes the necessary steps to protect your legal interests.