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What people need to know before accepting an insurance settlement

by | May 1, 2023 | Personal Injury

A car crash is both disruptive and expensive. It may lead to injuries and leave someone without a vehicle that can get them to work. Those who didn’t cause the crash will typically expect that the other party involved will reimburse them for their losses and expenses. After all, that is the whole point of liability insurance.

Someone with property damage or injury losses will make a claim for insurance reimbursement. The insurance company may offer a settlement where they provide a one-time, lump-sum payment instead of making a bunch of small claims for each expense they have to cover. A settlement can be convenient because it means receiving money right away. For someone to know whether or not a settlement is appropriate given their circumstances, they generally need to know two specific things.

How much insurance will pay

The goal of the settlement offer is often to save money. There are many scenarios in which an insurance company will not cover the full cost of a crash. Often, they try to get people to accept settlements well below the maximum amount of coverage available. The policy limits state how much someone could get as the maximum amount of compensation, and therefore knowing the policy limits can help someone understand if the settlement is reasonable or far too low.

How much the crash will cost

People also need to have an understanding of the total cost of the crash to make sure a settlement is reasonable, as they will usually give up their right to ask for future compensation. Not only do they need to add up their current bills and expenses, but they also need to determine future losses that they might suffer, like a diminished value on their vehicle when they use it as a trade-in later or future medical expenses and lost earning potential.

Only those who know how much insurance is available and how much the crash will cost them can properly evaluate a settlement and prepare for negotiations to secure an appropriate amount of financial compensation. Many times, people seek legal guidance during the settlement negotiation process to help them better evaluate the financial impact that the crash will have on their futures.