Should You Negotiate a Personal Injury Claim or File a Lawsuit?

Imagine you were injured in a car accident caused by someone else. You have hospital and doctor bills, costs for medications and bandages, and continuing therapy bills. You’re hurt and can’t work. The pain you suffer continues daily. What do you do?

Should you file a lawsuit against the at-fault driver, or do you file a claim and try to negotiate a settlement? A personal injury claim and a personal injury lawsuit are separate and distinct from one another. It’s important to understand which one best applies to your situation.

(We use the example of a car accident, but the information here applies to all types of personal injury cases, including slip and falls, dog bites, defective products, etc.)

Difference Between a Claim and Lawsuit

Personal Injury Claim

A personal injury claim is between you and the at-fault driver’s insurance company, before any lawsuit is considered. The claims process is a series of negotiations between you and the insurance company’s claims adjuster. The negotiations hopefully result in a compromised settlement payment, where both parties are satisfied.

Personal Injury Lawsuit

A personal injury lawsuit is filed when the negotiation process breaks down, and a compromise can’t be reached. 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 you’re demanding. When claim negotiations hit a wall, the next step is a lawsuit.

Beginning a Personal Injury Claim

A claim begins after a victim is injured or suffers property damage (or both) caused by another driver’s negligence. To cover the resulting costs, the victim pursues the at-fault driver, who turns the matter over to his insurance company.

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. If the two can agree on a settlement, a lawsuit will not have to be filed.

To settle the case, the claims adjuster needs proof that the accident was caused by her insured (the at-fault driver), that her insured was negligent, and that the victim’s injuries are severe enough to qualify for a settlement. To get this proof, the adjuster will investigate the facts of the case.

In your case, this investigation may include:

  • Reviewing your medical charts and bills
  • Speaking with you, and any witnesses to the accident
  • Reviewing the police report
  • Going to the scene of the accident and taking photos
  • Looking over the damage to your car and estimating repair costs
  • Evaluating any other evidence you provide

Your conversations with the claims adjuster need to be accurate and support your case. During the claims process, you must convince the adjuster:

  1. Their insured’s negligence caused the accident
  2. Your injuries are real, and required medical attention
  3. The cost of your medical treatment is substantial
  4. Your out-of-pocket costs are real (e.g. medications, crutches, transportation, etc.), and directly related to the accident
  5. Because of your injuries, you were unable to work and earn income
  6. You suffer continuing pain and discomfort

When her investigation is over, the claims adjuster will make a decision based on all the information she collected. The decision can range from paying the entire amount of your demand, to paying nothing. Generally, the adjuster’s response is somewhere in between.

At that point, you and the adjuster start negotiating. 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 won’t file a lawsuit or involve the courts in any way.

Beginning a Personal Injury Lawsuit

A lawsuit begins when you can’t reach an agreement with the claims adjuster. Technically, you can file a lawsuit anytime, starting from the first day of the accident. But for most minor accidents, a lawsuit is a last resort. It’s only considered when negotiations break down, and other methods of resolution have failed (i.e. arbitration and mediation).

A negotiated settlement is often the best result because it avoids the high costs and lengthy duration of a trial. 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.

Lawsuit expenses can include:

  • Filing fees for the petition
  • The cost to have a sheriff or constable serve your lawsuit
  • Time off from work
  • Court reporter costs for depositions, and transcripts
  • Expert medical testimony from doctors at depositions and trial
  • Copying costs for medical records, police reports, witness statements, etc.

Never file a lawsuit because you’re angry or indignant over the amount the insurance company offers to settle your claim. Filing a lawsuit should be an objective decision. If the injuries you suffered are not severe enough, you may be wasting your time and money at the courthouse.

Injuries Serious Enough to Merit a Trial

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 of time.

Many states use what’s referred to as the “Threshold Injury Doctrine.” If you’re injured in a car accident and fail to meet the threshold, your case could be dismissed. Although the various states define threshold injuries differently, some are common to all.

Threshold injuries include:

  • Death
  • Dismemberment
  • Significant disfigurement or scarring
  • 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.

Make the decision to file a lawsuit carefully. You don’t want to file suit, then have it summarily dismissed. If your injuries don’t meet the threshold, and you live in one of the states adhering to the doctrine, give very serious thought to settling your case – even for less than you think it’s worth. Regardless, it’s always a good idea to speak with an attorney .


Arbitration can take place after settlement negotiations fail, but before filing a lawsuit. It’s like going to court, without actually having to go to court. In arbitration, both sides agree on a third party, called an arbiter (or arbitrator), who listens to both sides and decides the outcome. In most cases, once the arbiter makes a decision, it cannot be appealed.

Arbitration is an excellent alternative to filing a lawsuit. There are various types, including one that guarantees you’ll receive at least some amount of money. Compared to a lawsuit, arbitration takes less time, because the hearing can be set quickly. The costs are also much lower.

Statute of Limitations

There are time limits for filing a lawsuit, called Statutes of Limitations. If you fail to file your lawsuit before that time limit expires, you’ll lose your right to sue, and may be left with nothing.

Each state has it’s own statute of limitations for personal injury cases. Most are between two and three years, so check your individual state’s laws. Normally, the state where the accident occurred is the state whose statute applies. With few exceptions, it’s also the state where the lawsuit must be filed.

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