SETTLEMENT VALUE IN PERSONAL INJURY
Every personal injury case has unique facts, and thus, will have a unique settlement value. It is important to remember this fact in negotiations, that no two cases are alike, and all though there may be similar factual scenarios in two separate cases, it does not mean they have similar settlement values. However, there are certain factors that you can look at to determine what sort of a value your settlement should have. These factors include the insurance policy limits of the other party, liability, and the damages.
Insurance Policy Limits: when determining the settlement value, it is crucial to know the available policy limits in the matter. For example, if the other party has 15/30 policy limits, and no other assets, you are looking at a potential maximum recovery of $15,000. In this situation, you would look to see whether the injured party has underinsured driver coverage. You can recover from your own insurance company as well when a driver does not have insurance or does not have as much as is needed in your case, assuming of course you have uninsured or underinsured motorist coverage. You must know what kind of range you are dealing with, in order to properly negotiate the case.
Remember that the insurance company you are dealing with has a duty of good faith to their insured to reasonably attempt to settle the case within the policy limits, thereby protecting their insured from a verdict in excess of the limits. Legally, the insurance company cannot disclose what the policy limits are without the consent of the insured. After a lawsuit is filed, the plaintiff can find out the policy limits through discovery. It is in the insured’s best interest to reveal the policy limits of their coverage, and most insurance companies will explain that to the insured. Therefore, normally the policy limits can be revealed without having to go through the filing of a lawsuit and conducting discovery. It can generally be as simple as a demand letter to the insurance company requesting the policy limit amounts, with a reminder that any verdict in excess of the policy limits amount can expose the insurance company to a lawsuit from their insured for the excess portions.
Liability: This factor is straightforward. Who is at fault? If the other party if 100% at fault, it is pretty straightforward. If you are partially at fault, through the doctrine of comparative negligence, the recovery and settlement value will be reduced by that percentage. For instance, if it is determined that you are 50% at fault, it does not mean that you are not entitled to a recovery. It will simply be for half of what you would have received if you were not half at fault. This is the law in California, and although this seems like a common-sense result, in some states, a determination that the injured party was at fault by any percentage, can preclude a recovery entirely. In cases where there are multiple parties at fault in causing damage to the injured, each party’s fault needs to be determined. In most routine Personal Injury and Accident cases, liability will not be too difficult to determine. But it is obviously a significant factor in determining the settlement value.
Damages: There is an entire page on this website dedicated to how to calculate damages, so this discussion will not go too in depth, but for now it is important to understand that the amount of damages plays a major role in the value of the case. Basic damages are normally past and future medical costs, lost wages, and pain and suffering. If the damages are high, it will be a high value case, assuming there is a source of recovery and liability is not an issue. If the damages are low, the fact that liability is in your favor and the insurance policy limit is high will not lead to a high recovery. You must have all three working in your favor for a high value case.
Settling a case for a high value is an art form that requires tremendous preparation, and the ability to reason with the other side. The ability to effectively negotiate cannot be overstated and the selection of an attorney should take this trait into heavy consideration.