Car Accident Settlement Basics

By FindLaw Staff | Legally reviewed by Robert Rafii, Esq. | Last updated December 20, 2021

Imagine you were in a pretty bad car accident with a distracted driver several weeks ago, and now you aren't sure what to do. Your injuries are pretty severe and aren't getting much better. You used to play tennis every day after work, but now your neck and back are hurting more than you'd like to admit, and even sitting at work for long periods of time is painful.

The other driver's insurance company isn't offering you what you wanted, so you did what you thought you had to do — file a personal injury lawsuit. You've heard about settling out of court, but is that really the best option for your situation?

Learn more about car accident settlement basics in the following article.

What Does “Settlement" Mean?

Settling your case basically means resolving your dispute and not going to trial. It's important to recognize that most cases, particularly car accident cases, don't end up in a full civil trial. Often these cases end up settling as the parties come to an agreement that works for everyone involved. Why? Because a jury trial offers no guarantee of a successful outcome, even in the most air-tight cases. Juries can be unpredictable, while your settlement, once accepted, is not.

What Is a Demand Letter?

If you feel that your injuries are being undervalued by the opposing party's insurance company, you can have your injury attorney write a formal “demand letter" to the insurer. This document gives you the opportunity to explain the incident, describe your injuries and damage, and request a payment amount to settle the claim without any further litigation or court appearances. A well-drafted demand letter will put all of the issues and facts into perspective, carefully laying out your case and any evidence in your favor, including medical records and other relevant information.

A skilled attorney may even demand higher payment than what is really expected so both sides have room to negotiate. Keep in mind, the insurance company may require you to get an independent medical evaluation to substantiate your injury claim.

Settlement Negotiations

After both sides have had a chance to review the demand letter and respond to it, the case may move to a settlement negotiation phase. This means that there will likely be back-and-forth negotiations between the parties in an attempt to come to an agreement.

If these talks break down in and you end up at an impasse, you may be able to agree to meditation or to alternative dispute resolution (ADR). Mediators are licensed attorneys or retired judges who are usually able to help both parties come to a resolution. If your negotiations are successful, you will be able to put the case behind you and collect from the insurer or the at-fault driver. If you are not able to come to a resolution, your case will proceed through court.