Personal Injury Claim vs Lawsuit: What’s the Difference?

Knowing the difference between a personal injury claim vs lawsuit is essential to getting the compensation you deserve. Here’s what you need to get started.

When you’ve been injured by a negligent person or business, you have a right to pursue compensation for your medical bills, lost wages, and more.

A personal injury claim is a legal demand for compensation, usually filed with the at-fault party’s insurance company. You or your attorney will negotiate a financial settlement directly with the insurance company.

A personal injury lawsuit is a legal action filed in court against the at-fault party seeking compensation for damages. A judge or jury decides if you are entitled to compensation, and if so, how much.

Should you file a claim or a lawsuit? Here’s where we unpack the differences to help you decide which one best applies to your situation.

Differences Between a Claim and Lawsuit

Claims and lawsuits are different ways of seeking compensation for damages. Whether it’s a claim or lawsuit, the burden of proof is on the victim. You must prove the other party was negligent, and their negligence resulted in your injuries.

Personal injury damages include:

  • Medical and dental bills
  • Physical therapy or rehabilitation expenses
  • Out-of-pocket medical expenses like medications, crutches, and bandages
  • Cost of ruined personal items like clothes and eyeglasses
  • Lost wages
  • Pain and suffering

What is a Personal Injury Claim?

A personal injury claim usually involves an insurance company, such as auto insurance, homeowner’s insurance, business liability insurance, or malpractice insurance.

An injury claim is between you and the insurance company. In most cases, like car accident claims, you’ll file your claim with the at-fault driver’s insurance company before any lawsuit is considered.

The claim process is a series of negotiations between you (or your attorney) and the insurance company’s claims adjuster. The negotiations hopefully result in a compromised settlement payment, where both parties are satisfied.

You may decide to handle a minor injury claim on your own. You can work directly with the insurance adjuster to settle relatively minor car accident or slip and fall claims.

Severe or complicated injury claims are best handled by an experienced personal injury attorney.

Even with severe injuries or complications (like accusations of shared blame) from a car accident or slip and fall, your attorney will still be handling the claim directly with the insurance company unless negotiations fail.

What is a Personal Injury Lawsuit?

A personal injury lawsuit is filed in court when the initial demand for compensation is denied or the negotiation process breaks down, and a compromise can’t be reached.

A lawsuit must be filed against the at-fault person or business, not their insurance company.

The breakdown may occur because the claims adjuster denies their insured was at fault, or doesn’t agree with the severity of your injuries and the amount of compensation you’re demanding.

Injury claims arising from malpractice, defective products, toxic exposure, and other complex circumstances often begin with a formal written demand for compensation, shortly followed by a lawsuit when the demand is rejected.

When claim negotiations hit a wall, the next step is a lawsuit.

Process and Benefits of Claims vs Lawsuits

Most injury claims are settled out of court, even after a lawsuit is filed. It’s a good idea to talk to an attorney about the pros and cons of filing a claim vs lawsuit for your particular circumstances. Every injury case is unique.

Filing an Insurance Claim

A claim begins after a victim suffers bodily injuries caused by another person’s negligence. The victim sends a written notice of intent to file an injury claim to the at-fault party’s insurer as soon as possible after the accident.

Once the insurance company is notified, it generates a claim number and assigns the case to a claims adjuster. The adjuster opens a claim and contacts the victim to negotiate a settlement.

Negotiations get underway when you send a demand letter detailing what you think would be fair compensation. After a few rounds of offers and counteroffers, if you eventually come to an agreement, the insurance company sends you a release form and a check.

Once you sign the release and cash the check, your claim is finished, and final. You have “released” the right to seek more compensation.

A negotiated settlement is often the best result because it avoids the high costs and stress of litigation. Unless you’ve been severely or permanently injured, you might not come out ahead financially with a lawsuit, even if you are awarded more than the adjuster offered for settlement.

Although you might not be satisfied with the amount of money being offered, before you refuse, consider the expense and time needed to pursue a lawsuit. With a compromised settlement, you know how much money you’re getting and can get on with your life.

Most personal injury claims are settled in a few weeks or months after filing your claim.

Watch Out for the Statute of Limitations

Personal injury claims are subject to legal deadlines called Statutes of Limitations. You must settle your injury claim or file a lawsuit before the deadline, or you’ll forfeit the right to pursue compensation for your injury.

The clock starts running when your injury occurred, not when you filed your insurance claim. It’s up to you to keep track of the time you have left to act. The insurance company is under no obligation to help you settle your claim before the deadline, or to warn you that time is running out.

Filing a Personal Injury Lawsuit

A civil lawsuit may become necessary when you or your attorney can’t reach an agreement with the at-fault party’s insurance company. Technically, you can file a lawsuit anytime, starting from the first day of the accident. But for most personal injury cases, a full-blown civil lawsuit is a last resort.

Filing a lawsuit may be the only way to induce the insurance company to bring an appropriate amount of money to the negotiating table. Your lawsuit will name the at-fault party, but the insurance company has a contractual duty to defend their client.

Never file a lawsuit to “get even” or because you’re indignant over the amount the insurance company offers to settle your claim. Before you file a lawsuit on your own, talk to an experienced personal injury attorney about the value of your claim and the strength of your case.

Summons and Complaint

A lawsuit begins by filing a Complaint or Petition with the clerk of the court in the jurisdiction appropriate for your case.

Venue and jurisdiction, meaning where you file your case, are important. Most personal injury cases are filed in the county where the injuries occurred or where the victim lives.

At the same time, you must file a summons and serve a copy to the at-fault party. Where and how to serve a summons depends on the rules of the court where your suit is filed and if the defendant is an individual or a business.

Your attorney will handle all of these details.

Drawbacks of Filing a Lawsuit

  • Time: According to the Department of Justice, it takes an average of 18 months to conclude a personal injury lawsuit. Some injury lawsuits drag on for several years.
  • Risk: You never know what a jury will do. Even if you win, your award may be less than the settlement offer you had before trial. And if you win big, you can expect the losing side to appeal.
  • Costs: Lawsuits are expensive. In addition to lawyer fees, you’ll be responsible for the “costs” of filing and preparing your case. If your attorney is working on contingency, you won’t have to pay attorney’s fees if you lose, but you may be responsible for some or all of the costs.

Lawsuit costs can include:

  • Court filing fees
  • The cost to have a sheriff serve your lawsuit
  • Court reporter costs for depositions and transcripts
  • Expert medical testimony at depositions and trial
  • Copying costs for medical records, police reports, etc.

Small Claims Court Lawsuits

It’s usually not in your best interest to file a standard civil lawsuit for minor injuries, at least until claim negotiations break down and other methods of resolution have failed.

An affordable alternative is filing a lawsuit in Small Claims Court, sometimes called Justice of the Peace Court. Small claims court is a good option if you are only seeking compensation to cover your medical expenses, replacement services, and lost wages. Many small claim courts don’t allow recovery for pain and suffering.

The limits in most small claims courts are under $10,000. As in a traditional lawsuit, you’ll sue the at-fault party in small claims court, not their insurance company.

The small claims court system is designed to help people resolve monetary disputes without hiring an attorney. While the party you are suing may be represented by an attorney, small claims courts are not as formal and rule-oriented as higher courts. The judge won’t be swayed by an attorney so long as your case is supported by evidence and well presented.

Most personal injury lawyers offer a free consultation to accident victims, so it doesn’t hurt to get professional legal advice before filing a small claims injury case.

Small claims court cases are heard by a judge in a matter of months, much sooner than traditional court cases.

No-Fault Car Accident Claims and Lawsuits

Most car insurance companies won’t pay a claim unless the victim can prove their insured was completely to blame for the accident. Years ago, proving fault could take a lot of time and effort, and even minor injury cases ended up in court.

To prevent lawsuits and help injured victims get paid faster, many states adopted no-fault auto insurance laws.

If you live in a no-fault insurance state:

  • Your auto policy must provide Personal Injury Protection coverage (PIP)
  • PIP will pay your medical bills and lost wages no matter who caused the accident
  • You are not allowed to seek compensation from the other driver for most injury claims
  • PIP does not pay compensation for pain and suffering

No-fault states allow exceptions for severe, high-dollar injury claims. You may legally pursue compensation from the at-fault driver if the cost of your injuries is more than the available PIP coverage, or your injuries meet a certain threshold of severity.

Serious Injury Threshold

Threshold injuries are very serious injuries. To fall in this category, the injury must have caused significant damage, and either be permanent or limit a person’s ability to do normal, daily activities for a specific period.

Although the various states define threshold injuries differently, some are common to all.

Threshold injuries include:

  • Death
  • Dismemberment
  • Significant disfigurement or scarring
  • Bone fractures
  • Loss or significant limitation of a body organ
  • A medically-certified injury or impairment that may be non-permanent, which prevents you from performing acts that are customary and usual for at least 90 days of the 180 days following your injury

If your injuries don’t meet the threshold, and you live in a no-fault state, give very serious thought to settling your claim – even for less than you think it’s worth. You could end up with nothing if you try to go after the other driver.

On the other hand, if your injuries are bad enough to exceed the no-fault threshold, you are almost always better off hiring a skilled personal injury attorney to handle your case.

Injury Claim vs Lawsuit Questions

Charles R. Gueli, Esq. is a personal injury attorney with over 20 years of legal experience. He’s admitted to the NY State Bar, and been named a Super Lawyer for the NY Metro area, an exclusive honor awarded to the top five percent of attorneys. Charles has worked extensively in the areas of auto accidents,... Read More >>