Negotiating an Accident Settlement Without a Lawyer

You can save on legal fees by negotiating your own car accident or personal injury claim settlement. Here are the steps involved.

Many people handle their own car accident or minor personal injury claims successfully without hiring an attorney. In cases where the injuries are relatively minor, it may be more economical to negotiate your own settlement and keep all of the money, rather than paying one-third of it to your lawyer.

In this article, we'll offer some tips on figuring out damages in a personal injury case -- in other words, how much your case is worth. Once you factor in the other key issues – evidence of liability, your own negligence, availability of insurance coverage, etc. – you’ll be ready to write your demand letter.

Because this page is long, we’ve broken it down into the following sections:

When To Consider Self-Representation
Important First Steps & Tips
Estimating Your Damages
Sending Your Demand Letter
Countering and Accepting a Settlement

When To Consider Self-Representation

It's certainly possible to represent yourself in an accident claim or personal injury case, even against a big insurance company, and come away with a satisfactory result. This is especially true if you have experience handling your own legal cases in the past, and an ability and willingness to stand up for yourself and present your case in a thorough and professional manner.

But when deciding whether or not to represent you, it helps to consider two key factors.

How badly were you hurt? If you slipped and fell in a store and suffered a few bruises, the store may not put up much of a fight, and they may offer a quick settlement to cover your medical bills with a little extra thrown in for your inconvenience. Everyone is (relatively) happy.

But if you were involved in a serious car accident, and have undergone extensive medical treatment, lost a fair amount of income, and have experienced significant pain and suffering as a result of your injuries, you may want to at least discuss your case with an experienced injury attorney. When damages are significant, the stakes increase for everyone -- for you because you want fair compensation for the accident and your injuries, and for the defendant (usually an insurance company) because they don’t want to pay a large sum of money to resolve the case. This is when things get adversarial, and you want someone who has experience with the (often hostile) back and forth of litigation.

Is it clear that the other party was at fault? If it’s obvious that the defendant or one of its employees is to blame for your accident -- you’ve got witnesses who will testify, for example -- you may find it easier to prove fault, and to get a satisfactory settlement on your own.

But, as with the severity-of-injury issue discussed above, you can expect more of a fight if it is not so clear that the defendant is responsible for causing the incident/accident that led to your injuries. The defense may even point the finger back at you and say that you weren’t watching where you were going when you slipped, or you were driving too fast and could have avoided the car accident, or you fell down some stairs because you were on your phone (not because the stairs were faulty). Again, in this kind of situation, you it’s usually worth the cost of hiring a lawyer.

Important First Steps & Tips

First steps, to be taken before sending a demand letter to the insurance company of the person at fault in the accident:

  • Take pictures of the property damage, the accident scene, and the injuries.
  • Get a copy of the police report (for a car accident case)
  • Get the medical treatment you need, as soon as possible.
  • Use your personal injury protection to pay initial bills, and then use your health insurance. Get copies of all the records and bills.
  • Do not give a recorded statement to the other person's insurance.
  • Make sure you understand the time limits for your claim - statutes of limitations vary by state and type of accident.
  • Do not write about your accident in social media. This info can get to the other side of your case, and taken out of context, can be used to damage your case or minimize your injuries.

Estimating Your Damages

There are two types of damages in any personal injury case:

  • damages capable of exact calculation (called special damages), and
  • damages not capable of exact calculation

Damages Capable of Exact Calculation -- Special Damages

Special damages are property damage (costs to fix or replace your car in a car accident case), lost earnings and lost earning capacity, medical bills, and other financial losses attributable to your accident. They are capable of exact calculation because they can be added up. Since medical bills and property damage in an accident claim are pretty straightforward, we'll spend most of our time explaining how lost earnings work.

Lost Earnings

Lost earnings are exactly what they sound like -- how much money did you lose, past, present, and future, as a result of your injury? In some states, it is referred to as lost earning capacity. In other states, lost earning capacity only refers to future losses.

How does this work? Here is an example. Let’s say that you earn $50,000 per year, that you have been totally disabled for one year due to a serious back injury suffered in a car accident, and that you are now only able to return to a part time job earning $25,000 per year. You thus have lost earnings of $50,000, and a lost earning capacity of $25,000 per year for the remainder of your work life expectancy.

Work life expectancy is based on federal government statistics and is a statistical measure of how many more years a person is reasonably expected to work, based on that person’s age, sex, and race. Now the challenge is to calculate what $25,000 per year for some future time period is worth.

Present Value

Because future lost earning capacity involves a calculation of losses that may extend for many years into the future, it generally has to be calculated in terms of its present value. Present value is a financial concept that involves determining the value of a future stream of income (i.e., your weekly paycheck) as if it were all in a bank account today.

In other words, how much money does your employer need in a bank account today in order to pay you your salary for, say, the next twenty years? This is a complex financial calculation, and is customarily performed by an economist that a lawyer would hire to be an expert witness in your case.

Problems in Calculating Lost Earnings and Lost Earning Capacity

Three problems often arise in making lost earnings claims:

  • you are not working at the time of the injury
  • but for the injury, you had plans to take a new job for more pay
  • you are self-employed

If you are unemployed at the time that you are injured, you can generally claim your earnings from your previous job as your earning capacity as of the time of the injury. If, for whatever reason, you have not worked for many years, the defense attorney will argue that you have no earning capacity and thus should have no lost earning claim. It can be hard to rebut this argument. In this situation, you and your lawyer will have to work together to formulate a plan for making a lost earnings claim. If you are retired, then you have no lost earning claim.

If you got hurt the week before taking a new job for higher pay, you can generally claim that higher pay rate as your earning capacity. You would have to prove that you had indeed been hired for the new job.

If you are self-employed, the defense attorney will undoubtedly examine carefully your business records and tax returns to see whether your actual records support your lost earnings claim. For any type of employee, the general rule is that, whatever you tell the government in your tax returns about your earnings is what you must tell the defense attorney and the jury.

If you worked under the table, you are going to have a hard time trying to convince the jury that you should be compensated for those losses. Juries generally feel that they declared all of their income and paid taxes on it, so why shouldn’t you.

Damages Not Capable of Exact Calculation

This category of damages includes pain and suffering and mental anguish that result from your injuries. There are no guidelines for determining the settlement value of an injured person’s pain and suffering. A jury cannot look at a chart to figure out how much to award for pain and suffering. Thus, these types of damages are not capable of exact calculation.

How to Value Pain and Suffering in Trying to Settle Your Case

This is the big question. Lawyers and writers have often talked about a “multiplier” in personal injury cases, that insurance companies calculate pain and suffering as being worth some multiple of your special damages. But that is only true up to a point. Juries do not use multipliers when they are in the jury room trying to determine your damages, and there are many other factors that affect the outcome of a case. There are some factors that can greatly impact the value of a plaintiff’s pain and suffering damages. Key factors include:

  • the nature and extent of the injuries
  • whether the plaintiff is a good or bad witness
  • whether the jury likes the plaintiff
  • whether the jury thinks that the plaintiff lied
  • whether the jury thinks that the defendant or the defendant’s witnesses lied
  • whether the plaintiff has a criminal record
  • whether the plaintiff’s injuries are easy for the jury to understand
  • whether the plaintiff’s medical treatment appears to be “soft;” that is, whether the vast majority of the plaintiff’s medical bills are physical therapy and/or chiropractic treatment, as opposed to physician’s or hospital bills.

All of these things and more can affect how pain and suffering is valued. See Factors Affecting Your Pain and Suffering Claim for more detail on these claims.

Sending Your Demand Letter

On the timeline of a typical settlement between an injured person and an insurance carrier, the demand letter is the jumping-off point for serious settlement negotiations.

But the demand letter is usually only sent once an investigation into the circumstances of the accident (including fault) has been made, and the extent of the injured person's losses are known -- or those damages can be reasonably forecast if future medical care or lost income is expected.

In short, it's best to send a demand letter only after you have taken a thorough look at the impact of your injury on all aspects of your life, and made a reasonable valuation of your injury claim. This is important because in your demand letter, you will be detailing for the insurance carrier or the defendant:

  • exactly why the insurance carrier or defendant is liable for the injuries
  • the nature and extent of your injuries and resulting medical treatment
  • your financial losses that can be linked to the accident and/or your injuries, and
  • any other losses you've incurred, including pain and suffering.

To get an idea of what a good demand letter looks like, see our page of Sample Demand Letters.

Countering and Accepting a Settlement

Remember, the insurance adjuster will probably low-ball you but then you can start to negotiate. It's okay if your demand is on the high side - this will give you room to negotiate later. See Responding to a Low Settlement Offer

Consider the Counter Offer and Decide

Consider the counter offer, and then decide if you want to accept it or not. If you do, fine. Take the money, and sign a release for the insurance company. If you don't, get ready to file a complaint with the court. You probably won't need to do this, but you will need to know how to do so (or hire an attorney at this point) because a lawsuit is the biggest threat you have against the insurance company.

You Want a Fair Settlement, Not a Windfall

You may be reluctant to settle your claim for a reasonable amount, because you see such large jury awards, but there is risk in going to court. The jury may decide for the defendant and give you nothing. So a fair settlement amount should reflect this risk. Additionally, settling out of court means you'll be compensated more quickly, and you'll avoid many court appearances and high litigation costs.

Most claims are negotiated and settled outside of court. Remember, most adjusters will be more willing to help you (i.e. settle your claim) if you are polite, reasonable, and explain your story. You will need to show clear liability and records of all your injuries before they can settle with you.

For more on dealing with insurance adjusters, you may want to check out the following articles:

To find lots of information on settling an accident claim, see our section on Settling Your Personal Injury Claim.

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