Car Accident Settlement: Understanding the Process and What to Expect

The automotive industry has come a long way when it comes to onboard technology and safety features. Automatic parking, emergency braking, backup cameras, and smartphone integration are just some features available to you as a driver. However, even with all these amenities, car accidents still happen because of driver negligence.

If you've been involved in a car accident, it's naturally within your rights to seek compensation for any injury you sustained or damages to your vehicle. When you file a personal injury lawsuit, the fault will be determined based on evidence and witness statements.
If you are partly at fault, you might not be able to receive the compensation you're expecting. In some instances, even 1% negligence means losing your case.

Understanding Car Accident Settlement

Settlements are agreements between victims and negligent parties or their insurance companies. As part of the negotiation process, the at-fault party is asked to pay compensation. In most cases, settlements save both parties money, time, and effort as opposed to when the case goes to trial.
Injuries in a car accident are usually settled rather than litigated in court. Depending on the circumstances, both parties can agree to settle before or during the court case.
When deciding whether or not to proceed with a personal injury case, it is important to consider your situation as the victim, as well as the facts of the case. If you need help making that decision, you may want to consult an attorney with experience in this area.

Sending Demand Letters

The insurance company of the opposing party may not provide you with a fair settlement amount. You may consider writing a "demand letter." In this letter, you explain the damage you suffered in the car crash and request a fair settlement. A settlement negotiation phase follows the review of the demand letter, which is often accompanied by much back and forth before a deal is reached.

Negotiations and Dispute Resolution

It is always possible to seek binding or non-binding arbitration by a neutral third party if disagreements or firm differences prevent a satisfactory settlement agreement. Otherwise, if a resolution is not reached, the car accident lawsuit may go to trial.
The good news is that it is possible to reach a settlement at any point in the legal process, even after the jury has delivered the verdict. Even with an ongoing appeal, both parties can still agree on a settlement.

Calculating Car Accident Settlements

Despite what you may think, finding out how much settlement a car accident victim receives is not going to be very useful for you. This is because each settlement is based on the particular circumstances of the collision, not the average amount. When a crash victim sustains only minor property damage, an insurer will offer far less money than when a victim loses a loved one or suffers permanent disability.

Settlement amounts for car accidents are typically determined by:
- Amount of medical bills
- Lost wages
- Pain and suffering
- Emotional distress
- Extent of property damage

Average car accident settlements also depend on the type of insurance coverage available and the determination of fault.

Factors Affecting Car Accident Settlement Amount

Various factors can affect how much settlement you can receive if you've been injured in a car accident:

Insurance Coverage

Most states require liability insurance by law. If a policyholder is responsible for the victim's injuries, the insurer will pay compensation but only up to the policy limits.
The insurer will not pay the excess if damages exceed the insurance coverage. For losses the insurance doesn’t cover, accident victims may be able to file a direct claim against the at-fault driver.
Often, even if a court awards additional damages, people do not have the assets to pay them. Therefore, pursuing a court case to obtain additional compensation may be pointless if an insurance company offers a settlement at the policy limit.


Settlements can be larger when there is a clear liability in a collision. A driver's insurer will likely accept liability and offer a reasonable settlement to avoid a lawsuit if the driver was clearly at fault for the accident.
On the other hand, the settlement offer may be lower if the fault is uncertain. A car accident compensation claim can be significantly affected if the drivers share the fault.
Some states follow the contributory negligence rule. In this case, if a driver in a car accident is even 1% at fault, he cannot seek compensation from the motorist who was most at fault.
Other states follow the comparative negligence rule. With this rule, a driver who is 75% at fault for a crash can still file a claim against the other driver and be entitled to 25% of the total damages.

In modified comparative negligence states, a driver may qualify for compensation as long as the driver's fault is not more than 50% of the accident. Likewise, if the driver shares part of the blame, compensation would be reduced accordingly.

Severity of Injuries

Typically, car accident settlement amounts are determined by the severity of the injuries. According to a survey, car accident victims who were not injured received $16,700 in compensation, as opposed to victims who were injured and received $29,700.

State Laws

To pay for their injuries or injuries to their passengers, drivers in states with no-fault laws must first use their insurance coverage. When their insurance runs out, they can pursue compensation from the insurance of the other driver. In addition, all drivers in these states must have personal injury protection to cover lost wages and medical bills due to accidents.
In fault states, the one who caused the crash is responsible for paying for the losses. In most cases, the at-fault drivers' insurers offer more comprehensive damage settlements for even relatively minor accidents in these states.

Financial Loss

The amount of financial loss affects car accident settlements. In general, the settlement is meant to compensate the crash victim for all losses resulting from the collision. The term "losses" includes damages resulting from injuries, such as lost wages, and those resulting from property damage.

Agreeing to a Settlement for Your Personal Injury Claim

It is faster to resolve a dispute over a car accident by entering into a settlement agreement. There may, however, be situations when this mode is not appropriate. Having an understanding of how the settlement process works will guide your decision-making process before signing a settlement agreement.
Remember that if the insurance company offers an amount that is too low in your opinion, you always have the option to negotiate. Also, having a personal injury lawyer on your side can help ensure that all of your injuries, physical and emotional, are adequately compensated.

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Posted - 05/29/2024