What Happens if the Settlement Isn’t Enough?

While a settlement can be a good thing, it is not always a possibility and it doesn't always happen in every case. There are a few reasons why a settlement may not be agreed upon. For example:

1. Sometimes a defendant won't offer a settlement at all, which will leave the plaintiff no choice but to go to court in order to try to recover compensation. 2. Other times, a defendant will offer a settlement but it won't be considered reasonable by a plaintiff, or a plaintiff will make an unreasonable settlement demand. 3. In still other cases, a plaintiff wants to have his day in court and it is important to him to have the case go to trial.

4. When punitive damages are at stake, it may be especially attractive for a plaintiff to go to trial because the awards can sometimes be significantly larger than actual damages.

Settlement negotiations usually begin by someone making an initial offer or demand. Plaintiffs who want to have the best chance of getting a settlement they are happy with should consider being the one to get the ball rolling with a demand letter, so negotiations can begin on their terms. Once the initial offer is made, there is usually some back and forth negotiation that can go on for several months as the parties try to work out a settlement. All the components of the claim must be settled, including the payment of the plaintiff's legal fees, in order for a settlement to become final.

One thing the plaintiff should be aware of is that sometimes settlement negotiations can drag on for so long that they get near the statute of limitations for filing a claim. In such cases, plaintiffs should not hesitate to file their lawsuit, even if they are still involved in negotiations. Negotiations can always continue after the lawsuit is filed, but if the plaintiff doesn't get his or her case into the courts on time, the statute of limitations will bar him forever from making a claim. Insurance companies and defendants sometimes know this and try to drag things out, because once a plaintiff cannot sue, there is no reason for the insurer to give him anything.

Should a Plaintiff Ever Accept a Low Settlement?

While plaintiffs should always try to negotiate the best and most fair settlement possible, there are times when it might make sense to accept a settlement that is lower than what they believe they could potentially get in court. Some examples of times when a plaintiff may wish to consider accepting a low settlement include:

• When the plaintiff's case is uncertain (i.e. if he or she is not confident about proving all elements of the claim in court)
• When the injuries are small or insignificant. A settlement should be based on medical bills, lost wages, pain and suffering, emotional distress and anything else applicable like wrongful death damages. If a plaintiff didn't really suffer any significant injuries, then a low settlement offer may be all that is appropriate.
• When a settlement offer is at the max of the policy limits, even if it seems low. For example, if a defendant has a $25,000 liability insurance policy and the insurer offers a $25,000 settlement, the plaintiff may want to consider accepting the settlement because even if they won a larger verdict in court, it might not ever be collectable.

Plaintiffs who are offered a low settlement, or any settlement for that matter, must remember that this is their only recourse. If it later turns out that the plaintiff suffered injuries that are more serious than initially thought, there will be nothing that can be done once the settlement has been accepted.

Collections Issues for Larger Settlements

As mentioned above, a plaintiff who has received a settlement offer that is equal to the maximum an insurance policy will pay may wish to consider accepting it due to the potential difficulty of collecting any excess above and beyond the policy maximum. An insurance company is not going to pay out any money above and beyond what it's obligated to pay by the policy terms, so anything in excess is going to have to be paid by the defendant personally. If the defendant is a large corporation, then collecting this excess may not be a problem. However, if the defendant is a small business or a private person, the defendant may not have significant assets or any assets at all. The judgment the plaintiff gets, then, won't be able to be collected.

For example, assume a plaintiff wins a $150,000 verdict and the insurance policy only pays out to $50,000. The other $100,000 will have to come from somewhere. If the defendant is unemployed and owns no assets, he's not going to be able to pay the $100,000. The plaintiff can try to place liens on any assets the defendant does have, or can try to get the defendant's wages garnished, but all of these things will require additional court actions and may not even be effective if there really is no money to take.

Deciding on whether to settle a personal injury case and negotiating a settlement can be tricky. It is always in the best interests of any potential plaintiff to speak with a qualified lawyer for help with this process. A lawyer can assist in determining if a settlement offer is fair and, if it isn't, in either getting a better offer or going to court.

Brian White | February 23, 2021 | Personal Injury

After you suffer injuries in an accident, you will likely have to deal with the insurer for the person or business that caused your injury. Insurance claims can usually be resolved faster than a lawsuit can. An insurance settlement after a car accident, medical error, or slip and fall accident can put money in your pocket so that you can pay your medical bills and take time off from work to recover.

But sometimes, an insurance claim settlement will fail to cover all of your expenses. What can you do when you claim isn’t enough? Here are some things that you should know about insurance claim settlements and the options that you have after accepting an insurance claim that wasn’t enough.

How Does Liability Insurance Work?

Most injury claims are filed through the insurer for the person or business that caused your injury. 

For example:

• Car accident injuries fall under the auto insurance policy for the driver who caused the accident in an at-fault state like Texas.
• Slip and fall injuries are usually covered under a homeowner’s insurance policy or a general business liability policy, depending on whether your injury occurred at a residence or a business.
• Medical errors fall under a malpractice insurance policy for the health care provider or facility where the error occurred.

Policy limits exist so that the insurance companies can properly price their policies based on exposure to risk. For example, a policy with a limit of $100,000 will be more expensive than a policy with a limit of $50,000.

Policy limits also tell you the maximum compensation that is available if the insured person causes an injury to another party.

For example, Texas requires all drivers to carry liability insurance. The minimum bodily injury coverage required by law is $30,000 per person and the total value is capped at $60,000 per accident. This means that the most compensation that any single person can recover under this type of policy is $30,000. It also means that if multiple people are injured in an accident, they must share $60,000 to cover all of their injuries.

How Can Insurance Claim Settlements Come Up Short?

Claim settlements might fail to cover all of your expenses for a few reasons, including:

You Accepted a Settlement That Was Too Low

After your claim is submitted to the insurance company, a claims adjuster will assess their insured’s liability and your losses. If the adjuster agrees that the insured party caused your injuries, they will make a settlement offer based on your losses.

Oftentimes, the original settlement offer will be very low. Some insurance companies do not even offer enough to cover your documented medical bills, let alone your lost income and future medical bills.

Adjusters often use your desperation against you. They might offer money right away but deliberately undervalue your claim. You may be tempted by their offer, since you might have unpaid medical bills and cannot work.

But if you accept a low offer, you may quickly exhaust your resources to be able to continue your medical treatment or pay your living expenses while you are out of work. When you accept a settlement offer, the insurer will require you to release them from all claims. This release will bar you from reopening the claim and asking for more money in the future. In fact, settling your claim will likely release all parties from liability.

To avoid this situation, you should consider hiring a lawyer to negotiate on your behalf. A lawyer can prevent the adjuster from using your desperation against you during negotiations.

Insurance Policy Limits Were Too Low

An insured party is responsible for choosing and paying for the policy limits that are associated with their liability insurance. This means that you could be stuck with inadequate compensation if the insured party selected policy limits that were too low to cover your losses.

For example, suppose that you were in a car accident with someone who only bought the minimum liability coverage in Texas. If you suffered a serious brain injury, your medical expenses and lost income might far exceed the $30,000 policy limits. Even if you could prove that your damages were higher than the policy limits, an adjuster would not be able to pay more than the policy allows.

To avoid this situation, you should be careful when you accept an insurance settlement. Adjusters almost always require you to release all of your claims before they’ll provide you with a settlement check. If you release your claims, you cannot seek further compensation from the person or business that caused your injuries and the only compensation you will ever receive for the accident will be the settlement check.

Instead, you might want to sue the person or business that is at fault for your injuries. The insurance company will defend their insured, but will take responsibility for any damages incurred up to the policy limits. Any amount awarded over the policy limit will be due from the person who caused your injuries.

You Incurred More Expenses Than You Anticipated

It can be difficult to estimate how much you will need to cover your medical expenses and lost income. For example, you might only have $3,000 in medical bills and lost income when you file your claim. But going forward, your injuries might require years of physical therapy and keep you from working full-time or force you to look for a new job.

Under Texas law, you are entitled to future expenses and lost income that are likely to result from your injuries. If you underestimate these future losses, you may severely undervalue your claim.

To avoid this situation, you should hire an injury lawyer to evaluate your claim. You must know the value of your claim to know when the adjuster has made a fair offer that includes your present and future economic losses.

What Can You Do If You’ve Already Settled?

If you have already settled your claim and ran out of money to cover your losses, you have very few options available. Let’s take a look at these options below.

Challenge the Release

You may challenge the release given to the insurance company. But you will have an uphill battle to be successful at this because you’ll be required to prove a defect in the release or release process.

That might mean:

Absent these serious flaws, a court will probably enforce the release.

File a Lawsuit Against Someone Else

If your injuries had multiple causes, you could pursue and settle multiple claims. For example, suppose a negligent driver caused your accident, but a negligent paramedic made your injuries worse than they should have been. You could pursue separate claims against the driver and the paramedic.

Be Proactive After an Accident

In most cases, an accepted claim settlement will limit the money you can ever get for your injuries. That’s why it’s so important to be proactive and make sure your claim settlement is fair before you accept it.

For more information, contact the Houston personal injury law firm of Attorney Brian White Personal Injury Lawyers by calling (713) 500-5000. 

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