According to the Bureau of Justice Statistics, 96% of personal injury lawsuits (also called "torts") reached a settlement in state courts in 2005. A lot of personal injury lawsuits are car accident lawsuits. So, why do most car accident cases settle? In this article we'll answer questions like:
In a car accident lawsuit, an injured person (called the "plaintiff") sues the person who caused the plaintiff harm (called the "defendant") for money damages. In most cases, it's the defendant's car insurance company, not the defendant, who ends up footing the bill for the plaintiff's damages.
Car insurance companies often make quick settlement offers. Quick settlements save insurance companies work and money. Plaintiffs who accept quick settlements and sign "releases," giving up their right to sue, might not get the full value of their claim because they don't yet understand the full extent of their injuries.
If you've been injured in a car accident, you should talk to a lawyer before you accept a quick settlement offer from the defendant's insurer. A lawyer can explain why it's important for you to reach "maximum medical improvement" before accepting an offer or reassure you that the settlement offer is fair.
Learn more about the role of insurance in a car accident case.
Car accident trials are unpredictable. You might think proving fault (legal liability) for the accident will be easy, but witnesses might not seem as credible on the stand as they did at the scene or the judge might not let your accident reconstruction expert testify.
Proving damages is even more unpredictable than proving fault. Insurance companies fear that a jury will award sympathetic plaintiffs much higher damages (more money) than their case is worth. Plaintiffs fear that they will get less than what the settlement offer was and have to shell out more in litigation expenses and attorneys' fees.
Plaintiffs and defendants (and their lawyers and insurers) settle over 90% of cases to avoid unexpected results and control their risks. In most cases, especially when liability and damages are pretty clear-cut, there is no need to roll the dice and pay for an expensive trial.
Litigation is expensive. Cases can go on for years and the costs can really add up. In addition to paying attorneys' fees, plaintiffs and defendants (or, more likely, their insurers) have to pay for things like court costs, depositions, expert witness fees, and travel expenses.
Learn more about the cost of taking your personal injury case to court.
Plaintiffs might not have time to wait for the litigation process to play out. Plaintiffs, particularly seriously injured ones, often have medical bills piling up and lost income. The sooner the case settles, the sooner plaintiffs can get out of potentially crushing debt and move on with their lives.
Collecting a settlement is often easier (and more certain) than collecting a judgment after trial. After settling a car accident case, you'll probably just need to wait for the check to come in the mail or get automatically deposited in your account. If you go to trial and win, the defendant might appeal and it might take a year or more for the appeal to be decided. If the amount of the judgment exceeds the defendant's insurance coverage and the defendant has limited assets, you might not be able to collect at all.
Most attorneys for plaintiffs get paid through a contingency fee agreement. The most common arrangement is for the attorney to get around 33% of any pre-trial settlement and 40% or more after trial begins. The sooner the case settles, the sooner the plaintiff's attorney gets paid. Overall, a quicker settlement is usually more profitable for a plaintiff's attorney because trials and pre-trial preparation require so much time with no guarantee of a better outcome.
From a practical perspective, law offices aren't set up for every case to go to trial. Attorneys typically juggle dozens of cases at once. If every single case went to trial, lawyers wouldn't have enough hours in the day to fully work up each case. The criminal justice system is similar. If most criminal cases didn't end with a plea bargain, the system would collapse under its own weight.
If you are injured in a car accident, you have a right to be compensated for your injuries. After you start a car accident claim, you'll want to:
You might receive a settlement offer pretty quickly or you might need to negotiate for a better settlement. If you have questions about the settlement process and the value of your claim, talk to a lawyer before you accept an offer. Learn more about how an attorney can help with your car accident claim.
It's pretty common for insurance adjusters to start negotiations with a very low settlement offer. Like a bargain shopper at a flea market, most adjusters will try to get a sense of whether you know how much your claim is worth.
If the offer is unreasonably low, ask the adjuster to give you specific reasons why the offer is so low. Then respond to each reason in a letter. If the adjuster has some valid points, you can lower your demand, but not until the adjuster responds to your letter.
No two car accident claims are exactly the same so there is no way to know what the value of your claim will be or how long the settlement process will take. Liability insurance typically pays for injuries and property damage caused by the policyholder. According to Insurance Information Institute statistics, the average car accident liability claim in 2020 was $20,235 for bodily injury and $4,711 for property damage.
Martindale-Nolo surveyed readers across the United States about their experiences with car accident claims from 2015 through 2020. The overall average settlement award was $23,900, but most readers received less than $10,000. More than a third of readers (35%) received $5,000 or less, while just under a quarter (23%) received $20,000 or more. Readers who suffered injuries received an average award of $29,700, while the average for those who had no injuries was $16,700.
Notably, nearly all readers received their money as part of a settlement (98%) and not as a court award after trial. Legal representation vastly improved the outcome of readers' claims. The average payout for readers without lawyers was $13,900, while the average payout for readers with lawyers was $44,600.
Most cases resolve pretty quickly. In the same Martindale-Nolo survey, more than half of the readers surveyed (56%) resolved their personal injury claims within six months after their car accident. The average time it took to receive a car accident settlement was just under a year (10.7 months).
Faster isn't always better. Readers who sent demand letters and negotiated their claims took longer on average to reach a settlement (17 months) than those who didn't (8.8 months), but received average settlements that were nearly twice as high. Factors like having an attorney and having injuries can also extend the time it takes to reach a settlement, but tend to lead to higher payouts.