Skip to Main Content

What Does It Mean to Settle a Car Accident Case?

Very few car accident cases go to trial, but what exactly does it mean to “settle” a case? Deciding whether to agree to a settlement is a complicated process, and you should have a Las Vegas car accident attorney help you review the terms of any proposal. Often, it is possible to get more money if you understand the strengths and weaknesses of your case and hold out for more.

Settlement versus Litigation

To litigate a claim means to file a lawsuit in court, alleging that someone else’s negligent or reckless conduct caused you injury and financial losses. You include a demand for an amount of compensation. When issues are litigated, a factfinder needs to determine who was at fault for the crash and how much a person has suffered in damages. Typically, a jury acts as the fact finder, though in a bench trial a judge fulfills this role.

Litigation can be long, drawn out, and expensive. There is usually a long phase called discovery, where each side can request information from the other. It is not unusual for a year or more to pass before a case ever gets to the day of trial.

Fortunately, the parties to a lawsuit have the power and the right to resolve their dispute outside of court. They can mutually reach an agreement on the terms of the settlement, such as who is at fault and how much the person at fault will pay the victim. In exchange, the victim gives up the right to sue the defendant based on this accident.

Imagine the following—Charlie hits Samantha as she is crossing the street, and Samantha sues for $100,000. In negotiations, Charlie agrees to pay Samantha $60,000 in exchange for a release of all claims. Once Samantha agrees, she cannot later sue Charlie for the same accident. She can sue other defendants, but if she tries to drag Charlie into court, he will show the judge the settlement agreement and the judge will dismiss the case.

How Parties Settle a Dispute

Settlement usually requires several rounds of negotiation. The person who is injured typically submits a request for a certain amount of compensation to cover medical bills, lost wages, pain and suffering, and property damage. The insurer then makes a counteroffer for less money. Each side then moves a little, up or down, until they reach an amount that is acceptable to both. In many ways, negotiating a car accident settlement is a lot like negotiating the purchase price of a used car with a salesman.

In the background, each side considers how strong their case is, because if settlement negotiations break down, the parties could end up in court. If the evidence is very strong in your favor, you can afford to be more aggressive in settlement negotiations.

The Importance of the Settlement Agreement

The written agreement, signed by all parties, is what is legally enforceable. Spoken promises or even email messages that are not incorporated into the settlement agreement rarely have any legal effect. Instead, a court will enforce what is in the signed document.

For this reason, we encourage all injured motorists to work with an attorney to negotiate a settlement to their car accident case and to draft the ultimate terms of the agreement. Attorneys can spot issues that are very difficult for lay people to see, and using a settlement template you found on the internet is rife with problems.

Key Components of a Settlement Agreement

Anyone reading a settlement agreement should make sure it contains the following:

  • Complete statement of damages. This is the total compensation you will receive and should include future medical expenses or future lost wages, if those apply. It should also include non-economic losses for things like pain and suffering.
  • Accurate categorization of damages. Car accident victims might owe taxes on some or all of their settlement, depending on what the money’s for. An attorney can help you better understand how the tax code interacts with car accident settlements, but the way damages are categorized is key.
  • Case information. If a lawsuit has already been filed, then the settlement should contain information on the name of the suit and the case number. The settlement should also state that it is resolving all legal issues that remain, and that the case will be closed.
  • Attorneys’ fees. Some settlement agreements include money to pay for attorneys’ fees. If it isn’t in the settlement, then you will not be getting them.
  • Payment timeline. Any settlement agreement should identify how compensation will be paid. It can be in a lump sum or in installments. The settlement agreement should explain how and when payments are made.

You will notice that a settlement agreement does not have to contain a discussion of fault, and neither side must admit fault for a settlement to be legally binding.

Receiving Permission from Your Insurer

If you are the accident victim, you might be surprised to find out that you sometimes need permission from your own insurance company before you can agree to settle a claim. This situation arises often if you are making a claim on an underinsured motorist> policy because you have losses that are uncompensated even after settlement.

Essentially, your own insurer wants to see that you are maximizing the amount that you can get from the at-fault driver. You do not always need permission from your insurer, and sometimes it helps to have a lawyer represent your point of view when talking to your insurance company.

Impediments to Settlement

The key impediment is usually money. One side wants more than the other is willing to pay. Sometimes, there are also honest disputes about liability—each side believes the other is solely or primarily responsible for the accident, so they don’t believe they should pay compensation.

Settling a case often works for all parties involved, so reach out to one of our Las Vegas car accident lawyers today. Naqvi Injury Law has negotiated numerous settlements, and we are very skilled at negotiations. Contact our law firm today to schedule a free consultation.