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Determining Whether a Personal Injury Settlement Is Fair

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Posted on August 12, 2013

Personal injury claims are filed successfully with each week that passes by. Claims pertaining to various sets of circumstances are the subject of a considerable volume of business between insurance companies and personal injury attorneys. Large claims can have the potential to affect someone’s life considerably and may leave the victim wondering if the settlement payout was fair.

The Basic Methodology of a Personal Injury Claim

A common example is any given case involving a two-car accident and a resulting trip to the emergency room. Let’s suppose our example represents Driver 1 who was rear-ended by Driver 2 while stopped and waiting at a red light. Driver 2 was distracted by a waving sign spinner on the roadside and failed to brake in time to avoid striking Driver 1 from behind. The impact was strong enough to send Driver 1 to the hospital for stitches. As a result, Driver 1 also missed 3 days of work.

A fair settlement was quickly reached between Driver 1 and Driver 2’s insurance adjuster. Driver 2 was determined to be 100% at fault due to consistent statements provided by 2 witnesses and the details of the police report. Driver 1 filed a claim for compensation, along with documented proof of his costs, for the costs of his emergency room visit, repairs to his vehicle, and time missed at work. Driver 2’s insurance company agreed to reimburse Driver 1 for 100% of these costs and all was well.

What Constitutes a Fair Settlement When My Life will Never be the Same?

Often times, injury claims are not nearly as simple as the situation described between Drivers 1 and 2. When the injuries resulting from an accident are extensive, the costs can quickly add up. Determining whether a settlement figure is fair often evokes considerable scrutiny and controversy when a permanent injury is involved.

Insurance companies will state that coverage is designed to restore conditions to their prior, existing state. In other words, to make things as if the accident had never occurred – nothing less, and certainly nothing more. However, what about cases of permanent injury such as paralysis or severe brain damage? No amount of medical treatment, despite the price tag, is available to restore the pre-existing conditions. So how much money is permanent paralysis worth? Is $10,000,000 sufficient compensation to make up for a lifetime of personal struggles and medical complications? These types of case pose an impossible question, one with infinite answers based upon who you may ask.

Was Your Settlement Fair? 4 Items to Consider

Here are 4 tips to help consider the fairness of some of the more quantifiable aspects of a settlement:

  • Did my attorney and I accept the insurance company’s first offer? As in all negotiations, the first offer is typically toward the low end of the spectrum and there is room for improvement.
  • Did we negotiate effectively? Allow your attorney to perform his/her job. He/she should have your best interests in mind and benefits from years of litigation experience, especially in cases of lawyers who dedicate their practice solely to personal injury law. Even large offers can seem tempting, but consider your attorney’s advice carefully if he/she feels strongly about rejecting it.
  • Does my settlement cover all of my associated costs? Perhaps you did accept the first offer. If you feel confident that your settlement truly recouped 100% of your losses, then your settlement was probably fair. You should also consider any opportunities lost (promotions or seniority pay raises) in calculation of your true total costs.
  • Was fault placed correctly? Insurance companies may attempt to allocate excessive fault to you. In our example of Drivers 1 and 2, Driver 1 was obeying the law and unable to take any action to avoid being struck from the rear. Driver 2 had a lawful responsibility to control her vehicle and stop at a safe distance. Driver 2 should be assigned 100% of the fault. Driver 1 should be assigned zero.