The insurance company for the other driver may offer to settle your car accident claim. If so, it will prepare a car accident settlement agreement that you must sign before you can receive the settlement funds.
However, there are some things to know about car accident settlement agreements before you sign the agreement.
Five Things You Need to Know Right Now About Car Accident Settlements
Before you sign a car accident settlement agreement, consider these things:
1. You Release All Parties From Future Liability
When you sign a car accident settlement agreement, you release all parties from future liability for the claim. There are two potential problems.
By releasing all parties, you could be leaving money on the table. If you are not receiving full compensation for your damages, another liable party could provide additional compensation. However, when you sign the settlement agreement, you release ALL parties from liability, even if you are not aware that another party could be liable for your claim.
You are also releasing all parties from future liability for your claim. The release includes any known and unknown damages and injuries caused by the car accident. If you discover you need additional surgery or treatment, you cannot demand more money for your claim.
Likewise, if you realize that you sustained additional injuries or a permanent disability that prevents you from working, you cannot demand more money. The car settlement agreement is binding and final. The insurance company, at-fault driver, and any other parties who could potentially be liable for your claim are “off the hook” for your damages.
How can you protect yourself?
Do not agree to a settlement of your car accident claim until you complete medical treatment. You want to make sure that you include all medical bills and costs in the settlement amount.
Also, your doctor provides a prognosis when he releases you from treatment. The prognosis includes a description of any permanent disabilities and an impairment rating. This information is necessary to determine the value of damages, including non-economic damages for disabilities and future financial damages for ongoing medical care and loss of income.
2. A Car Settlement Agreement is a Legally Binding Contract
The agreement is a contract between you and the parties to the agreement. Because the agreement is a legally binding contract, the other parties can go to court to enforce the agreement’s terms.
If you decide you made a mistake by settling your car accident claim, you cannot merely back out of the agreement because you change your mind. The insurance company can ask the court to force you to accept the terms of the agreement.
How can you protect yourself?
Have a personal injury lawyer review the settlement agreement before you sign it. It is a wise idea to have an attorney review any agreement or document you sign related to your car accident before you sign it. You do not want to give up your legal rights unintentionally.
If you decide to hire a lawyer to handle your car accident settlement, your lawyer reviews all documents before you sign them. He explains the terms of the contract, including any legal rights that might be impacted by entering the agreement.
Your lawyer also discusses whether the agreement is in your best interest or whether there are other options you want to consider before accepting the settlement offer.
3. The Settlement Offer Could Be Lower Than the Value of Your Claim
You need to know what your claim is worth before you sign a car accident settlement agreement. In most cases, the offer by the insurance company is lower than the value of your claim. The insurance company will try to pay the lowest amount possible to resolve your personal injury claim.
If you do not understand the types of damages you can receive for a car accident claim or the value of those damages, the amount you receive for your car accident could be thousands of dollars lower than the value of your claim.
How can you protect yourself?
Make sure that you document your economic damages carefully to ensure all medical bills, lost income, travel expenses, personal care costs, and other out-of-pocket expenses are included in the settlement amount.
Request statements from each of your medical providers that details the exact cost of treatment. Keep copies of all invoices and bills related to your car accident claim. When you pay a bill or spend money on over-the-counter medications or supplies, keep the receipts to prove the cost.
Make sure you understand the types of damages that are included in your claim. In addition to financial losses, you are entitled to compensation for your non-economic damages. Non-economic damages include:
- Physical pain and suffering
- Loss of quality of life
- Emotional distress
- Permanent disabilities and impairments
- Mental anguish and trauma
- Scarring and disfigurement
- Psychological injuries, including anxiety, depression, and PTSD
Placing a value on your pain and suffering damages can be difficult. There is not a standard formula for calculating the value of non-economic damages. Many insurance companies use a multiplier to place a value on these damages.
The multiplier is a number between 1.5 and five. The number is based on numerous factors, including the severity and type of injuries, the length of your recovery, and whether you sustained a disabling condition.
In most cases, the multiplier increases as the severity of your injuries increases. For example, the multiplier for a case involving amputation or spinal cord injuries might be higher than a multiplier for a case involving a broken bone or whiplash.
The value of your non-economic damages would equal your financial damages multiplied by the multiplier.
4. Read the Fine Print to Understand the Settlement Structure
A car settlement agreement may contain a lot of legal terminology and fine print. You need to read each section of the car settlement agreement carefully. Ask questions if you do not understand the terms of any section.
Pay close attention to the settlement structure. Most settlements for car accident claims are paid in lump-sum payments.
However, some insurance companies might try to structure the payments over time. For most accident victims, structured payments are not acceptable.
As discussed above, the settlement agreement is a binding legal contract. If you sign the agreement without reading all the fine print, the result could be a settlement structure that is not in your favor.
How can you protect yourself?
Read the agreement word-for-word. Make notes about sections that you might not understand. Write down questions as you read the agreement that you need to be answered.
If you are unsure about the terms of the agreement, do not sign the agreement without legal counsel.
5. You Have the Right to Negotiate
The first settlement offer is usually very low. You do not have to decline the offer and move straight to a personal injury lawsuit. You can make a counteroffer and begin negotiations for a settlement.
How can you protect yourself?
As stated above, know the value of your damages. Your counteroffer should be on the high end of the value of your damages to leave room for negotiation.
Determine the lowest amount that you are willing to accept to settle your car accident claim. Offer an amount that is higher than the amount you are willing to accept. The insurance company might accept your counteroffer, or it could make another offer.
Negotiations could take several weeks or months as you and the insurance company exchange offers. Documentation of your damages increases your negotiating strength. Also, writing a narrative about how your injuries impacted your daily life, your daily pain levels, relationships with family members, and your emotional state can help increase the strength of your demand for pain and suffering damages.
Contact Our Florida Car Accident Attorneys for a Free Consultation
You do not have to do this alone. You can get help with car accident settlement agreements from a Florida car accident attorney.
The insurance company has lawyers who protect the company’s best interests. You deserve to have a legal team working to protect your best interests. You can get more information about car accident claims during a free consultation with a lawyer.
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