After an injury or accident, you have two possible avenues to get compensation. The first is to receive an offer for settlement (which you could choose to accept). The other is to file a lawsuit in civil court that would, if you win, allow you to collect compensation for any damages you have suffered. Although a lawsuit may eventually result in a larger settlement for a plaintiff, the fact of the matter is that the overwhelming majority of such cases are settled outside of court, usually before a civil lawsuit is actually filed. There are a number of reasons for this.
Understanding How a Settlement Works
A settlement takes place when either a defendant or insurer offers an injured party a payment for compensation.
1) This offer can occur prior to a lawsuit being filed but after a possible claim arises.
2) It can also be made when a case is in the process of being litigated but no verdict has yet been handed down.
3) A settlement can also happen as a case is being deliberated because one or both parties prefer the certainty that comes with a settlement.
After a settlement is agreed to by both parties, the plaintiff is required to relinquish any and all potential claims related to the incident or accident. The plaintiff must sign a liability release to confirm this. For example, in the case of a car accident, the plaintiff may be offered an out of court settlement of $50,000 by the insurer of the car that hit the plaintiff. In order to receive this amount, the plaintiff must agree that he or she will not sue the insurer in regards to the accident.
Insurance Companies and Settlements
When an insurance company is involved, a settlement is nearly always the preferred solution (as opposed to a personal injury civil suit). Since insurance companies are nearly always involved, this helps to explain why so many cases are settled rather than litigated. Insurance companies prefer to avoid risk. Therefore, since they fully expect that they will have to payout a certain percentage of claims, they would rather settle than deal with legal fees and the overall cost of a trial.
The Reason Why Many Cases Settle
There are several reasons why a case is settled, especially in instances when an insurance company is involved. First, as previously mentioned, opting for a settlement means the defendant can control both the risks that come with a jury trial and the associated costs. Second, if the defendant is certain that he or she will be found to be responsible, it's probably in his best interest to avoid an especially sympathetic jury. Such a jury might decide to award the plaintiff with a much larger amount for punitive damages or pain and suffering. A third reason is that the defendant may prefer to avoid the case becoming public and showing up in the local newspaper. And lastly, settling a case is advantageous for both parties, as it avoids a lengthy trial that could go on for months and sometimes even years. Talk to a lawyer like Marcus & Mack for more information.