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Five Things to Know About Car Accident Settlement Agreements

Five Things to Know About Car Accident Settlement Agreements

The insurance company for the at-fault driver in a car accident case might make a settlement offer. A settlement offer is an agreement to end the dispute. The insurance adjuster offers a specific amount of money to resolve your injury claim.

Before you receive compensation for your car accident claim, the insurance company requires that you sign a settlement agreement and release. The agreement and release impact your legal rights. It is generally in your best interest to ask a lawyer to review the settlement agreement before you enter into a settlement agreement. 

Whether you are working with a car accident attorney or you are handling your car accident claim without a lawyer, there are a few things that you need to know about car accident settlement agreements. 

Settling a Car Accident Claim Too Early Can Be Costly

Car Accident Claim

The insurance company may offer you a quick settlement for your car accident claim. In some cases, the company may issue an offer before you complete medical treatment for injuries. Beware of a settlement offer issued before each accident victim completes treatment for their injuries.

Until you complete your medical treatment, you cannot know for sure how much your medical bills may be or how much money you might lose from being out of work. Lost wages and medical costs after a car accident can be substantial.

You need to make sure that all financial losses are included in a settlement offer. You cannot know for sure whether you might have permanent impairments from the car wreck until you complete treatment. Settling your claim too early can mean that you lose thousands of dollars in damages you were entitled to receive for your injury claim. 

Car Accident Settlement Agreements Are Final

When you accept a settlement offer from an insurance company, the settlement agreement is a final resolution of your claim. After you sign the agreement, you cannot demand more money for your claim. 

Therefore, make sure that the amount you accept compensates you fully for all your damages. Damages in a car accident case include both economic and non-economic damages. 

Economic damages are the financial losses incurred because of the accident and your injuries. Your non-economic damages include the pain and suffering you experienced because of the accident, your injuries, and your recovery. 

Examples of damages included in a car accident settlement are:

  • The cost of personal care and medical treatment, including therapy, medications, surgeries, doctors’ bills, etc.
  • The loss of income, including wages, commissions, benefits, salary, and bonuses
  • Mental, emotional, and physical pain and suffering
  • Disfigurement and permanent impairments
  • Decreases in future earning potential because of impairments or disabilities
  • Loss of enjoyment of life or quality of life

Your claim may include additional damages, depending on the severity of your injury and the circumstances of your case. 

If you are unsure how to calculate the value of your damages, you might want to consult with an insurance claims lawyer before signing the agreement. 

The First Offer May Be Much Lower Than the Value of Your Claim

Insurance companies

Insurance companies want to pay the lowest amount possible to resolve your car accident claim. The company is in business to make money. Paying claims hurts the company’s profit margin

Therefore, the insurance company will likely make an offer that is much lower than the value of your injury claim. The company hopes that you will not be familiar with personal injury claims or how to value damages. It also hopes to settle the claim before you know the full extent of your damages or talk with an injury lawyer.

You are not required to accept an offer from the insurance provider for the at-fault driver. There could be several options available to you for resolving the claim, including rejecting the offer, making a counteroffer, or filing a personal injury lawsuit.

You Can Make a Counteroffer and Negotiate the Settlement

If you are not happy with the insurance provider’s settlement offer, you can make a counteroffer and negotiate a settlement. It is best to make a counteroffer for more money than you are willing to accept to settle the claim. Using a higher figure allows you to negotiate if the insurance company rejects your counteroffer.

When making a counteroffer, make sure to highlight the severity of your injuries, including your pain and suffering. Also, reiterate that the insured is responsible for your pain and suffering. 

It is common to go back and forth several times when negotiating a car accident settlement. The negotiation process could take several weeks or even a few months. Make sure that you are aware of the deadline to file a lawsuit if you need to file a lawsuit to resolve the claim.

The deadline to file lawsuits for most car accident claims is three years from the accident date. However, be aware that the statute of limitations (deadline) for filing a lawsuit can vary, depending on the facts of your case. For example, car accident cases involving minors or government entities have different deadlines.

In some cases, a deadline to file a lawsuit could be shorter than three years. Missing the deadline could result in losing your legal right to pursue court action against the person who caused your car accident. 

You Are Releasing All Claims and Parties When You Sign the Agreement

The insurance company may not explain that you are releasing all claims and all parties when you sign a car accident settlement agreement. The language of the release could be difficult to understand and buried within a lengthy document.

When you release all claims and all parties, it means that you are giving up any right to demand more money for your car accident claim. The release covers all parties and claims, known and unknown. 

Therefore, if you discover that you could have recovered more money by filing a claim against another party or filing an additional claim against the other driver, you are barred from pursuing that claim. The settlement agreement is a legally binding contract that is enforceable in court. Unless there is fraud or other wrongdoing, you are bound by the terms of the agreement.

Do I Need to Hire a Personal Injury Lawyer for a Car Accident Claim?


It depends on the facts of the case. Some car accident cases do not require the assistance of an attorney. If you sustained minor injuries, understand the value of your damages and the insurance company agrees to pay you the amount you desire, you might not need an attorney’s assistance.

However, most individuals injured in car accidents benefit by consulting with a lawyer specializing in personal injury law. They learn about their legal rights and their options for recovering maximum compensation for their injuries, damages, and financial losses. If they hire a lawyer, they benefit from having a legal team on their side to protect their best interests throughout the case.

Contact Our Boston Car Accident Lawyer for a Free Consultation

If you have questions about a car accident claim or a settlement agreement, we can help. Call our office at (617)-391-9001 to schedule a free consultation with an experienced Boston car accident lawyer.

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