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

Choosing between a claim or lawsuit is your first step in going after the injury compensation you deserve. Here’s what you need to know to get started.

When another party (like a person or business) causes you to get hurt, you have the right to expect compensation for your injuries.

Every day someone like you is injured by car accidents, slip and falls, dog bites, defective products, medical errors, and more.

Imagine you’re 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.

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.

Difference Between a Claim and Lawsuit

Claims and lawsuits are different ways of seeking compensation for damages. Personal injury damages often 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

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

Personal Injury CLAIM

A personal 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 claims 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 without an attorney. You should be able to work directly with the insurance company for car accident, slip and fall, and other small liability claims.

For injuries caused by medical malpractice, dangerous drugs, workplace poisoning, and similar complex cases, you’ll need an attorney to win fair compensation.

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 of compensation 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 suffers bodily injuries or property damage caused by another person’s negligence. In car accident cases, the victim pursues the at-fault driver, who turns the matter over to their auto 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.

You should always put the at-fault party’s insurance company on notice that you intend to file a claim as soon after the accident as possible.

However, do not make a demand for compensation or begin settlement negotiations until you are completely recovered from your injuries.

To settle the case, the claims adjuster needs proof that the accident was caused by the insured (the at-fault driver), that the 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 a car accident claim, the 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 communication with the claims adjuster needs 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 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 the investigation is over, the claims adjuster will make a decision based on all the information in the claim file. 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 any time during the claim process, you have the right to consult an attorney about handling your claim.

After receiving the adjuster’s response, you’ll 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 have “released” the right to seek more compensation.

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. The adjuster knows if the statute runs out before you settle, they win.

Each state has its 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.

Beginning a Personal Injury Lawsuit

A civil lawsuit may become necessary 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.

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

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

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.

Lawsuit expenses can include:

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

Never file a lawsuit 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.

Arbitration Instead of a Lawsuit

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.

Warning: Arbitration does not stop or “toll” the statute of limitations.

Unless the statutory deadline is looming, 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 and less money to get to a final resolution of your case.

No-Fault 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 insurance company 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 an amount 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.

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