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The risk of settling an insurance claim after a major crash

On Behalf of | Feb 1, 2024 | Motor Vehicle Accidents

Many people involved in motor vehicle collisions worry about how they will pay their medical bills or repair their vehicles. If they can’t work, the financial pressure may be that much more intense. They may worry about a long insurance claims process that leaves them with an ever-increasing stack of financial obligations.

Not only do those injured in car crashes often have major expenses to cover, but they may also experience a sudden loss of income if their injuries prevent them from returning to work. Receiving a settlement offer from an insurance company can feel like a stroke of good luck after a car crash. However, accepting a settlement can lead to increased risk for the parties affected by the crash. Why are insurance settlements often riskier than people realize?

Settlements end company liability

A lump-sum settlement means that the person making a claim against insurance coverage receives a single payment. The insurance company estimates the total cost and makes a settlement offer. People typically assume that the offer is a reasonable reflection of what the crash might cost them and may accept it without questioning the amount offered.

However, the person signing a settlement agreement or cashing a settlement check officially gives up their right to seek compensation in the future. The insurance company can absolve itself of financial liability for a fraction of what it may have paid out on the claim otherwise. If a settlement is substantially lower than the policy limits that apply after a crash, then the party accepting the settlement may have reason to worry about uncovered future expenses.

Even if they require additional medical treatment, they typically cannot request additional compensation from the insurance company. Occasionally, those who accept the lowball settlements may have grounds for a bad faith insurance lawsuit against the company. Still, it is typically much more beneficial to identify a settlement as inappropriately low before agreeing to certain terms.

Those navigating a sizable insurance claim need to know what their likely long-term expenses might be. Estimating future medical costs and lost wages accurately with assistance from a capable legal team can help people establish whether a settlement is appropriate or whether they need to counter it with a different figure.