Insurance settlements are relatively common. People who have sizable claims and ongoing expenses agree to accept a single lump-sum payment instead of smaller distributions made as expenses arise. People dealing with the aftermath of major motor vehicle collisions may have a stack of medical bills to cover. They may have mounting household expenses to address and a sudden lack of income due to their injuries.
An insurance settlement can seem like the light at the end of a tunnel for someone struggling financially after a motor vehicle collision. Unfortunately, people frequently fail to consider the long-term implications of a settlement before they agree to the terms suggested by an insurance professional. They may then later regret their decision to accept that settlement.
Settlements end company liability
People with collision costs are eager to receive settlements because they need money as soon as possible. Insurance companies are happy to offer settlements because they can eliminate an ongoing source of liability.
A successful settlement absolves the insurance company of any future financial responsibility. Typically, initial settlement offers are lower than the policy limits and also likely lower than the total crash costs. A driver with the minimum insurance required by state law might have $25,000 in bodily injury coverage on their policy. An injured person might have nearly $10,000 in trauma care expenses.
They might accept a settlement that just barely covers their outstanding medical bills. What they may fail to recognize is that the settlement prevents them from getting compensation for any future medical expenses they may incur. They also lose the opportunity to request compensation from the policy for lost wages and reduced earning potential.
People who settle too quickly, especially without negotiating, often leave themselves without enough compensation given the long-term scope of their losses. Negotiating with an insurance company after a car crash isn’t easy. Many people find the process intimidating.
Thankfully, those dealing with the aftermath of a collision have the right to hire an attorney. Lawyers can represent injured people during insurance negotiations. They could help their clients estimate their total losses and explore every potential avenue for recouping their losses.
Understanding the risk inherent in settling a car crash insurance claim can help people avoid mistakes with long-term financial consequences. Otherwise, settlements often protect an insurance company at the expense of those injured by one of the company’s policyholders.