How to Navigate a Car Accident Settlement

LawHow to Navigate a Car Accident Settlement

In 2021, the U.S. witnessed over six million police-reported vehicle accidents. It’s no surprise that the law and insurance companies have a standard process when it comes to car accident settlements.

From reporting the case immediately to gathering evidence and settling for compensation, car accident settlements involve several crucial steps. Stick around to learn more about how these settlements work and what to expect.

Car Accident Liability Laws

In most states, you always need to have car insurance. Insurance companies categorize two types of systems when it comes to car accident liabilities, namely at-fault and no-fault systems.


In this case, let’s assume the other driver in the accident is at fault. Subsequently, they’re responsible for mitigating all the damage. 

The next step for you is to file a lawsuit against the driver, a claim with your insurance company, or a third-party claim with the at-fault driver’s insurance company.

My advice is to go for the latter two because a lawsuit can lead to risky counter-sues.


No-fault systems involve filing the claim with your insurance company rather than approaching a third party. States like Kansas follow this liability system. It doesn’t open an opportunity for lawsuits or counter-sues as well.

Step-by-Step Car Accident Settlement Process

A car accident settlement process allows you to receive compensation for your damages. Here’s what you can expect during the ordeal.

1. File a Personal Injury Claim

The first step in a car accident settlement involves reporting the accident and filing a personal injury claim to your insurance company. The claim lays responsibility to an at-fault driver for all the damages incurred, which can include:

  • Vehicle repair costs
  • Mental anguish
  • Medical expenses
  • Lost wages from work time.

Now, you might wonder, is there a time limit when filing this claim? 

Yes, there are Statutes of Limitations detailing the time limits to file injury claims that differ from state to state. For instance, if you reside in Georgia, the time limit is two years from the time of the accident.

2. Gathering Evidence

The following step to a car accident settlement is the deposition. In other words, it’s when you and the other party’s lawyer start gathering evidence from witnesses, which could be you or other passersby. Witness statements offer a speed boost in most trials if they’re consistent with your story.

In other cases, they can slow it down if your stories don’t align. During my settlement trial, I was lucky enough to have a couple of witnesses on my side. It significantly sped up my settlement timeline. 

On top of collecting witness statements, evidence can come from taking pictures of the scene and your car, police report copies, and injuries.

Besides that, you’ll want to be cautious of insurance companies that want to avoid the payout. For this reason, I suggest not talking to any insurance worker before contacting your settlement lawyer.

3. Sending a Demand Letter

Usually written by an attorney, a demand letter details the accident’s facts and reports. It’s a professional and legal document that typically outlines the following for your insurance company to review:

  • Copy of police report
  • Proof of insurance
  • Proof of loss for all types of damage
  • Medical expenses
  • Estimate of desired settlement amount

4. Settlement Offer Result

After sending your claim and demand letter and presenting all your evidence to the insurance company, you’ll have to wait for the settlement offer. 

You’ll either get approved or denied for the accident’s compensation. In scenarios where it’s denied, it might be because the nature of the car accident isn’t covered by insurance.

Alternatively, your claim may hold some errors, whether from inconsistent witness reports or inaccurate evidence. Either way, don’t give up just yet. Ask for further clarification and consider consulting a car settlement attorney and going for a trial. 

Now, it’s worth noting that a trial and seeking an attorney will be a costly affair.

In contrast, if you get approval, it’s not the end of the road yet. You still have to ensure that you get a fair settlement and compensation amount.

5. Fair Settlement

Fair Settlement

Once you get approval, the insurance company should communicate a settlement amount. This number might not be the same amount you asked for in your demand letter. In this case, you can negotiate with the company for a fairer amount.

Keep in mind that your company might have you speak with an insurance adjuster to convince you to accept the low amount. 

In addition, you’ll have to consider that some insurance corporations might only negotiate with lawyers. They’re more well-versed about the personal injury law and can navigate a better offer for your settlement.

What If My Insurance Company Won’t Agree to My Settlement?

Insurance companies can be especially stringent with their settlement offer and refuse to give you your desired amount even after days of negotiation and your lawyer’s attempts. 

For this reason, you can take the following steps.

Request a Mediation

Mediation allows you to negotiate for a settlement without having to resort to a trial. The Alternative Dispute Resolution (ADR) calls for a mediator or a neutral third party. The meeting requires the presence of your insurance company’s representatives, you, and your attorney. 

Your assigned mediator will listen and review both sides’ statements and encourage communication and negotiation terms. 

That being said, mediators don’t have binding authority and only function as facilitators. If you ask for an arbitrator instead, they can make a legal decision enforceable by law.

File a Lawsuit

Filing a lawsuit should be your last resort since it’s a critical decision. A court case will be time-consuming and a costly process. 

Nevertheless, if the compensation amount is large, it might be your best option. Be sure to consult an attorney before going through with this decision.

Key Takeaways

How does a car accident settlement work? In short, the process begins with you reporting the accident and filing a claim to your insurance company. 

Next, you’ll have to gather the necessary evidence to support your case and send a formal draft letter with the settlement amount you need. 

Lastly, the decision on the settlement will be sent to you. If you got denied or approved for a low settlement amount, you can negotiate, request mediation, or file a lawsuit.

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