In one recent year, 312,798 traffic accidents took place in Michigan. Of those, 905 were fatal, 55,340 resulted in injuries and 256,553 resulted in property damage. That many accidents also inflicted tens, if not hundreds, of millions of dollars in costs on accident victims and their families.
Often, people don’t want the hassle of taking legal action to pursue reimbursement of those costs. Instead, they prefer to settle with an insurance company. That’s a fine way to go, if you have an attorney helping to ensure you recover the maximum settlement available. It gets tricky, however, when you try to negotiate a settlement all by yourself. For most people, that’s simply a recipe for ending up on the bad end of the deal.
Insurance companies are not in business to pay a penny more than necessary to policyholders and the parties to whom those policyholders are liable. Insurers will use any information they can get their hands on to avoid financial responsibility for an accident. Also, because they negotiate settlements day-in, day-out, they have well-developed skills and tricks that the ordinary car accident victim lacks.
That’s why it’s so important to have an attorney on your side in negotiating a settlement agreement with an insurance company. Not many car accident cases actually go to court, so attorneys have skills that are just as sharp as the insurance companies’. Here are a few things lawyers want you to know about insurance settlement agreements.
1. They’re Binding
Under Michigan law, any settlement agreement must be in writing and signed by both parties. But, once that agreement has been signed (and usually notarized), it’s usually binding. There are no take-backs or do-overs. Insurance companies use form settlement agreements when they deal directly with the people to whom they owe money. They write those agreements to be as favorable as possible to the insurance company, not to you. So, if you sign an insurance settlement agreement on a form supplied by an insurance company, it’s likely you’ll get stuck with the worst possible terms.
2. They Release the Insurance Company and Its Policyholder From Every Claim You Have Against Them, Forever
A settlement agreement is a contract. You agree to take money, and in exchange you “release” the insurance company and its policyholder from all claims you have our injuries and losses, forever, whether you are aware of those claims or not. That means you cannot go back and ask for more money later if you discover you are more hurt than you thought, or there are other legal claims you could have pursued, but didn’t. Insurance companies write their form settlement agreements with the broadest releases allowed by law. They want to make sure you never, ever come back to them against asking for more money. (The settlement agreement might even prevent you from pursuing claims against parties who aren’t specifically mentioned in the agreement.)
3. You Shouldn’t Sign One Until You Know the Full Amount of Your Damages
Before signing a settlement agreement, you should have as strong an understanding as possible of:
- How much your past, current, and future medical care will cost you or your health insurer;
- The amount of wages you lost if you were not able to work;
- How much money you will lose if you can’t go back to work for some time;
- How much you will spend on mental health if the accident affected you psychologically;
- How much it will cost to repair your vehicle;
- How much reimbursement you will need for a dumpster rental vehicle;
- How much your pain and suffering is worth; and
- How much it will cost you to pay someone to do daily tasks that you are not able to perform because of the accident.
Sometimes, these considerations can get very complex. Lawyers often work with medical and financial experts to calculate the value of your claim.
4. The First Settlement Offer Is (Almost) Never the Best One
Insurance companies count on the fact that car accidents turn victims’ lives upside down and create significant financial strain. It’s tempting for victims to accept “quick” settlement money just to pay bills and keep money coming in the door. But, that can be a costly error. A first settlement offer from an insurance company, particularly if it comes quickly, rarely reflects the maximum settlement an insurance company is willing to pay. Experienced car accident lawyers know this, and also know how to “talk turkey” with insurance companies to get them to a more realistic settlement number quickly.
5. They Can Affect Your Rights In Ways You Might Not Expect
As we said above, the basic components of a settlement agreement are the dollars coming to you, and the releases you give up in return. But, there are other provisions in settlement agreements that could affect your rights. They can include arbitration clauses, the form and timing of payment to you, and (as mentioned above) releases benefiting third parties. Experienced car accident lawyers know to look out for these provisions and to evaluate which of them are deal-breakers.
6. Hiring a Lawyer Evens the Playing Field
Hiring an experienced car accident to represent you in negotiations with an insurance company evens the playing field between you and an insurance company. Attorneys negotiate settlements nearly as often as insurance adjusters do. They know the tricks of the trade that you would probably miss. Your attorney might even convince the insurance company to use his or her own preferred form of a settlement agreement, instead of the insurance company’s.
Contact a Car Accident Attorney for More Information
Don’t attempt to settle a car accident claim with an insurance company without an experienced car accident attorney by your side. If you were in a vehicle accident and need help negotiating a settlement agreement, contact experienced legal professionals that offer a free and confidential initial consultation.
