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How Is an Auto Accident Settlement Determined?

You are on your way to work, all you can think about are the many items on today’s to-do list. Then, a car strikes you from behind, leaving you with car damage and physical injuries.

All of a sudden, your to-do list totally changes. Dealing with your accident tops everything else, and for once, you wish you would have had just another ordinary work day.

Being involved in a car accident resulting from another person’s negligence can no doubt be stressful. However, you have the right seek monetary compensation for the damages caused by the accident.

If you’re like many car accident victims, chances are that you’ll receive this compensation in the form of an auto accident settlement. Here’s a look at how an auto accident settlement is determined.

Let’s get started!

What Exactly Is an Auto Accident Settlement?

If you settle your auto accident claim, this means that you resolve your dispute with the other driver without having to go trial.

Why settle? Because a trial involving a jury is not guaranteed to give you the favorable outcome you’d like. Meanwhile, if you file a claim with an insurance company, recovering damages for your income loss, pain and suffering, and medical costs is possible.

To start the settlement process, you’ll need to collect all of the essential evidence and information that will help you to support your personal injury claim. These pieces of evidence include the following:

  • Medical records
  • Photos
  • Witness testimony
  • Health care treatment receipts
  • Medication

Once you have obtained this information, you will need to write a demand letter that states your claim. In the letter, you should explain the injuries that the accident caused you. You’ll also want to highlight the various damages you wish to recover.

After the insurance company receives your demand letter, it will examine the case and then choose to deny or accept it.

Let’s say that the insurance company chooses to accept the claim. In this situation, you can expect to receive an insurance settlement offer. Then, you and the company will negotiate with the goal of arriving at an agreement.

Now, let’s say that the insurance company denies the claim. You can still appeal this decision with the company’s claims adjuster. Also, you can sue the other driver by submitting a complaint to the appropriate district or county court.

Keep in mind that when it comes to calculating an insurance claim settlement, there is no specific mathematical formula in the industry. That’s because no two car accident cases are alike.

Nonetheless, various factors can be useful for determining the compensation amount that an insurance provider is okay with paying on a specific auto accident claim. Such factors include the type of damage your car sustained, whether your claim involves an injury, and the insurance policy’s policy limit.

Let’s take a look at some other important factors in an auto accident settlement amount.

Damaged Car Settlement Factors 

Let’s say that you get into a car crash and your claim involves only the damage done to your vehicle. The amount of money you receive will typically be your repair or replacement costs.

For instance, if your bumper was the only thing damaged, then your compensation will likely be a reasonable amount for repairing or replacing this car part.

However, don’t expect compensation if the cost to replace or repair something exceeds the car’s value. In this scenario, the insurer might simply pay you a certain amount to replace your car instead.

Note, though, that your car’s replacement cost will depend on depreciation, not a new vehicle’s cost. Therefore, the amount that the insurance company gives you probably won’t be adequate for purchasing a replacement car.

Injury Settlement Factors

If you’ve suffered injuries in a car accident, you’ll negotiate the property damage and personal injury portions separately.

For instance, let’s say that you’ve fractured a bone. You’ll get extra settlement compensation for your injury — something you wouldn’t expect in an accident situation that led to no injury.

Your personal injury compensation will be based on factors like your documented loss of wages and your medical bill total. It will also be based on how severe your injuries were based on your medical reports.

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Pain and Suffering Settlement Factors

Make sure that your medical reports are as detailed and comprehensive as possible. That’s because they won’t just have a major influence on your personal injury compensation. They will also impact how much you receive for the pain and suffering caused by your accident.

Pain and suffering refers to any future and past discomfort stemming from your accident injury. To possibly receive damages for this, you’ll have to complete your health care treatment and have your doctor release you before you submit to the insurer your injury claim.

Alternatively, your doctor must declare that you are stationary and permanent. This essentially means that your doctor doesn’t anticipate that you’ll improve any more with additional treatment.

Now if your physician does think you may benefit from future treatment, you’ll need to include in your claim an estimate of how much money you’ll need for this medical treatment.

Also, keep in mind that if your car accident gave you a major scar, you could receive additional compensation associated with permanent disfigurement. That’s because higher compensation is available for more serious injuries.

In addition, let’s say that you’re suffering from residual problems following the wreck. For instance, you may still be experiencing pain following your health care treatment. You can expect to receive extra compensation for this as well.

Important Considerations

Before you decide to accept an offer from an insurance provider, it may behoove you to talk to a personal injury lawyer about your possible settlement.

If you receive an insurance company settlement, you can’t go back for more later. Even if you submit and settle your claim prior to completing all treatment, you waive your right to receive future compensation.

So, make sure that your attorney gives you the okay before you decide to take an insurer’s offer.

Insurance Policy Limits

Also, as we alluded to earlier, insurance policies come with limits, or caps, that insurance companies won’t exceed.

For instance, perhaps your accident injury was the result of the other driver’s carelessness. Therefore, you file your personal injury claim with the other driver’s insurer, seeking $30,000 in damages. However, after some research, you learn that the insurer has a policy limit of $20,000.

In this case, you won’t receive more than $20,000. This means that if you want the other $10,000, you’ll have to sue the driver in court for the $10,000.

So, what happens if the other party had no insurance? 

In this situation, you could sue the driver personally for the full amount. Alternatively, you can use your own insurance company’s uninsured driver coverage. If you have opted for this coverage, your company will cover your costs.

Note that even if the claim you file isn’t capped by any policy limit, the insurer might pay you less than its policy limit because it feels that your injuries don’t warrant a higher compensation amount.

However, if you’re not happy with this outcome, as mentioned earlier, you could still sue the other driver for negligence. You’ll need to file your suit before your given statute of limitations expires. Otherwise, you’ll no longer have the right to sue in your accident case.

If you are still trying to work out a settlement but you’re drawing closer to your filing deadline, speak with an attorney. He or she may help you to file the necessary petitions to protect your legal rights and options in this situation. 

How We Can Help

In addition to highlighting how an auto accident settlement is determined, we provide the latest news and tips related to other money-, economy-, and health-related matters.

For example, on our site, you can learn about preparing your children for trips to the dentist. In addition, you can find out about whether hair transplants hurt, as well as why Americans appear to be passing away at younger ages.

On our site, you can furthermore explore how small businesses are faring in the current economy. You may also explore how the housing market is doing at a given time and how interest rates may be affecting this.

Take a peek through our site to learn more about topics that may have an impact on your daily living and overall wellbeing in the months and years ahead. 

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