Negotiating a Claim vs. Filing a Lawsuit

Have you been injured in a Los Angeles accident? Was the accident the result of another person’s negligent behavior? If so, you have the right to recover compensation for your injuries. There are two ways to recover the money you need: filing a claim or filing a lawsuit.

What’s the difference between filing a claim and a lawsuit? Even though the terms are often used interchangeably, claims and lawsuits are very different things.

Personal Injury Claim: A personal injury claim involves a formal request to an insurance company. The claims process does not involve the courts. Instead, you try to negotiate a settlement privately with the at-fault driver’s insurance company.

Personal Injury Lawsuit: A personal injury lawsuit involves filing a civil lawsuit against the at-fault driver (and/or their insurance company). This process does involve the courts. Your attorney will still attempt to negotiate a settlement during the lawsuit process. However, if no agreement can be reached, your case will be litigated in court.

Which option is right for you? It really depends on the extent of your injuries and the amount of money you want to recover. However, most accident victims try to recover compensation through the insurance claims process before turning to more aggressive legal approaches.

Negotiating a Personal Injury Claim

Drivers in California are required to purchase and carry car insurance. Insurance must include bodily injury liability coverage ($15,000 per person and $30,000 per accident) and property damage coverage ($5,000). These are just minimum requirements.

Drivers are permitted – and even encouraged – to purchase more coverage. When you are injured because of another driver, their insurance kicks in. You have the right to file a claim with their insurer to recover compensation.

Filing a Claim and Making Your Demand

You’ll need to let the at-fault driver’s insurance company know that you’ve been injured and intend to file a claim immediately. Most companies require that you notify them of your intent to file within a “reasonable” amount of time. Others limit your ability to submit a claim to a 24-48 hour window.

The claim is simply a way to notify the insurer that an accident has happened and that you will be submitting a request for damages. Once the claim is received, you’ll get a letter in the mail from the company’s insurance adjuster. This letter is called a Reservation of Rights (ROR). It’s intended to acknowledge your claim but make it clear that the company is not accepting liability on behalf of their driver at this time.

When the time is right, you, or your personal injury lawyer, will have to send a demand letter to the insurance company. This letter explains what happened, details your injuries and harm, and provides evidence to back up your allegations. This is your opportunity to state your case and demand that the insurer accept liability for their insured driver’s actions.

When is the “time right” to send a demand letter? The best rule of thumb is to wait until you’ve recovered. This way, you can really identify your costs and the extent of your damages.

Considering the Insurance Company’s First Offer

Once the insurance company has received your claim and demand, they’ll investigate your accident. Their investigation is intended to undermine your request and limit the payout you receive. The insurer is looking for any way to deny your claim or undervalue your injuries.

If the insurance company agrees that their driver is to blame, they’ll extend an initial settlement offer. Today, most companies will put the details of your accident, including your specific injuries, into a computer software program. The program analyzes the data and comes up with a settlement figure. The number the insurance company arrives at is almost guaranteed to be much lower than the figure you’ve calculated.

You have three options when you receive this initial settlement offer: accept, reject, or make a counteroffer.

Accept: You agree to accept the company’s settlement offer. If you do, you’ll be required to sign a waiver that prohibits you from seeking additional money in the future.
Reject: You refuse to accept the company’s settlement offer.
Counteroffer: You refuse to accept the company’s offer, but turn around and make them a new offer.

Making a counteroffer is probably your best bet. When you make a counteroffer, you can contest any reasons the insurer may have undervalued your claim. You can also provide additional pieces of evidence to support your demand. It can be a good move to reduce your demand slightly to show that you are willing to negotiate.

Weighing Your Options When You Receive a Final Offer

You may be able to go back and forth with the insurance company a few times. However, negotiations will end eventually. This typically happens when the company extends its final settlement offer. The company will say that this is the best offer they can give you and that you can reject it at your own risk.

Should you accept a final offer? It really depends. Is the offer sufficient to cover all of your accident-related costs? If it is, it may really be the best offer you’ll receive. If the offer is insultingly low, or if the company has refused to negotiate fairly, you may want to reject it. You always have the option of filing a personal injury lawsuit.

Filing a Personal Injury Lawsuit

When Should I File a Lawsuit?

There are a few reasons you may want to file a lawsuit after an accident:

The insurance company denied your claim
The insurance company refused to extend a fair settlement offer
Negotiations with the insurance company have stalled, or
The extent of your damages exceeds the maximum payable amount of the at-fault driver’s insurance policy.

If you’ve experienced any of these it’s important to consult with an attorney.

What Injuries Support Filing a Personal Injury Lawsuit?

While it is true that you can file a lawsuit to recover compensation for any of your accident-related injuries, lawsuits should typically be reserved for more serious matters. The claims process can be a great way to recover the money you need for minor injuries and harms.

If you’ve suffered a more serious injury, though, filing a lawsuit may be in your best interest. Serious injuries are those that create significant financial debt, result in temporary or permanent disability, or significantly disrupt your life.

Consider filing a personal injury lawsuit if you or someone you love has suffered any of the following injuries:

The costs associated with injuries like these can be overwhelming. Filing a lawsuit may be the only way to recover the compensation you need.

The Personal Injury Lawsuit Process

In California, you have the right to file a lawsuit as soon as you want after an accident. However, the state does place a limit on the amount of time you have to file your legal claim. In most cases, you’ll have two years from the date of your accident to begin the process. There are exceptions to this rule but they are very limited. It’s in your best interest to file your lawsuit before the statute of limitations expires.

Filing the Claim

The process formally begins when your attorneys file a claim with the local court and effects service. Service simply means that the defendant in your case – the person being sued – receives a copy of the lawsuit. The process cannot begin until they have been notified that you have initiated legal proceedings against them.

What’s in the claim? Prior to filing, your attorney will have begun an investigation into your accident. This investigation will:

Determine the cause(s) of the accident
Identify who is to blame, and
Assess the extent of your injuries.

The investigation will also allow your attorney to gather evidence and documentation that support your case. In the claim, your attorney will explain the facts of the case and present a legal argument about why the defendant should be required to compensate you for your harm.

Negotiations After the Claim

Once the lawsuit is filed (and served), one of two things will probably happen:

The defendant may reach out to you and ask to settle the matter privately,
The defendant may file an answer and fight back against your allegations.

If the defendant wants to settle, your attorney will sit down with their representative and attempt to negotiate a fair deal. It’s important to know that you retain the right to accept or refuse any settlement offer you receive.

Negotiations can sometimes be aided by processes known as mediation and arbitration. In mediation, a neutral third party helps to resolve your dispute. You retain control over the outcome. In arbitration, a neutral third party helps to resolve your dispute, but makes unilateral decisions on your behalf. Think of mediation as negotiations on steroids, while arbitration is more like a mini-trial.

If you accept a settlement offer during negotiations (or if one is awarded during arbitration), the personal injury lawsuit process ends. If you can’t reach an agreement, your case will move forward to litigation.

Litigating Your Claim

Litigation means that your case goes to court. In reality, very few personal injury cases proceed to the trial stage. Most cases are settled privately. When you go to court your case will be tried in front of an impartial judge and jury. You and the defendant (or more specifically, your Los Angeles personal injury attorneys) will have the opportunity to state your case, offer evidence, and examine witnesses. Once the trial has concluded, the jury will retire and determine the outcome.

You can negotiate a settlement up until the jury returns with a verdict. If the defendant thinks that you may win, they may be more willing to extend an offer that’s fair. Juries can be very generous with the awards they extend to accident victims.

Get Help With Your Legal Claim or Lawsuit

At Citywide Law Group, our personal injury lawyers in Los Angeles are prepared to help you assert your rights and get the money you deserve. We can guide you through the claims process or represent you in a personal injury lawsuit. If you’re having trouble understanding your rights or simply want to learn more, do not hesitate to call us for help. We offer a free consultation for all new clients and would be happy to answer any questions you have.