You were injured in a car accident, you filed a claim with the other driver’s insurance company, but settlement talks have stalled. You (or your lawyer) can't seem to settle the claim for what you think is a fair amount. Should you accept what's being offered or take your case to court by filing a personal injury lawsuit?
In this article, we'll:
The "settle or sue" question usually boils down to money—more specifically, the delicate balance between what the insurance company is offering and what you (and your lawyer) believe when it comes to what your car accident case is worth.
If your lawyer believes your case is worth significantly more than what the insurer is offering, and that it's unlikely the insurer will increase its offer in injury settlement negotiations, then it's probably time to file a lawsuit.
But how far apart do the two sides need to be before filing a lawsuit makes sense? This is where it helps to remember that car accident injury claims don't really have a specific value; instead, they tend to fall within a value range.
This is because part of the value of a car accident claim is the injured person's pain and suffering, which is not typically subject to exact calculation. So, in reality, a claim is not worth, for example, $50,000. Instead, it's more accurate to say that the case is worth between $40,000 and $60,000. When you think about the value of a car accident claim this way, you may get a better picture of what your car accident settlement goals should be. In a case that's worth $40,000 to $60,000, your goal should be to settle the case for somewhere in that range (hopefully towards the higher end).
So, if you and your lawyer value your car accident case at $40,000 to $60,000, and the insurer adjuster's settlement offer is $52,000, you take the offer and settle the case. That’s an easy decision. If the insurer’s final offer is $38,500, it probably makes sense to take it. It's close enough to your valuation of the case. If the final offer is $20,000, that’s also an easy decision: it's time to file a lawsuit.
Now for a harder example. Let’s say the insurer’s final offer is $30,000. In that situation, you're certainly justified in filing a lawsuit. The offer wasn’t close enough to your valuation of the case. But, keep in mind that if you put a case in suit, you most likely won’t be able to talk settlement again for at least a few months. This is because, once the case is in suit, the defense attorney will want to do pre-trial investigation and discovery, and the insurer probably won't be interested in talking settlement until its attorneys have completed investigation and are ready to make a settlement recommendation to the insurer.
Also, keep in mind that, if you file suit, your lawyer’s out of pocket expenses and case costs will start to increase significantly, and it's possible that a later settlement will not put a significant amount of additional money in your pocket.
Let’s look at another example. Let’s say that, pre-suit, your lawyer’s costs are $1,000. With a $39,000 offer and a 1/3 contingency fee agreement, your lawyer’s fee is $13,000. So, you would net $25,000 from the settlement. Let’s say that you reject that offer and put the case in suit. After a year of pre-trial investigation, the insurer increases its offer to $54,000, but your lawyer’s costs have increased to $6,000. After the 1/3 attorney’s fee and the costs, you would net $30,000 from the settlement, a year later. Was it worth a year’s wait to get $5,000 more? Only you can decide that.
The time delay and the increased expenses show that it's usually only worth putting a case in suit if you and your lawyer feel that the claim is worth substantially more than the insurer’s final pre-suit offer.
It's your lawyer’s opinion that's probably most significant when it comes to deciding whether a lawsuit is the right move in your situation. Valuing a case may not seem like rocket science, but it isn’t as straightforward as you might think.
Chances are your lawyer (or the larger firm) has experience with car accident claims, or they likely at least have inside information about more than a few car accident case outcomes. So it's important to trust your lawyer's judgment.