When Personal Injury Settlement Doesn't Work

A look at your options if the personal injury settlement process hits the proverbial wall.

While a settlement can be a good thing, it is not always a possibility and it doesn't always happen in every case. There are a few reasons why a settlement may not be agreed upon. For example:

1. Sometimes a defendant won't offer a settlement at all, which will leave the plaintiff no choice but to go to court in order to try to recover compensation.
2. Other times, a defendant will offer a settlement but it won't be considered reasonable by a plaintiff, or a plaintiff will make an unreasonable settlement demand.
3. In still other cases, a plaintiff wants to have his day in court and it is important to him to have the case go to trial.
4. When punitive damages are at stake, it may be especially attractive for a plaintiff to go to trial because the awards can sometimes be significantly larger than actual damages.

Settlement negotiations usually begin by someone making an initial offer or demand. Plaintiffs who want to have the best chance of getting a settlement they are happy with should consider being the one to get the ball rolling with a demand letter, so negotiations can begin on their terms. Once the initial offer is made, there is usually some back and forth negotiation that can go on for several months as the parties try to work out a settlement. All the components of the claim must be settled, including the payment of the plaintiff's legal fees, in order for a settlement to become final.

One thing the plaintiff should be aware of is that sometimes settlement negotiations can drag on for so long that they get near the statute of limitations for filing a claim. In such cases, plaintiffs should not hesitate to file their lawsuit, even if they are still involved in negotiations. Negotiations can always continue after the lawsuit is filed, but if the plaintiff doesn't get his or her case into the courts on time, the statute of limitations will bar him forever from making a claim. Insurance companies and defendants sometimes know this and try to drag things out, because once a plaintiff cannot sue, there is no reason for the insurer to give him anything.

Should a Plaintiff Ever Accept a Low Settlement?

While plaintiffs should always try to negotiate the best and most fair settlement possible, there are times when it might make sense to accept a settlement that is lower than what they believe they could potentially get in court. Some examples of times when a plaintiff may wish to consider accepting a low settlement include:

  • When the plaintiff's case is uncertain (i.e. if he or she is not confident about proving all elements of the claim in court)
  • When the injuries are small or insignificant. A settlement should be based on medical bills, lost wages, pain and suffering, emotional distress and anything else applicable like wrongful death damages. If a plaintiff didn't really suffer any significant injuries, then a low settlement offer may be all that is appropriate.
  • When a settlement offer is at the max of the policy limits, even if it seems low. For example, if a defendant has a $25,000 liability insurance policy and the insurer offers a $25,000 settlement, the plaintiff may want to consider accepting the settlement because even if they won a larger verdict in court, it might not ever be collectable.

Plaintiffs who are offered a low settlement, or any settlement for that matter, must remember that this is their only recourse. If it later turns out that the plaintiff suffered injuries that are more serious than initially thought, there will be nothing that can be done once the settlement has been accepted.

Collections Issues for Larger Settlements

As mentioned above, a plaintiff who has received a settlement offer that is equal to the maximum an insurance policy will pay may wish to consider accepting it due to the potential difficulty of collecting any excess above and beyond the policy maximum. An insurance company is not going to pay out any money above and beyond what it's obligated to pay by the policy terms, so anything in excess is going to have to be paid by the defendant personally. If the defendant is a large corporation, then collecting this excess may not be a problem. However, if the defendant is a small business or a private person, the defendant may not have significant assets or any assets at all. The judgment the plaintiff gets, then, won't be able to be collected.

For example, assume a plaintiff wins a $150,000 verdict and the insurance policy only pays out to $50,000. The other $100,000 will have to come from somewhere. If the defendant is unemployed and owns no assets, he's not going to be able to pay the $100,000. The plaintiff can try to place liens on any assets the defendant does have, or can try to get the defendant's wages garnished, but all of these things will require additional court actions and may not even be effective if there really is no money to take.

Deciding on whether to settle a personal injury case and negotiating a settlement can be tricky. It is always in the best interests of any potential plaintiff to speak with a qualified lawyer for help with this process. A lawyer can assist in determining if a settlement offer is fair and, if it isn't, in either getting a better offer or going to court.

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